A frequent bus rider wrote me this this afternoon. I can only assume that after he had his afternoon of sleep inducing turkey, he decided to do some psiber sleuthing and came across this information that dovetails with this information.
The rider writers: I hope you had the chance to read about Doug Cassity's latest adventure in today's News-Leader and here, on November 23.
My family knew Doug's (his grandparents ran the local post office). They were well-respected although some thought they held themselves in a little too high regard.
It is still hard to believe that someone who was so liked and admired turned out to be such an incredible heel. After reading the SNL piece I googled "Doug Cassity" and discovered the item below. The link was dead but I found a cached version of s story that appeared on the WFLD, Chicago's FOX TV affiliate, website.
The SNL piece missed quite a bit. Not the least of which are political contributions made to Jay Nixon and Matt Blunt at the time his company was being investigated.
The Average Joe's MadoffA couple of days ago, another bus rider emailed me asking if I had read the November 23 piece on Cassity, saying, in part, "Hop-Along-Cassidy rides again. I thought Doug was already locked up a Club Fed?"
Regulators and congress are outraged and appalled, as they always are, at the enormity and longevity of the Madoff ponzi scam. Despite the fact that for years the writing was on the wall, with flashing strobe lights, and at times right in their hands, somehow it was overlooked that Madoff was delivering miraculous returns, using a "trading strategy" that in no way could generate returns of that magnitude for long periods of time in various economic environments, and the auditor of this multi-billion fund was a one-man shop in a strip mall. Huh? I could go on and on, but Madoff is not my point.
The ponzi that should be in the spotlight involves a maze of intertwined companies under the umbrella of Missouri-based National Prearranged Services, including Lincoln Memorial Life Insurance Co. and Memorial Services Life Insurance Co., which was relatively quietly forced into liquidation in March 08. Unfamiliar...here's a thumbnail sketch...
NPS sold pre-need funeral contracts through funeral homes in 19 states, over 200,000 contracts nationwide. The pitch is to pre-pay funeral expenses at today's prices and avoid higher inflation adjusted prices later. What did my grandma always say...when it seems to good to be true, it probably is...then she would promptly box my ears for failing to see the obvious.
In a perfect world, NPS would take a percentage of the pre-paid funds and place them in a trust, which is used to buy a whole life insurance policy on the contract holder, which generates interest. When you die, NPS pays the funeral expenses within 24 hours and are reimbursed from cashing out the life insurance policy with interest. The insurance policies are, of course, purchased from their sister companies, Lincoln Memorial and Memorial Services. Keeping it all in the family...
In an imperfect world, a/k/a reality, NPS allows the insurance policies to lapse or cancels the whole life to buy a cheaper, non-interest bearing term-life policy. When you die, they "honor" the old contract with proceeds from new contracts sold. No harm, no foul. Except that you cannot sustain this model, it is illegal and is by any definition a classic ponzi! Aside from the fact that the percentage they are required to put into trust varies by state, with Missouri law allowing NPS to keep 20% of funds in commissions, and of course keep the interest. From the get go, a $10,000 contract is really worth $8,000, allowing consumers the privilege of paying $2,000 in inflation protection. I can feel my grandma's hands coming...
But, like Madoff, NPS operated with a relatively deaf ear from regulators. With it's various businesses...insurance, cemeteries, funeral homes...it fell into one of those gray, murky areas of oversight...insurance? funeral industry? contract law? Like a quick game of hot potato...don't be the last to hold it, or you are the state agency forced to do your job!
NPS was poison from inception. Founded in 1979 by James Douglas Cassity, a disbarred Springfield, MO attorney who served time in federal prison in the early 80's for an unrelated tax shelter fraud. His name rarely appears, instead placing the ownership interests of all of the kissing cousins in various Cassity family trusts and other family members.
FIRST FLASHING STROBE LIGHT
In 1992, the attorney general of MO began investigating NPS, resulting 8 years later in a 2000 court ruling which scolded NPS and told them to tighten up their financial records and make sure proper coverage is in place, with no further or ongoing regulatory monitoring guidelines.
