Chesterfield Businessman Indicted for Pre-Arranged Funeral Scheme

The U.S. Attorney’s Office announced Monday that Chesterfield resident Randall Sutton, CFO, director and president of National Prearranged Services, has been indicted on mail fraud, wire fraud and money laundering charges over a ten-year $600 million fraud scheme involving the sale of pre-paid funeral services.

The indictment alleges that the collapse of the business 2008 followed a history of deception wherein Sutton and several others extracted funds that they had led customers to believe would be held in a trust or used to purchase an insurance policy that would cover eventual funeral and burial costs.

National Prearranged Services, Inc., headquartered in Clayton, sold prearranged funeral services in 19 states. According to a press release from the FBI, customers either purchased prearranged funeral services directly from National Prearranged Services, or from funeral homes who in turn purchased these services from National Prearranged Services.

National Prearranged Services purchased life insurance policies from Memorial Service Life Insurance Company and Lincoln Memorial Life Insurance Company of Austin, Texas in order to fund the funerals when customers died. Sutton was Director of both of those companies.

The St. Louis Post-Dispatch also reported that James Douglas Cassity, of Clayton, who bought the company in 1979; his son, Brent Cassity, also of Clayton, who helped run the companies; Howard A. Wittner, of Chesterfield; and David R. Wulf, of St. Louis County, were also part of the scheme.

The release from the FBI has more details on the ponzi-like scheme:

According to the indictment, beginning in 1998 and continuing until 2008, Sutton and others, defrauded National Prearranged Services' customers, states' guaranty funds, and funeral homes doing business with National Prearranged Services.

The purchase of prearranged funeral services involves a pre-payment of a substantial sum by the customer, in exchange for the promise that funeral services will be provided at no further expense upon the customer's death. In the ordinary course of business, the seller of prearranged funeral services uses the customer's pre-paid funds to purchase a life insurance policy, holds the funds in trust, or otherwise makes reasonable use of the funds, to ensure that funds are available to provide the funeral services upon the customer's death. The customer reasonably expects that the business will operate in such a way so that the pre-purchased services will be available upon death.

The indictment alleges that rather than making reasonable use of the assets of their business, Randall Sutton and others used a series of deceptions to extract funds from National Prearranged Services and related entities such as Lincoln Memorial Life. As a result of this fraudulent scheme, National Prearranged Services and Lincoln Memorial Life were unable to meet their mounting obligations and collapsed in 2008. Sutton and others at National Prearranged Services led funeral homes and customers to believe funds paid for prearranged funeral services would be held in trust or used to purchase life insurance policies in order to ensure that money would be available to pay for customers' funeral services when needed. Funeral homes and customers who paid the entire cost of pre-need funerals up-front were given "Paid in Full" certificates. Customers were not informed that their purchase of prepaid funerals involved risk. They also failed to disclose to funeral homes and customers.

Sutton, 63, Chesterfield, was indicted by a federal grand jury on six felony counts of mail fraud, one felony count of money laundering, and two felony counts of wire fraud.

If convicted, each count of mail and wire fraud carries a maximum penalty of 20 years in prison and/or fines up to $250,000; money laundering carries a maximum penalty of 10 years in prison and/or fines up to $250,000.