ST. LOUIS – A St. Louis federal jury has awarded $491 million in damages in a 6-year-old lawsuit linked to the collapse years ago of a company that sold prepaid funerals but that federal investigators described as nothing more than an elaborate Ponzi scheme.
Monday’s verdict ended a trial over the 2009 lawsuit by state life and health guarantee associations and a special receiver set up to wind down National Prearranged Services Inc., which was based in the St. Louis suburb of Clayton, the St. Louis Post-Dispatch (http://bit.ly/1Hqn8w1 ) reported.
The damages include $391 million against PNC Bank and $100 million against the now-defunct Forever Enterprises holding company. Some banks and other companies connected to NPS have settled out of court or are arranging settlements for unspecified amounts.
PNC, which pledged to appeal the verdict, wasn’t involved with NPS but succeeded Allegiant Bank, a former trustee of NPS assets.
NPS operated from 1992 to 2008, selling funeral plans in advance with the promise that the buyers’ money would be kept safe until the time of the funeral. Customers typically paid a single sum of up to $10,000 to cover the cost of funeral services and related expenses.
Prosecutors said that money should have been held in trust and increased at least three-fold in value but was instead used to enrich the company’s officers and others.
Dan Reilly, a Denver lawyer representing the guarantee associations, called the outcome “the final step in the process of protecting consumers in Missouri and other states.”
Frederick Solomon, PNC Financial Services Group’s senior vice-president, said in a statement that PNC “respectfully disagrees with the jury regarding the liability of its predecessor bank, Allegiant, and we intend to appeal this verdict.”
Forever Enterprises was not represented in court, the newspaper reported.
Solomon also said that all of the consumers who bought prepaid funeral services will receive those services.
Beginning in the early 1990s, the lawsuit’s plaintiffs argued, liabilities exceeded trust assets, and NPS could pay for funerals only by using cash from new contracts.
More than 97,000 victims who included customers, funeral homes, insurers and financial institutions lost money, federal officials have said.
In November 2013, six NPC officials were sentenced to prison terms ranging from 18 months to 10 years for fraud.
Information from: St. Louis Post-Dispatch, http://www.stltoday.com