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Funeral Directors Association cleared to resume operations during fraud proceedings

Funeral Directors Association cleared to resume operations during fraud proceedings

  • Updated

The Wisconsin Funeral Directors Association was cleared by Dane County circuit judge on Wednesday to resume normal operations, though its investment trust that investigators say is $21 million short of projections will remain under control of a court-appointed receiver.

Meanwhile, the receiver, Milwaukee lawyer John Wirth, will set in motion a plan to reimburse funeral directors at least 60 percent of funeral costs for people who bought into the trust to pay for their funerals "pre-need."

The two court orders were agreed to during a telephone hearing.

Under the funeral claim payment plan, the trust will pay 60 percent of the funeral cost, with the rest picked up by the funeral homes.

Wirth said in an interview that the funeral home may later recover all or part of that balance. If a trust deposit was made by a funeral home that is now out of business, or if funeral services were provided out-of-state, the trust will pay 100 percent of the claim.

Wirth said his office is reviewing up to 70 applications for payment, and the goal is to process claims in less than a week.

Wirth was named receiver after the state filed a complaint Sept. 14 accusing the 500-member WFDA of fraud, failure to register as an agent, and selling unregistered securities in connection with the marketing and sale of investments in the trust. State investigators say the fund placed its more than 10,000 funeral customers' money in risky investments instead of the safer ones it promised.

Wirth said the new investment advisors for the fund have been active and have "gotten rid of some of the bad investments."

Among other actions, Wirth has overseen the departure of the WFDA's executive director and named a veteran insurance regulator to lead a trust-owned and WFDA-serviced life insurance company.

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Related to this story

The court-appointed receiver of the Wisconsin Funeral Trust, which state investigators say was mismanaged to the toll of millions of dollars for people who paid for funerals in advance, said Friday that "there was substantial wrongdoing in operating the trust, and litigation is likely to occur in the near future to recover lost assets."

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