State Warns Consumers of Prepaid Funeral Scams

December 1, 2009
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image Five years after Florence Muto prepaid for a funeral in 2004, the 92-year-old from Westland is out the $6,000 she paid for the plan. Muto was part of a group of 60 families authorities say were scammed by the owners of the now-closed Ziomek Funeral Home in Livonia between 1998 and 2007.

Problems with prepaid funerals affect consumers around the state. The Michigan Department of Energy, Labor and Economic Growth, which oversees the regulation of prepaid funeral services, said that in the last fiscal year — Oct. 1, 2008, to Sept. 30 — it received 53 complaints and took disciplinary action against 10 providers.

Experts said that there are protections in place, and consumer awareness of what Michigan laws require of funeral homes will go a long way toward preventing a repeat of this situation.

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Phil Douma, executive director of the Michigan Funeral Directors Association, said the Michigan law covering prepaid funerals enacted in 1986 requires providers of such plans to register with the state and put the money that people pay for their plans into escrow so it is there when needed.

According to the Wayne County Prosecutor’s Office, Nancy and Christopher Ziomek, the couple who operated the funeral home accused in the scam, had not had a valid registration to offer prepaid funeral services since 1999, and they never placed funds in escrow.

Christopher Ziomek’s attorney noted that his client has not admitted wrongdoing. Nancy Ziomek’s attorney declined to comment. The Ziomeks are to be arraigned today in Wayne County Circuit Court.

Local families can’t believe couple would betray trust

Hilda Laichalk didn’t believe at first when she learned this summer that the couple who had sold her a prepaid funeral plan in 2004 weren’t legally allowed to do so.

After all, Nancy and Christopher Ziomek handled her husband’s funeral in 2001, as well as the funerals of other relatives. Laichalk felt like she was dealing with friends — and didn’t know to ask lots of questions.

“The hardest part for me is they were so darned nice. I guess that’s what sucks you in,” said Laichalk, 79, who gave the Ziomek Funeral Home in Livonia $4,109 for a prepaid funeral.

The Ziomeks stand accused of scamming 60 families of at least $250,000. They are to be arraigned today in Wayne County Circuit Court on six charges, including embezzlement and converting money from prepaid funeral contracts to their own use. The most serious charges carry possible 15-year sentences upon conviction.

Christopher Ziomek’s attorney, Theodore Empson of Livonia, has said that his client is maintaining a position of innocence. Nancy Ziomek’s attorney, Timothy Wrather of Detroit, is declining to comment.

Guidelines protect buyers

Experts want funeral home consumers to know that they do have protections in the state.

For starters, funeral homes that offer prepaid funeral plans must be registered with the state, and the Department of Energy, Labor and Economic Growth keeps a searchable online database of prepaid funeral service registration holders.

As part of the registration process, funeral homes are required to file yearly audit reports with the state, which currently lists 549 prepaid funeral registrants. The Ziomeks had not been registered since 1999, according to the Wayne County Prosecutor’s Office.

Phil Douma, executive director of the Michigan Funeral Directors Association, said consumers also should consider whether a funeral provider is a member of a trade group like his organization, which requires members to follow a code of ethics.

Money accepted as part of a prepaid funeral plan must either be kept in trust or used to buy a life insurance policy that would cover future funeral expenses. Those who buy prepaid funeral plans should receive regular reports showing how their plan is faring.

Just a misunderstanding?

Many of those who paid the Ziomeks said they never received any documentation that the money was being kept in trust by a third party as required by law. In fact, the state’s Bureau of Commercial Services found that the Ziomeks didn’t have any trusts or escrow accounts set up for the plans.

The Ziomeks came under scrutiny after an investigation into their operation was launched in 2007 based on complaints to Livonia police. Many of the complaints came after people saw that the sign for the business had changed and another funeral home was taking over the property.

Nancy Knox of Hamburg Township, a friend of the Ziomeks, attended a court hearing for them earlier this month in 16th District Court in Livonia and said the Ziomeks have been misunderstood.

“You’re talking about good people who just got in a bad place” with their finances, she said of the Ziomeks, who operated the now-closed Ziomek Funeral Home on Wayne Road in Livonia.

Theresa Harp, 70, of Westland is outraged at what happened to her mom, Florence Muto, but said the experience will not keep her family from considering another prepaid service.

“I know there’s dishonest people all over, but no, I’m not going to lock my door” to everyone, said Harp, 70. “Now I know what to look for.”

Families’ plans in shambles

The loss of money from her mother’s prepaid plan means Harp is unsure how her mother’s funeral arrangements will be handled. Laichalk has the same concerns.

She said that if she could do it over again, she would ask more questions of the Ziomeks or anyone else from whom she was considering buying a prepaid funeral plan.

And she would not let her impressions of the couple cloud her judgment.

Now, she’s afraid she might have to leave the planning and cost of her funeral arrangements up to her children, something she had hoped to handle herself.

“You don’t have children to have them bury you,” she said.

Writer: ERIC D. LAWRENCE: 313-223-4272 or elawrence@freepress.com

Source: Detroit Free Press

Photo: Defendant Nancy Ziomek listens to the proceedings before Judge Sean Kavanagh in 16th District Court in Livonia on Tuesday, Nov. 10, 2009. (PATRICIA BECK/STAFF PHOTOGRAPHER)

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