A federal grand jury indicted yesterday Northeast Baltimore funeral director Paul Stella, whose state license was pulled late last fall after customers accused him of plundering their prepaid accounts.
"We must protect people who are cheated in the process of planning for their own funerals," Maryland U.S. Attorney Rod J. Rosenstein said in a statement urging those who think they might be victims to contact the FBI. "The investigation of Mr. Stella and his funeral home is ongoing."
In January, the federal agents detailed an eight-month investigation in which the FBI said it found evidence that Stella and his employees secretly drained more than $550,000 from 140 client trust accounts set aside for future funerals.
"The majority of these customers were not aware that their accounts had been closed," FBI Special Agent Lance Griffin wrote in a search warrant affidavit filed in U.S. District Court in Baltimore.
Stella, 43, of Forest Hill, could not be reached yesterday. A telephone number listed for the funeral home on the 7500 block of Harford Road has been disconnected.
The indictment handed up yesterday seeks forfeiture of $525,000 fraudulently obtained from more than 100 customer accounts.
If convicted, Stella could receive a maximum sentence of 30 years in prison for bank, mail and wire fraud. The funeral home could be fined a maximum of $1 million.
A court appearance has not been scheduled, prosecutors said.
In November, an undercover FBI agent recorded Stella saying that he had signed a customer's name on the back of a refund check for a closed funeral bank account, court documents show. According to the tapes, Stella said the bank had made multiple errors and expressed confidence that clients granted permission for his actions.
Proceeds from the theft, according to the FBI, appear to have afforded Stella a lavish lifestyle. Court papers say that he was able to cover more than $100,000 in gambling losses at casinos in Atlantic City, N.J., and Las Vegas by tapping into personal bank accounts where he had earlier deposited his customers' funds.
The Maryland State Board of Morticians suspended Stella's license in an emergency action Nov. 29, stripping him of his ability to work as a funeral home director and shutting the doors of his business. A report on the suspension includes allegations similar to those contained in FBI documents filed in federal court.
Stella's customers told FBI agents that they first suspected a problem when they did not receive annual tax documents showing the status of their funeral accounts.
According to the FBI, the amounts paid by customers to set up the interest-bearing accounts ranged from $500 to $7,500.
When the so-called pre-need customers contacted Madison Bohemian Savings Bank, they learned their accounts had been closed without their permission, according to the FBI.
Griffin, the FBI agent, wrote that evidence showed Stella's employees had closed the accounts using documents allegedly authorized by the customers. The bank then issued refund checks in the customers' names, court documents say.
But according to the nine-count indictment, those checks were falsely endorsed and deposited into Stella's business and personal bank accounts.