ST. LOUIS (CN) – A federal jury Monday awarded $491 million in damages in a civil lawsuit stemming from the collapse of a prepaid funeral Ponzi scheme.
The lawsuit was filed by state life and health guarantee associations and a special receiver set up to wind down National Prearranged Services (NPS) in 2009.
The jury awarded $355.5 million in compensatory damages and $35.5 million in punitive damages against PNC Bank, and $100 million against Forever Enterprises. PNC was a defendant as successor to Allegiant Bank, a former trustee of NPS assets.
NPS promised customers across the country that money from prearranged funerals would be held in trust and that claims would be funded by life insurance policies payable to the trust.
But those funds were used to pay for lavish lifestyles instead.
By the early 1990s liabilities exceeded trust assets and funerals were paid for with cash from new contracts. The scheme claimed more than 97,000 victims.
The plaintiffs claimed the trustees, including Allegiant Bank, were negligent and breached their fiduciary duty by allowing company officers to siphon money and by failing to uncover the scheme.
Frederick Solomon, senior vice president of the PNC Financial Services Group, told the St. Louis Post-Dispatch: “PNC respectfully disagrees with the jury regarding the liability of its predecessor bank, Allegiant, and we intend to appeal this verdict.”
Solomon said that NPS had sufficient funds to cover every deposit when Allegiant resigned, which was four years before NPS failed.
NPS owner James “Doug” Cassity and two other company officers were sent to federal prison in 2013 for terms ranging from 18 months to 10 years. Cassity and three others were ordered to pay $435 million in restitution.
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