For the first round of Missouri preneed examinations, the State Board of Embalmers and Funeral Directors had no choice but to jump into preneed sellers’ records and files. Hundreds of funeral home had been selling preneed for decades without supervision or record keeping requirements. So, the first exam objective was to look at everything and assess the condition of the seller’s records. There is no doubt that the process found some significant record keeping issues.
When it came time in 2015 for the State Board to discuss the scope of the second round of preneed examinations, the staff pled their case for drilling deeper into seller records, and in particular, the performance and distribution records. We will be the first to acknowledge that performance and distributions records are crucial to confirming fraudulent preneed activity. While all sellers should be required to maintain such records, drilling down into every seller’s performance records will not be an efficient use of the $25 paid by each and every preneed consumer.
Rather, we believe that the State Board can become a more efficient, and effective, supervisor of preneed sellers if the primary objective of the exam process is to confirm that consumer funds are being administered correctly by funeral homes. More specifically, are those funds being deposited with insurance companies, banks and trustees within the required number of days?
The handful of Missouri funeral directors that have gone to jail in the past couple of years were guilty of running preneed consumer funds through their business accounts. All went years without complying with the deposit requirements, and as consequence, thousands of consumers were harmed. While performance and distribution records will be important to the prosecution of fraudulent funeral directors, an examination process that focused on deposit compliance would have led to earlier regulatory intervention and better protection of the preneed consumers.
We have requested that the State Board place on its December agenda the attached examination outline.