California Funeral Trust Misspent Money

A California audit found that the second-largest prepaid funeral trust in California misused millions of dollars that were set aside to pay for 27,000 consumers’ funeral expenses. The audit shows that $12.6 million was misspent and some was used as follows:

• $2 million: lobbying and conventions for the California Funeral Directors Association
• $1.6 million: not distributed to consumers, estates, or the state treasury as it was supposed to be
• $4.2 million: administrative fees, such as trustee fees on an improperly inflated income in 2001 and 2002

Attorneys for the fund trustee say that the report is inaccurate and that the trust intended to comply with laws and regulations.

Only half of the money needs to be paid back. The rest has already been paid back, may be impossible to trace, or can be adjusted through accounting alterations.

See Don Thompson, Audit Finds Calif. Funeral Trust Misspent Money, The Associated Press, July 8, 2010.