A major bank is taking a huge hit for its part in a funeral insurance scam.
A major bank is taking a huge hit for its part in a funeral insurance scam.
A federal jury determined PNC Bank has to pay $391 million for not properly overseeing funds and allowing trusts involved in an alleged fraud scheme “to be pillaged.”
The jurors put PNC on the hook for $355.5 million in compensatory damages and $35.5 million in punitive damages for the bank’s part in and purported insurance scam run by National Prearranged Services (NPS), a defunct company that sold prepaid funeral contracts. PNC Bank is the successor to Allegiant Bank, which served as a trustee for the company from 1998 to 2004.
Forever Enterprises Inc., a funeral home and cemetery owner, were also fined, and must pay $100 million.
The plaintiffs, a group of national and state life and health insurance guaranty associations, alleged that NPS conned funeral homes and consumers into thinking the funds they provided for prepaid funeral services would be backed by life insurance policies or held in a trust.
The funds were supposed to be safeguarded by NPS so they could be distributed if a client who had prepaid their funeral died.
Instead, the life and health guaranty groups, as well as the Texas receiver, were left to foot the bill after NPS’ principals purportedly skimmed money from the trusts, the lawsuit accuses.
The bank allowed the NPS trusts “to be pillaged” because they didn’t properly supervise the funds, the suit alleges.
Prior to the trial, several other defendants, including the Bank of America, reached undisclosed settlements, according to court records.
Marcey Zwiebel, a PNC Bank spokeswoman, said in a statement the company disagreed with the verdict and intends to appeal.
A federal jury determined PNC Bank has to pay $391 million for not properly overseeing funds and allowing trusts involved in an alleged fraud scheme “to be pillaged.”
The jurors put PNC on the hook for $355.5 million in compensatory damages and $35.5 million in punitive damages for the bank’s part in and purported insurance scam run by National Prearranged Services (NPS), a defunct company that sold prepaid funeral contracts. PNC Bank is the successor to Allegiant Bank, which served as a trustee for the company from 1998 to 2004.
Forever Enterprises Inc., a funeral home and cemetery owner, were also fined, and must pay $100 million.
The plaintiffs, a group of national and state life and health insurance guaranty associations, alleged that NPS conned funeral homes and consumers into thinking the funds they provided for prepaid funeral services would be backed by life insurance policies or held in a trust.
The funds were supposed to be safeguarded by NPS so they could be distributed if a client who had prepaid their funeral died.
Instead, the life and health guaranty groups, as well as the Texas receiver, were left to foot the bill after NPS’ principals purportedly skimmed money from the trusts, the lawsuit accuses.
The bank allowed the NPS trusts “to be pillaged” because they didn’t properly supervise the funds, the suit alleges.
Prior to the trial, several other defendants, including the Bank of America, reached undisclosed settlements, according to court records.
Marcey Zwiebel, a PNC Bank spokeswoman, said in a statement the company disagreed with the verdict and intends to appeal.
