Funeral Fraud: Scamming the Dearly Departed


Misty Carter, CFE, CIA
ACFE Research Specialist

Scamming the elderly or taking advantage of the mentally disabled are considered among the most repugnant of fraud schemes. But what about when fraudsters scam the deceased?

Believe it or not, many criminals take advantage of those who have died using funeral fraud schemes. These types of frauds come in many forms and mainly target and affect the families of the deceased. One of the most common funeral fraud schemes involves prepaid funeral expenses. According to the Federal Trade Commission, millions of Americans prearrange their funerals by entering into contracts and prepaying all or some of the related expenses. Some states have laws in place to regulate these contracts,. Other states, however, are more lenient, which leaves a window of opportunity for unscrupulous individuals.

Consider the case of James “Doug” Cassity, a disbarred attorney and resident of St. Louis, Missouri. His company, National Prearranged Services Inc. (NPS), engineered a fraud scheme that caused fraud losses of more than $600 million. Cassity devised a scheme to defraud purchasers of prearranged funeral contracts or insurance policies obtained through NPS.

How did the scam work? NPS promised customers that, for a fee, the company would cover all their funeral expenses when they died. Depending on the type of funeral arrangements requested, customer’s fees could run upwards of $10,000. After finding out what customers wanted, NPS determined an agreed-upon price and accepted payment. NPS then made arrangements with the funeral home designated by the customer. NPS supposedly placed the funds in a trust — to be used for safe investments or to purchase a life insurance policy — with a third party in the customer’s name.

What customers didn’t know was that NPS, instead of putting their funds in a trust or life insurance policy, often altered documents by changing deposit amounts and listing the company as a beneficiary. NPS then converted these policies and used the money for risky investments, to pay existing funeral claims, and to purchase personal items. According to court documents, Cassity sold approximately 100,000 prepaid funeral contracts. The scheme was discovered when several agencies reported suspicious practices by NPS to the FBI. Cassity was sentenced to nine years in prison.

There are many other funeral fraud schemes that individuals should also be on guard against. For example, some scammers might try to capitalize on a family member’s unfamiliarity with funeral services and add unnecessary charges to their bill. Some might even insist that a burial casket is necessary even though a body will be cremated and a less expensive cardboard casket could be used.

Some suggestions that can help you minimize the risk of becoming a victim of a funeral fraud scheme are:

  • Be informed. Shop around before making a purchase. Take a friend along who might be able to offer a different perspective before you make a final decision.
  • Educate yourself about the goods and services, such as caskets or cremations, provided by funeral homes.
  • Understand the difference between fees, such as funeral home basic fees and fees for any additional services.
  • Carefully read all contracts and any other paperwork before signing.
  • Before signing, make sure that you understand the contract language and that all your requirements have been included in the contract.
  • If you are considering prepaying, be sure to include specific details about what funeral arrangements have been made in the prepaid contract.

While funeral fraud might at first seem hard to believe, the reality is that wherever there is a cheap buck to be made, fraudsters will find an opportunity. By being informed and aware, people can help protect themselves – and their friends and family – from becoming victims of this insidious type of fraud.