Calif. AG sues funeral trusts

Bryan Cohen Apr. 19, 2011, 2:33am


LOS ANGELES (Legal Newsline) - California Attorney General Kamala Harris filed a lawsuit on Monday against one of the nation's largest funeral trusts, alleging that it illegally diverted some $14 million.

The California Master Trust, the California Funeral Directors Association and other defendants allegedly pooled the funds of more than 27,000 California consumers who prepaid for funerals for themselves or loved ones. The lawsuit alleges that the organizations engaged in conspiracy and kickbacks.

The trust was created in 1985. It is a "preneed" funeral trust that pools the prepaid funeral payments of individual purchasers throughout California. It controls around $63.5 million.

Harris filed the suit, seeking a permanent injunction and restitution for consumers in Los Angeles Superior Court, on behalf of the Cemetery and Funeral Bureau of the Department of Consumer Affairs.

"The defendants preyed upon thousands of Californians at one of the most vulnerable times of their lives," Harris said. "This lawsuit will make sure their money goes where it was intended: to pay for their funerals or the funerals of loved ones."

The suit alleges that millions of dollars of consumers' money paid to the trust was mismanaged or misspent and that the defendants paid at least $4.6 million in illegal kickbacks to funeral homes. The suit also alleges that the defendants paid themselves excessive administrative fees.

The lawsuit seeks an injunction to halt the alleged illegal activities plus restitution of close to $14 million with interest. The suit also seeks to take control of the trust from Funeral Directors Service Corp., a subsidiary of the California Funeral Directors Association, and place it under a new trustee.

In addition, the suit seeks a full accounting of the trust's financial transactions as well as the defendant's financial transactions with the trust since 2000.

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