Digging deeper into case between W. Va. AG candidates

By John O'Brien | Oct 31, 2007



A closer look at State of West Virginia, ex rel. Attorney General Darrell V. McGraw, Jr. v. Iams Funeral Home, d/b/a Iams and Iams Funeral Home, Inc, et al, a case in Wetzel County Circuit Court in which current Attorney General McGraw is facing Republican challenger Hiram Lewis, who is representing John Iams II.

McGraw's exhibits, filed with the complaint:

*Exhibit A: Twelve pages of the legislation concerning preneed funeral services contracts. McGraw claims Iams did not file required documentation with the Attorney General's Preneed Funeral Services Division and that he was operating without a business license.

"No person shall sell, offer for sale, make available or be a provider of a preneed funeral contract until such time as he has received a certificate of authority from the Department," the legislation says.

*Exhibit B: Affidavit of Ralph Laton, the certified public accountant who is the keeper of records for the PFSD. He writes that three audits of Iams Funeral Home have been conducted since 2001, and violations have been discovered during each. The third occurred Aug. 27 and led to the lawsuit.

"The audit revealed 25 preneed contracts for which IFH and Iams had failed to submit death beneficiary reports, accounting for withdrawals of consumers' funds after performance of preneed contracts, to the Preneed Division," Laton said.

*Exhibit C: A Voluntary Assurance of Discontinuance reached in 2001 between McGraw and IHF. It prevented Iams' father, John Iams Sr., from working at IFH, leaving Iams II in charge.

*Exhibit D: A letter from Laton presumably to IHF informing it that it had not renewed its Certificate of Authority, dated Aug. 5, 2003.

*Exhibit E: A Voluntary Assurance of Discontinuance reached in 2005 between McGraw and IHF. McGraw had claims Iams did not properly record 13 preneed contracts with the PFSD, and Iams agreed to abide by the preneed laws and provide Death Beneficiary Reports every six months. Iams also agreed to pay $6,500 to the Preneed Burial Contract Regulation Fund.

*Exhibit F: The Preneed Funeral Contract of Ethel Faye Miller, of New Martinsville. It is dated March 19, 2004, and is worth $1,392.

*Exhibit G: The Preneed Funeral Contract of Jimmie Mahana, of Lebanon, Pa. It is dated Aug. 11, 2004, and is worth $6,882.74.

*Exhibit H: The Preneed Funeral Contract of Jim Weekley, of Greer, S.C. It is dated Aug. 23, 2004, and is worth $9,153.30.

*Exhibit I: The Preneed Funeral Contract of Ada Haught, of New Martinsville. It is dated Aug. 18, 2004, and is worth $5,904.80

The total funds paid by the four 2004 contracts was $18,742.74. IFH was supposed to retain 10 percent of that and place the rest in a trust fund, McGraw says, but the entire amount was put in the company's account.

Lewis made eight points in an email to Legal Newsline:

*A letter from the PFSD announced new requirements regarding caskets. Now, if a preneed provider deals with one casket manufacturer at the time a contract is reached, a casket from that same manufacturer must be used upon the customer's death. Most of Iams' preneeds are from the late 1980s and early '90s and he does not use the same manufacturer.

"When he questioned the AG office, they told him that he was in violation of the regulations and would be fined," Lewis said.

*The first four allegations of McGraw's complaint were caused by a secretary who misrepresented the amount of commission in the preneeds account. She claimed $5,000 was commission, when it was actually only $1,800. Iams replaced the money and informed Layton of the situation during the 2005 audit.

*McGraw's fifth cause of action (the failure to renew the Certificate of Authority) is moot because Iams no longer sells or makes available preneed funeral contracts. He has not since Dec. 2005.

*McGraw's sixth cause of action (the failure to obtain a license from the PFSD) is also moot because he has not sold a contract in almost two years. Lewis claims it is not Iams' fault he was not able to renew the license.

*McGraw's seventh cause of action (failure to submit preneed contracts and pay fees) is also moot because he has not had a preneed to submit. All contracts reached before Dec. 2005 have been submitted.

*McGraw's eighth cause of action (failure to file death beneficiary reports) mostly contains allegations of wrongdoing before the 2005 settlement. Those allegations were made part of that settlement, though seven preneed buyers have passed since then.

"A man named Doug Patterson was hired to do death beneficiary reports," Lewis said. "Doug sent reports to the AG's office. Some of the reports returned with little notes of why they weren't accepted. I have all the reports and I was attempting to work with the AG's office to meet the reporting requirements and filed his application for a COA when the lawsuit was filed."

*McGraw's ninth cause of action (failure to transfer contracts upon request of buyer) will not stand because no buyer ever requested a transfer in writing and has proof the transfer was accepted by the transferee (another COA holder).

"When he was provided proper documentation signed by the COA holder, then he executed the paperwork necessary for the transfer as soon as reasonably possible," Lewis said.

Lewis added that Iams has transferred the accounts of two-to-three individuals a month since 2005 with no explanation.

"You would think the consumer would actually come to the funeral home to initiate a transfer, but all these transfers have come from the AG's office with no complaints from the original consumers," Lewis said.

*McGraw's 10th cause of action (doing business without a license) was a clerical mistake. His license expired July 1, and Iams failed to renew it. He has since filed the required paperwork and paid the fees. At the time, Iams was considering selling his business because of his experiences with McGraw.

Iams decided to attempt to renew his COA, but the PFSD told him he would have to transfer all his preneed contracts (worth $318,000).

"Knowing he would be out of business if he lost his largest asset, he decided to fight the AG's office," Lewis said.

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