Jury awards $491 million in damages for fraud by prepaid funeral company

March 16, 2015 by

A federal court jury in St. Louis recently awarded $491 million in damages in a lawsuit sparked by the collapse of a Missouri-based company, National Prearranged Services Inc., that sold prepaid funerals.

NPS promised customers across the country that money from prearranged funeral contracts would be held in trust.  Claims were supposed to be funded by life insurance policies payable to the trust but federal authorities found that company officers and others spent some of the money on lavish lifestyles instead.

Beginning in the early 1990s, liabilities exceeded trust assets, the plaintiffs said, and NPS could pay for funerals only by using cash from new contracts.  More than 97,000 victims — customers, funeral homes, insurers and financial institutions — lost money, federal officials have said.

The suit was filed by state life and health guarantee associations and a special receiver set up to wind down NPS.  After a five-week trial, the jury awarded $355.5 million in compensatory damages and $35.5 million in punitive damages against PNC Bank and $100 million more against Forever Enterprises, the latter being a defunct family-owned holding company.

PNC was not involved with NPS but was a defendant as a successor to Allegiant Bank, a former trustee of NPS assets.

Keith Dubanevich
Keith is an accomplished trial, appellate, and healthcare lawyer with over 30 years of experience in more than a dozen different jurisdictions around the country. With a focus on complex dispute resolution, with particular emphasis in the healthcare industry, Keith is adept at handling multi-state and international antitrust cases, consumer litigation, and securities disputes. In healthcare, he has handled peer review disputes, partnership and incorporation matters, and billing investigations. Keith has led internal investigations for public entities as well as for not-for-profit organizations. Keith's clients value his keen instincts in court and his ability to delve into complex legal issues while never losing sight of the overall strategy of a case. During his time at the Oregon Department of Justice as Associate Attorney General and Chief of Staff, Keith led the creation of a civil rights unit, managed securities litigation including multiple cases against financial services companies, and supervised antitrust investigations and prosecutions. He was also involved with the adoption of legislation that expanded the Unlawful Trade Practices Act and legislation that imposed a mediation requirement prior to non-judicial foreclosures.

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