Stella, 43, of Forest Hill admitted that he endorsed the bank checks worth about $530,000 to himself and redeposited the proceeds into accounts that he controlled. He 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 inquiry, 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.
"He engaged in lies, lies and more lies," prosecutor Harry M. Gruber said in court yesterday.
The assistant U.S. attorney said many of Stella's victims, including elderly pensioners and the terminally ill, were not able to diligently check to see whether they continued to receive bank records showing that their funeral accounts were still funded.
One victim "was in a position where he could be convincingly deceived," Gruber said, adding that Stella "knew the types of individuals he was dealing with."
Stella's defense attorney, Joseph A. Evans, countered that many of the funeral arrangements had been completed by family members who were not infirm. Time and time again, Stella continued to bury clients even as the finances of his business were collapsing around him, according to Evans.
To Stella's victims, more was lost than money. One of Stella's victims spoke at yesterday's hearing about the indignity of deceiving her dying husband.
He thought the funeral had been paid for and she told the federal judge that she didn't have the heart after 41 years together to tell him that the account had been emptied.
Another spoke of losing so much money from Stella's scam that all she had to hold her husband's ashes was a plain, black plastic box instead of the fancier urn she could no longer afford.
Stella's brother tearfully sought to defend his family's name, telling the judge yesterday that the shocking crime was "the mother of all first-time offenses."
"I had no reason to believe that my brother was capable of this," he said, adding that he believed Paul Stella stole principally to keep the ailing business afloat and perform funerals even after his license was suspended.
At the end of yesterday's three-hour proceeding, a somber Stella stood before the judge and expressed sorrow and regret to his family and to his former customers.
"My business kept losing money and my gambling losses grew," he said. But he added, "I'm not blaming someone else," and asked those gathered to "accept my sincerest apologies."
matthew.dolan@baltsun.com