SECOND FLASHING STROBE LIGHT
In 2005, under the cleverly named "Operation Grave Concern", the MO attorney general targeted funeral homes and pre-need contract sellers. A handful funeral directors and contract sellers were charged, and NPS, the godfather of pre-need contract fraud, was harshly scolded for failing to ensure proper coverage in relation to one charged funeral director, and paid an out of court settlement of $10,000 and once again agreed to tighten their financial records, with no further or ongoing regulatory monitoring guidelines.
MORE SPOTLIGHTS It apparently was not important that according to the National Institute of Money & Politics, NPS ranked in the top 10 funeral industry lobbyists and political contributors, giving around $109,000, much to none other than MO attorney general Jay Nixon and MO governor Matt Blunt. It almost feels like I'm talking about Illinois! Where's Blago when you need him...
In March 08, Texas forced NPS into liquidation, as the two primary insurance companies wereheadquartered there, noting that the businesses were "inextricably intertwined". Not surprisingly, the Chap. 11 agreement personally exempts the Cassity's and about 50 other entities, including the Nantucket home that Doug Cassity sold last year for over $16M to Google CEO Eric E. Schmidt. In receivership, the unfortunate individual appointed to try to unravel this mess has stated that NPS will honor the existing contracts, but does not state at what value, and the payout will come no later than 60 days of filing the claim. 60 days! That's not much solace for the family who is forced to pony up thousands now for the at-need funeral they believed was paid for in advance, with the pat on the head that they will receive some to all of that money back within 60 days.
Several states, including Iowa, Texas, Missouri, Kentucky and Ohio are investigating, as is the FBI, who preliminarily have stated the loss at around $500,000,000. And various knee-jerk, sloppy and reactionary pieces of legislation have been proposed, with all of them failing to pass.
And the sordid story continues today...with no conclusion and little to no press coverage. At least they weren't deemed too big to fail.
When I replied that I remembered the original story (and more as I refreshed my memory via google.com) he fired this back at me: "Notice how they said "complicated" scheme. Cassity is so good at putting these things together I bet they never convict him. I hope he gets off so we can get in on the ground floor next time... He developed a huge thirst for cash flow to fuel his lifestyle and has ran scams ever since college."
The St. Louis Beacon has this fstory on line :
James Douglas Cassity returned to the area Wednesday to appear in court on charges that he and other leaders of his Clayton-based funeral empire embezzled as much as $600 million.There's more here
A 50-count indictment made public this week accuses Cassity and five others at his company — National Prearranged Services Inc. — of embezzling and laundering money that was supposed to be used to pay funeral expenses for about 150,000 consumers.
The indictment was the latest chapter in the downfall of a multimillion-dollar empire that reaped huge rewards for Cassity and his family, including homes across the country, and featured holdings in multiple funeral homes, insurance companies and cemeteries.
But on Wednesday, when a federal magistrate judge was determining bail for Cassity, 64, the accused embezzler claimed to be pinching pennies.
"He is not living the high life," his lawyer, Scott Rosenblum, told U.S. Magistrate Judge Frederick R. Buckles at the downtown federal courthouse. "He drove up here in a Jeep without windows and rented an apartment here. ... He lives on Social Security and is using credit cards for expenses."
Assistant U.S. Attorney Steven Muchnick had a different argument, saying his office was worried that Cassity might flee. Muchnick said $2.1 million was recently moved from accounts "nominally controlled" by Cassity's wife, Rhonda.
"We believe those proceeds came out of the fraud schemes," Muchnick said.
Rosenblum said that the Cassitys are separated and that his client had no influence over the transfers.
Regardless, Buckles set bail at $500,000, requiring Cassity to deposit $50,000 in cash with federal marshals by noon Monday. Just minutes after describing his client's financial woes, Rosenblum said Cassity would provide the $50,000 on time.
