NPS Battling Out Preneed Scandal in Federal Court

The topic in the federal courtroom on Wednesday was money, specifically what happened to $600 million and whether a federal judge should be watchful to make sure even more money doesn’t go missing.

“No one disputes that the money is gone,” attorney Daniel Reilly told the federal judge. “But the defendants never say where that money went.”

The defendants in this case were the Cassity family, owners of a once-celebrated funeral services company in Clayton and a web of affiliated companies. They ran National Prearranged Services and Forever Enterprises, plus two life insurance companies.

The Cassitys were sued last August in federal court by seven state insurance guaranty companies, some of them from Missouri and Illinois. The lawsuit sought to recover the cost of paying for 150,000 pre-need funeral service contracts after NPS collapsed in 2008. Regulators in Texas seized control of the company. The lawsuit claimed the family “preyed on consumers and funeral homes to perpetuate a multimillion-dollar, nationwide scheme….”

Now, attorneys for the insurance guaranty companies wanted a judge to issue an injunction against the Cassitys to keep them from spending money that the attorneys claimed was an “unjust benefit.”

The courtroom in downtown St. Louis was packed with attorneys, at least 30 of them. J. Douglas Cassity, the family patriarch, sat at a table writing notes with a red pen on a yellow legal pad, ripping off half-sheets that he handed to the attorneys. His wife, Rhonda Cassity, and one of his sons, Tyler Cassity, watched from the gallery. The only Cassity not in court was Brent.

“They say we got $600 million,” J. Douglas Cassity said loudly to an attorney during a break. “We got nothing, nothing but a salary.”

The hearing served as a preview of arguments that will likely play out in the civil lawsuit. Attorneys Reilly and Larry Pozner, who represent the guaranty companies, spent the day outlining how they believed the Cassitys used money set aside for pre-need funeral contracts for their personal whims.

They highlighted American Express bills, paid for by NPS, that showed the Cassitys spending $64,000 to charter a yacht and $22,300 on a family trip to St. Maartens. They claimed that pre-need funeral funds were used to pay off mortgages on Cassity houses in Nantucket, which were then bought by one of their life insurance companies.

Many of the transactions were in the form of loans, which were never repayed, Pozner told the judge. “The Cassitys borrowed money, not to pay Peter, but to pay Cassitys.”

But the desire for an injunction seemed to be focused on a medical malpractice insurance company owned by the Cassitys, Professional Liability Insurance Co. of America, known as PLICA. A deal for the company to be sold appeared to be in the works. Reilly and Pozner argued the judge needed to make sure sale proceeds were set aside to satisfy any potential judgement.

Attorneys for the Cassity family argued against the injunction, choosing not to dispute the other side’s allegations but by focusing on questions of jurisdiction and whether an injunction was truly necessary.

An attorney for Rhonda Cassity claimed that her client’s husband “doesn’t even have the money to have an attorney. He’s appearing pro se.” The attorney said Rhonda Cassity was supporting both of them by flipping high-end houses.

Barry Short, an attorney for Brent Cassity, said NPS operated successfully for years, that financial trouble began only when regulators seized control. And referring to a Supreme Court justice who called a preliminary injunction a legal “nuclear bomb,” Short argued to the federal judge that he ‘should not drop the bomb on the Cassitys.”

U.S. District Court Judge Richard Webber did not issue a ruling on Wednesday. But he ended the lengthy hearing noting that his work was not over.

“We have a lot of work to do,” Webber said, “and we’ll get at it.”

Source: StlToday.com