Newspaper article St Louis Post-Dispatch (MO)

Jury Awards $491 Million in Damages for Fraud by Prepaid Funeral Company in Clayton

Newspaper article St Louis Post-Dispatch (MO)

Jury Awards $491 Million in Damages for Fraud by Prepaid Funeral Company in Clayton

Article excerpt

ST. LOUIS * A jury in federal court here on Monday awarded $491 million in damages in a civil lawsuit sparked about seven years ago by the collapse of a Clayton-based company selling prepaid funerals.

The suit was filed in 2009 by state life and health guarantee associations and a special receiver set up to wind down National Prearranged Services Inc.

After a five-week trial, the jury awarded $355.5 million of 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.

Some banks and other companies connected to NPS have settled out of court or have been arranging settlements for undisclosed amounts.

Jurors took about 3 hours of deliberations, split between Friday and Monday, to decide.

Dan Reilly, a Denver lawyer representing the guaranty associations, said they are "extremely pleased." He called it "the final step in the process of protecting consumers in Missouri and other states."

Reilly said he asked for $355.5 million in compensatory damages against PNC, five times that in punitive damages and whatever jurors thought reasonable against Forever Enterprises, which was not represented in court.

A statement from Frederick Solomon, senior vice president of the PNC Financial Services Group, said, "PNC respectfully disagrees with the jury regarding the liability of its predecessor bank, Allegiant, and we intend to appeal this verdict."

"Allegiant's trusteeship spanned just over five years of NPS's thirty years in business, and not the last years," he said. He noted that NPS had "sufficient funds to cover every deposit" when Allegiant resigned, four years before NPS failed. "The record showed that federal and state bank examiners regularly reviewed Allegiant's practices when it was trustee, while a monitor for a prior court case examined NPS' practices during that time," he said.

Solomon also said that all of the consumers who bought prepaid funeral services will receive those services.

NPS promised customers across the country that money from prearranged funeral contracts would be held in trust. …

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