At the hearing, Cassity also pleaded not guilty to numerous fraud and money laundering charges. Buckles ordered him to check in weekly with the government and obtain court permission to travel to Naples, Fla., where Cassity has enjoyed a gulf view from the high-rise Le Jardin building. The luxury condo — valued at $2.6 million, according to tax records — is one of several properties owned by Cassity and his relatives that federal authorities hope to seize.
Cassity told the judge he recently rented an apartment in Chesterfield and will be living there as his case unfolds.
After the hearing, Cassity declined to talk with a reporter. Rosenblum said during the hearing that Cassity "believes he will be vindicated. He believes that in his heart, he believes that in his soul."
Others indicted include Cassity's son, Brent Cassity, 43, of Clayton; Randall K. Sutton, 65, of Chesterfield; Sharon Nekol Province, 66, of Ballwin; Howard A. Wittner, 73, of Chesterfield; and David R. Wulf, 58, of St. Louis County. All served as officers, directors or advisers of National Prearranged and affiliated insurance companies controlled by Cassity family trusts.
Bail has varied by defendant. U.S. Magistrate Judge Terry Adelman ordered Wittner, a lawyer, to wear a GPS monitoring device and pledge $200,000 in property. Adelman freed Brent Cassity on a promise to pay $50,000 if he were to flee.
PAST PRISON TERM
Wednesday wasn't the first time Cassity has had to appear in court as a criminal defendant.
Before moving to the St. Louis area, Cassity was a young lawyer in southwest Missouri. In the 1970s, he ran an investment club in Springfield, Mo.
A federal investigation uncovered a scheme full of intertwined corporations and missing funds. Cassity pleaded guilty of conspiracy and tax fraud violations in 1982, lost his law license and served six months in federal prison.
After Cassity got out, he moved his family to St. Louis to focus his efforts on National Prearranged Services, which aggressively sold prearranged funeral policies.
He had started getting involved in the death business years earlier, after one of his legal clients — a door-to-door seller of prepaid funerals — couldn't come up with the money to pay Cassity's fee and offered him an ownership stake instead.
Business grew rapidly, and by the 1990s, the Cassity family controlled several related companies and was held up as the leading innovators in the funeral business. It operated from a building overlooking Shaw Park in downtown Clayton, and the marble floors, wood-paneled walls and leather furniture were testaments to its success.
Forever Enterprises — one of the Cassity companies — envisioned graveyards where video monitors stood side by side with age-old headstones. Mourners would be able to watch tribute videos of the departed.
Eventually, the Cassity empire would include ownership of several funeral homes and seven area cemeteries as well as control of two insurance companies.
In 2005, Cassity sold a Nantucket, Mass., home for $16 million to Eric Schmidt, Google's chief executive. In July, Cassity and his wife sold their New York City condo for $750,000.
In addition to the Florida condo, the indictment seeks recovery of homes in Clayton and Chesterfield, and Oak Hill Cemetery in Kirkwood. Authorities also are seeking real estate elsewhere, including:
• The 62-acre Hollywood Forever Cemetery — the final resting place of stars like Rudolph Valentino, Cecil B. DeMille and John Huston — next to Paramount Studios.
• A four-bedroom Nantucket residence known as the Hydrangea House, according to an online real estate listing advertising that the house is for sale for $5.9 million.
• An 1,828-square-foot Nantucket house that Rhonda Cassity sold to one of the family businesses in 2002 for $1.5 million, according to tax records.
Most consumers who paid for funeral plans are protected by state insurance-guarantee associations. In some cases, however, the insurance pays only a small portion of the actual cost of the arrangements, and participating funeral homes must make up the difference, funeral directors said.
Connie James, with James & Gahr Mortuaries in St. James, Mo., won't say exactly how many of pre-need contracts her business is on the hook for.
"A few thousand," she said.
But James doesn't hold back when asked about Cassity.
"He's the Bernie Madoff of Missouri," she said.
There's more here: http://www.politicalfriendster.com/showPerson.php?id=7787&name=National-Prearranged-Services-Inc adn herehttp://www.deathcarelaw.com/tags/nps.