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Some Prepaid Funeral Practices Cast Pall

Death: Pre-need is big business, but some providers allegedly spend the money too soon.


HODGENVILLE, Ky. — There are only so many funerals in a town of 2,874 people.

So when Bobby Brownfield built an expansive new mortuary in a field by the Dairy Mart and lavished it with cut-glass doors, antiques in its parlors and concrete urns atop the front gate, folks here clucked a little.

"I just teased him," recalled Ellice Kidd, an 87-year-old retired contractor who'd prepaid Brownfield for his future embalming and burial. "I said, 'You're spending my money, aren't you?' But he said, 'No, I can't spend that until you die."'

It turns out Brownfield couldn't wait that long, prosecutors say.

Even before the new home opened five years ago, they say, Brownfield cashed the $5,200 check Kidd wrote for his funeral. Other funds were also pocketed--Sydney and Judelle Bunnell's matching checks for $5,481, Bobby Garrison's $6,121, Myrtle Blakeman's $25,000.

The claims of fraud don't end there. Customers like Pearl Lobb, 87, prepaid for their funerals by signing insurance contracts. So Brownfield waited a while and then notified Forethought Insurance Co. that Lobb and others had died and claimed payment for funerals he'd supposedly provided. To do that, he even allegedly forged relatives' signatures.

"I'm the lady who's been dead for two years," Lobb said, rising from a velour armchair in her living room and offering her hand to a recent visitor.

In all, Brownfield is accused of stealing several hundred thousand dollars--a more precise figure is hard to come by because of separate investigations by various local and federal agencies.

Pre-Need Services and Problems Grow

That so many people signed up with Brownfield points to the rising popularity of prepaid funerals and burials here and across the country, but it's a practice that does not always deliver what it promises consumers.

Known in the trade as "pre-need," such services now account for more than one in five funeral sales. The amount of money invested in pre-death trust funds and insurance policies is estimated at up to $60 billion.

The growth of pre-need coincides with the rise of death-care conglomerates--huge, publicly traded companies that have bought up many smaller operators. The pace of those acquisitions has left the large companies struggling under heavy debt loads. The Loewen Group, the nation's No. 2 funeral and cemetery firm, is operating under bankruptcy protection.

The financial shakiness of the major companies has raised concerns about the security of prepaid trust funds. It also explains, in part, efforts by some state and federal officials to more strictly protect those accounts.

Among those states is Florida, where a bill has been introduced that would tighten control over prepaid funeral funds. That comes after two major death-care firms won permission from state regulators last fall to take $84 million in prepaid funeral funds and replace the money with bonds backed by an insurance policy.

Pre-need arrangements prove a comfort to many because their families are spared the anguish and cost of planning a funeral. There's also strong appeal for those looking to beat inflation. The average American funeral costs $5,000, up from about $3,400 in 1989, according to the Funeral Directors Assn. of America. Burial adds another $2,500.

But even as they reassure customers, pre-need arrangements also have triggered a flurry of troubling questions and widely scattered abuses.

"Consumers are giving their money and control of their money over to the industry," said Adrienne Oleck, an American Assn. of Retired Persons consumer-protection advocate. "It's too easy to take advantage, especially when the consumer is an older, vulnerable person."

Aside from instances of outright fraud, problems include contracts that fail to cover all costs or that are so packed with restrictions that they may be largely unusable if a consumer dies far away from the funeral home they signed with.

Funeral-industry executives say such problems are rare exceptions. Instead, they say, growth in the pre-need business is a testament to its value.

"When we talk to families, while we point out the benefit of locking in the price, the real issue is, 'How do you handle this event?'," said Brian Marlowe, chief operating officer of Stewart Enterprises Inc., the nation's third-largest death-care firm. "We think the most important aspect is the decision-making, removing the burden from one another and from the children."

But a number of pre-need fraud cases have arisen. Among them:

* In Pennsylvania, six men were convicted last fall in an investment scheme that defrauded 27 mortuaries of $5.9 million in prepaid funeral funds. Funeral directors and a banker collected commissions for funneling consumers' money from bank trust funds to a New York investment firm that bought, among other things, a Bronx strip club.

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