- Associated Press - Thursday, August 17, 2017

ST. LOUIS (AP) - An appeals court on Thursday threw out a $491 million jury award involving prearranged funeral services fraud perpetrated by a suburban St. Louis company, declaring it was improperly decided by a jury.

The 8th U.S. Court of Appeals ruled that the five-week federal trial in 2015 shouldn’t have been decided by jurors, noting that any claims should have been governed by trust law, not tort law, and only for damages allowed by trust law, the St. Louis Post-Dispatch reported .

The court said those damages it estimated to be about $66 million should be limited to claims in Missouri from 1998 to 2004, when Allegiant Bank was trustee. Allegiant resigned as trustee in 2004 after it was bought by National City Bank, and PNC acquired National City in 2009.

Thursday’s ruling won’t mean a new trial. The appellate court ruled that the presiding judge could use the existing trial record supplemented by any additional evidence he needs.

The jury assessed $355.5 million of compensatory damages and $35.5 million in punitive damages against PNC Bank and an additional $100 million against Forever Enterprises, a defunct holding company whose officials were accused of taking for their personal enrichment money from pre-arranged funeral contracts.

The damages were awarded to state life and health guarantee associations and a special receiver set up to wind down National Prearranged Services Inc., once based in the St. Louis suburb of Clayton.

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 future funeral services and related expenses.

All told, customers paid more than $150 million to the company. 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.

Liabilities began to exceed trust assets and NPS eventually could pay for funerals only by using money from new contracts.

Six officials from NPS were sentenced in 2015 to prison terms ranging from 18 months to 10 years for fraud. A judge found that the officers defrauded nearly 98,000 customers in several states, with the scheme also victimizing hundreds of funeral homes and many financial institutions.


Information from: St. Louis Post-Dispatch, https://www.stltoday.com

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