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State continues investigation
into alleged cemetery fraud;
local owner on the run
Published Thursday, August 27
By Jebb Johnston
Staff Writer
The Mississippi Secretary of State’s Office continues to investigate the alleged misuse of prepaid burial funds at four cemeteries, including two in Prentiss County, while the owner of the cemeteries is wanted for arrest.
Secretary of State Delbert Hosemann planned to visit the cemeteries earlier this week during a visit to northeast Mississippi.
In future public meetings, “We will be coming here and to Booneville to ask people to tell us what claims or contracts they have,” he told the Daily Corinthian. “The goal is to get back now to a full accounting of what’s there and what’s not there.”
The cemeteries are Liberty Memorial Park in Booneville, Prentiss Memorial Park in Baldwyn, Sunset Gardens Memorial Park in Laurel and Pinecrest Memorial Park in Pittsboro.
In Prentiss County Chancery Court earlier this month, the secretary of state’s office was appointed temporary receiver/overseer of the cemeteries owned by Don Middleton of Rogers Memorial Management LLC. A warrant has been issued for the arrest of Middleton.
Hosemann appointed Phillip Wedgeworth of Laurel to assist with the receiver’s duties and responsibilities.
“Phillip was up Wednesday and Thursday and went through the cemeteries” in Prentiss County, said Hosemann. “He found that the cemeteries were being maintained. The funeral home was very helpful in giving us the ones that they knew had been pre-sold.”
It is not yet known how many individuals in the Prentiss County area have outstanding contracts with the two cemeteries. Hosemann said the records are “a shambles” and the money from those pre-need arrangements is gone.
An Atlanta attorney chartered the LLC overseeing the cemeteries in November 2001 but told the secretary of state’s office he knew little about the operation.
“He knew enough that there were problems with it, but there’s no accountability,” said Hosemann. “I think this scheme was hatched and they knew what they were doing when they started it. They basically raided these trust funds not only here but in other states.”
The secretary of state’s office and the attorney general’s office filed suit in Prentiss County Chancery Court against Middleton and Rogers Memorial Management seeking restitution, repayment of attorney’s fees and investigative costs, and civil penalties of $1,000 per violation.
With updates to the pre-need and perpetual care laws that became effective July 1, private cemeteries are required to make annual reports of the trust balance to the secretary of state’s office.
“Our goal is to audit every one of them when their reports come due to make sure the money is there,” said Hosemann.
He estimated 30 to 50 cemeteries statewide are affected. “You’ve got to remember that cities and churches and fraternal organizations are excluded,” he said. “It has to be a private cemetery.”
The issue came to light earlier in the year when the state took over Green Acres in Vicksburg. The secretary of state’s office held a public meeting in a packed courthouse.
“Every seat was taken,” said Hosemann. “I heard story after story. These people have at risk several thousand dollars but may not have the means really to take care of pursuing this kind of matter and getting everything organized.”
That cemetery’s perpetual care fund contained only $221.
“We know that the number that was transferred was over $500,000 when the cemetery was purchased in 2001,” he said. “We know that there’s a significant amount of money missing there.”
The secretary of state said he felt his office should intervene when he realized the scope of the issue.
“There was no central place to get all of this organized and have an accounting done and a proper sale done,” said Hosemann, adding that he felt his office should take on the task.
His office also worked to draft new pre-need legislation.
The cemeteries now in receivership are expected to be sold at public auction, and the purchaser will be asked to honor the outstanding contracts. Hosemann acknowledged the problem of negative equity in making the sale.
“One of the things I’ve looked at first off is how much has been developed,” said Hosemann. “In Pittsboro, it looks like a lot of it has already been developed, which means there’s very little upside potential for somebody, but it also means that there’s very little outstanding contracts. You can spend $3,000 or $5,000 on each one of these, so people buying them will know what they’re getting into if they accept these obligations.
“Some of these are not fully developed,” he said. “We may have literally thousands of additional spots that (will allow the purchaser to) operate this thing on a realistic basis.”
Some of the new provisions of the law include:
• The pre-need contract is portable — if a customer decides he or she prefers another provider, the amount paid is transferable.
• Only a funeral home or cemetery may be licensed as a pre-need provider to discourage “fly-by-night” businesses from selling caskets or vaults door-to-door or by phone.
• The penalty for violations of the pre-need act can be as much as $10,000, an increase from $5,000.
• A loss guaranty fund is established as a fund of last resort to pay claims of insolvent pre-need providers.
• A statewide registry for perpetual care cemeteries is established and maintained by the secretary of state’s office. Jurisdiction for reporting and oversight of these cemeteries moves from the chancery courts and clerks to the secretary of state’s office.
• Hosemann’s office can now examine the business records of a perpetual care cemetery — an oversight authority not previously granted to any agency.
