Reilly Pozner LLP Files Suit: $600 Million National Pre-Need Burial Insurance Fraud

ST. LOUIS--(BUSINESS WIRE)--The Special Deputy Receiver of the insolvent Lincoln Memorial Life and Memorial Service Life Insurance Companies, along with the country’s participating life and health insurance guaranty associations, which have have been paying death benefits under insurance policies issued by the two related life insurance companies associated with National Prearranged Services, Inc. (NPS), today sued the former executives, lawyers, accountants, investment advisors, and trustees of the pre-need funeral plan and life insurance companies alleging the entire enterprise was more than a $600 million racket supported by the malfeasance of former management and their professional advisors.

Approximately 149,000 people in 47 states bought NPS pre-need funeral contracts through their local funeral homes. The vast majority of these pre-need funeral contracts were purportedly backed by life insurance policies issued by Lincoln Memorial and Memorial Service. Both Lincoln Memorial and Memorial Service were placed in receivership in Texas along with NPS on May 14, 2008. Among its 27 claims for relief, the suit seeks treble and punitive damages under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), the Lanham Act, and state consumer protection acts.

Suit was filed Thursday in federal district court in St. Louis by Reilly Pozner LLP, a Denver-based national trial firm whose partners have successfully represented state insurance guaranty associations in the past, most recently recovering $30 million from a regional brokerage firm on their behalf. That result flowed from the liquidation of Midwest Life Insurance Company and followed three successful jury trials in Colorado, Washington, and Iowa, the latter a three-month trial over the failed annuity provider.

Plaintiffs in the action include the National Organization of Life and Health Insurance Guaranty Associations (NOLHGA), various state guaranty associations, including those of Missouri, Texas, and Illinois, and the appointed Special Deputy Receiver of the three failed companies, Donna J. Garrett.

Among the several dozen defendants are: NPS founder J. Douglas Cassity, a disbarred lawyer and convicted felon, his wife and two sons; Randall K. Sutton, NPS’ former president; attorneys and former NPS general counsel Howard A. Wittner and Katherine P. Scannell and the law firm, Wittner, Spewak & Maylock; investment advisor David Wulf and the investment advisory firm Wulf Bates & Murphy; and banks which became involved as trustees, including Bremen Bank & Trust Company, Marshall & Ilsley Trust Company, Southwest Bank, Bank of America, and Comerica and American Stock Transfer and Trust Co.

The 130-page complaint details years of systematic collusion, conversion, and fraud -- the alleged looting of hundreds of millions of funds. It can be viewed at http://www.rplaw.com/pdf/NPS-Lincoln_Memorial_Complaint.pdf.