National Prearranged Services: The $450 Million Pre-Need Fraud

National Prearranged Services Inc. (NPS) was a Missouri company that sold prepaid funeral contracts from as early as 1992 until 2008. Customers paid in full, up front. They were told their money would be locked away in a trust or a life insurance policy until the funeral. Instead, NPS took it. A federal judge found that NPS and its linked insurer defrauded more than 97,000 customers in more than 16 states, causing more than $450 million in losses. On 14 November 2013, six people were sentenced to a total of 36 years in prison (US Attorney's Office, Eastern District of Missouri).

The FBI called it a "Ponzi-like prepaid funeral scheme." New customers' money paid for the funerals of earlier customers.

That is the short answer if you searched "National Prearranged Services". If you hold an old contract, or you are thinking about prepaying for your own funeral, the rest of this page is for you. It explains how the money was taken, step by step, and the questions that protect you today.

A contract in a drawer

Think of an older man in Missouri in the early 2000s. His wife has died. He does not want his children to face a big bill and hard choices when his turn comes. So he sits with a salesperson, picks a casket and a service, and writes one cheque.

"It's all taken care of now," he tells his daughter. He puts the contract in a drawer.

Years later he dies. His daughter takes the contract to the funeral home. It has been paid for. Or has it? If the seller was NPS, the money he paid may have been changed on the paperwork, borrowed against, or spent long ago.

This man is a composite, built from what the FBI and the courts describe. But more than 97,000 real customers were in his position. All of them were trying to be kind to their families.

How a pre-need contract is supposed to work

A pre-need contract is a deal to buy your funeral before you need it. You choose the goods and services. You agree a price. You pay now, in one sum or in instalments. The price stays the same, however long you live.

That only works if the money is safe and growing. So US states have rules. The FBI summed them up: depending on the state, the money must go either to a financial institution, to be held in a trust "that could be only used for safe investments (like government-backed securities)," or to a life insurance company, "that would put the funds into a life insurance policy in the name of the customer" (FBI, 17 January 2014).

Think of it like a locked savings box. You pay in. The box is kept by someone independent. Only your funeral can open it.

In Missouri at the time, the seller could keep up to 20% of what you paid. The other 80% had to go into a trust, held by a bank, the federal appeals court explained (Eighth Circuit, 30 August 2021).

NPS found ways to open the box.

Five ways NPS emptied the box

These come from the FBI's summary of the case, the guilty pleas and the appeals court's findings. Each one is a lesson in what to watch for.

1. Change the numbers on the form. Outside Missouri, NPS was supposed to send customers' money to a life insurer. Instead, it altered the applications. The appeals court gave an example: "if a consumer paid fifteen hundred dollars for an insurance policy, NPS would change the amount paid to five dollars, send five dollars to Lincoln, and keep the rest of the money." Lincoln Memorial Life Insurance was an insurer the Cassity family owned.

2. Make itself the beneficiary. The FBI says NPS changed application documents to name itself as the beneficiary. It also converted whole life policies, which last for life, into term policies, which do not.

3. Borrow against the policies. In Missouri, trust money was used to buy Lincoln life insurance policies on customers' lives. Then, "at the direction of NPS, Lincoln routinely issued policy loans to NPS" against those policies, without the trustee's written approval. "This practice depleted trust assets," the appeals court found.

4. Buy other funeral homes' contracts. NPS bought "large blocks" of prepaid contracts that local funeral homes had already sold. It told those funeral homes the contracts would be rolled into life insurance. According to the FBI, that was false.

5. Lie to the regulators. "NPS routinely lied to state regulators about its practices," the FBI said. The company's lawyer later admitted making false statements meant to deceive insurance regulators.

Where did the money go? Into "risky investments, payments for existing funeral claims, and personal enrichment," the FBI said. Paying old funerals with new customers' money is what made it Ponzi-like. It works only while sales keep growing.

The money machine

Reveal, the investigative newsroom, laid out the scale in October 2013 (Reveal, 10 October 2013).

• NPS sold "some 100,000 preneed funeral contracts," according to court records.
• A single contract could cost a fee "that might top $10,000," covering everything "even graveside flowers."
• Through a holding company called Forever Enterprises, the family bought insurance companies, Midwestern cemeteries, funeral homes and a casket importer.
• The receiver later claimed in court that millions were lost to "wholesale looting," with more "siphoned out of the trust accounts."

The family "enjoyed its money," Reveal reported, buying multimillion-dollar properties in Missouri, Florida, Nantucket and Manhattan. Those were the receiver's and creditors' claims in a civil suit.

The machine also had a pressure valve. As long as new contracts came in, old funerals were paid. Customers' families saw a funeral happen and assumed everything was fine. Nobody saw the hole until the selling stopped.

