Customers furious at funeral director

Those defrauded of advance payment call for punishment

October 10, 2007|By Matthew Dolan | Matthew Dolan,SUN REPORTER

The spry octogenarian knows exactly what should happen to the corrupt Parkville funeral home owner who admitted yesterday that he stole almost $1 million from his elderly clients.

As a defrauded client, Catherine W. Isley feels empowered to recommend that former funeral home proprietor Paul Stella be sentenced to decades of supervised work release to pay back the most vulnerable senior citizens he bilked.

Isley, an 85-year-old retired real estate broker now living in York, Pa., lost $8,400 that was intended to cover burial costs for her and her daughter. The judge will get her recommendation in writing, Isley says.

"I don't want this man to get off with a smack on his wrist," she said.

Using a cane, Isley walked into U.S. District Court in Baltimore with a small crowd of victims to catch Stella's appearance yesterday.

The former funeral home director pleaded guilty to a single count of bank fraud and faces up to 30 years in prison. But federal investigators say Stella cheated more than 175 former clients out of more than $900,000 from their "pre-need" funeral accounts.

"In an outrageous abuse of trust, he stole from people who took steps to plan and pay for their own funerals," Rod J. Rosenstein, the U.S. attorney for Maryland, said in a statement.

Stella and his attorney, assistant federal public defender John H. Chun, declined to comment as they left the courtroom yesterday afternoon.

The number of people who pay for their funerals ahead of time is growing. Funeral directors promote the practice as a responsible way for elderly clients to plan ahead without leaving the financial burden to their families. Industry watchers estimate that up to one-third of all funerals are prepaid.

But the AARP recommends that its 35 million members over age 50 steer clear of prepaid funerals. Many consumer advocates agree, cautioning that a patchwork system of laws across the states fails to protect customers who dole out funds years before their deaths.

In Maryland, authorities say Stella exploited his clients' faith in him.

From his funeral home in the 7500 block of Harford Road, Stella persuaded customers to deposit prepaid funeral expenses in accounts at a bank and let him serve as a trustee, according to court documents filed with his guilty plea. After receiving money, authorities said, funeral home employees opened prepaid funeral expense accounts at Madison & Bradford Savings and Loan and its successor, Madison Bohemian Savings Bank.

But starting in June 2004, Stella forged customers' names and closed 111 of their bank accounts, investigators found. The 43-year- old from Forest Hill admitted that he endorsed the bank checks worth about $530,000 to himself and redeposited the proceeds into accounts that he controlled. Stella withdrew the money to gamble in Atlantic City and Las Vegas, prosecutors say.

In a second scheme, authorities say, Stella falsely assured 75 customers between 2003 and 2006 that he would safeguard their money and hold it in trust so it would be available to pay for their funerals when they died. Instead, according to his plea agreement, Stella cashed or deposited more than $370,000 of the customers' money into his personal and business bank accounts.

Eventually, customers started to ask questions and complained to the State Board of Morticians. When the board initiated an investigation, Stella asked one of his employees to take business files home and later lied to investigators, saying that prepaid funeral expense account funds had been reinvested in life insurance products.

The board suspended Stella's license on Nov. 30, 2006.

As part of his plea agreement yesterday, Stella agreed to pay restitution for the full amount of victims' losses, but how much his customers will receive is unclear. The funeral home is closed; his personal funds were so low that the court assigned a public defender to represent him.

Chief Judge Benson E. Legg scheduled a sentencing hearing for 10 a.m. Jan. 10.

Among the victims in court yesterday was Dolly Baliko, 70, of Aberdeen, who wrote a $6,000 check to Stella on Oct. 5, 2005, to pay for her funeral.

"He was a talker," she said. "He made it sound like the right decision."

She had seen other family members struggle with relatives' funeral expenses. Baliko wanted to spare her children that pain. But when her daughter saw a story in the newspaper about Stella's schemes, the retiree was floored.

Now, Baliko said, "I just want him punished."

matthew.dolan@baltsun.com

Funeral planning

Here's what the AARP recommends for its members thinking about planning for a funeral:

"In the past, some people lost money when companies were involved in fraud, bankruptcy or mismanagement of the funds. Before you make a commitment, find out where your money will be kept and what the terms are. Ask the provider what will happen if you move and wish for the funeral to be elsewhere. Can you transfer the contract to a new city or get a refund?

"Even if you don't prepay the funeral provider, there are many ways to set aside the money for your funeral. You can use a separate account, such as a certificate of deposit. You can create a shared bank account with someone close to you, who will use the money for your funeral."

[Source: AARP Web site]

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