How it ended

In 2007, state regulators began asking questions. In 2008, the FBI received information from several state agencies, and NPS stopped selling (FBI). That same year, Texas forced the company's liquidation (AP, 1 June 2020).

A Texas court put NPS and two Cassity-owned insurers, Lincoln Memorial Life Insurance and Memorial Service Life Insurance, into receivership. A special deputy receiver took charge (Eighth Circuit).

In 2010, Doug Cassity, his son Brent and four company insiders were indicted on federal fraud charges (Reveal).

Who went to prison

All six defendants were sentenced by US District Judge Jean C. Hamilton on 14 November 2013 (US Attorney's Office). Five pleaded guilty. One was convicted at trial.

Person	Role, as described by prosecutors	Outcome	Sentence
James Douglas "Doug" Cassity	Admitted he "organized and led the fraudulent enterprise"	Pleaded guilty	115 months
Randall K. Sutton	Former CEO of Lincoln Memorial Life Insurance	Pleaded guilty	84 months
Brent Douglas Cassity	One-time officer of NPS	Pleaded guilty	60 months
Howard A. Wittner	Attorney for the companies	Pleaded guilty	36 months
Sharon Nekol Province	Former NPS president	Pleaded guilty	18 months
David Wulf	State-required independent investment adviser for the Missouri trusts	Convicted by a jury on 18 counts	10 years

Judge Hamilton called it "an enormous Ponzi scheme" that ran "over 15 years," the St. Louis Post-Dispatch reported. She ordered five defendants to pay restitution of $435 million, and Mr Wittner to pay $10.5 million (Post-Dispatch via Connecting Directors). The paper noted that real repayment to victims "appears remote."

Note the role of David Wulf. Missouri law let large trusts use an independent investment adviser. He was the person meant to protect the trust money. A jury convicted him of bank fraud and wire fraud.

Doug Cassity's history. He was a disbarred lawyer. He lost his law license after pleading guilty to investment fraud in 1982 and was paroled after six months, Reveal reported. He then went into prepaid funerals. Brent Cassity's guilty plea included willfully letting a person he knew had a fraud conviction "exercise significant control" over the insurance companies (US Attorney's Office, 3 July 2013).

Doug Cassity was released early, among federal prisoners freed amid concern about the coronavirus. He was found dead at his home in Clayton, Missouri, in May 2020, aged 74. The St. Louis Medical Examiner's office said he died of apparent natural causes (AP, 1 June 2020).

What they said

At sentencing, the defence lawyers spoke (Post-Dispatch via Connecting Directors):

• Doug Cassity's lawyer said his client did not set out to "build a fraud," but made business choices that were "both wrong and fraudulent."
• Randall Sutton "deeply regrets" what he did, his lawyer said.
• Howard Wittner said he had no intention to harm anyone.
• Brent Cassity apologised. His lawyer said much of the illegal activity was directed by others.
• Sharon Province's lawyers said she was "at the very bottom level" of the scheme and was president "in name only."

Brent Cassity later wrote a memoir, Nightmare Success, and spoke about the case on podcasts. In a December 2021 interview, he said he had left the insurance side of the business to his father: "I made a mistake. I didn't pay attention to what I should have been paying attention to." He also defended the company's record as he saw it: "we went 30 years, paid over a half a billion dollars in death claims and always paid them on time" (My Favorite Mistake, 9 December 2021; the episode transcript is automated).

That last claim shows exactly how a Ponzi-like scheme feels from inside. Funerals were paid. The problem was where the money came from.

The bank that was supposed to be watching

Missouri law required a bank to act as trustee. For seven NPS trusts, from 1998 until May 2004, that bank was Allegiant Bank, which later became part of PNC (Deathcare Law blog, 30 July 2019).

The receiver and the state insurance guaranty associations sued. In 2015 a jury awarded $355.5 million in compensatory damages and $35.55 million in punitive damages against PNC. The appeals court threw that out in 2017. It said the claims were about trust law and should have been decided by a judge (Eighth Circuit, 30 August 2021).

After a bench trial, the judge found that Allegiant had breached its duties. As the appeals court summed up the evidence, the bank had agreed "to relinquish control over the Lincoln policies and to exercise no oversight of them," and had "transferred custody of the policies to NPS." It found the trust losses during Allegiant's time were $72,287,615. With punitive damages and interest, the award came to about $100 million. On 30 August 2021, the appeals court affirmed it in full.

The lesson for you is plain. A trust is only as strong as the people watching it. In this case, the watchers did not watch.

Who paid the bill

The losers were not only customers. The US Attorney listed three groups of victims: individual customers, funeral homes and state insurance guarantee associations.

Under the liquidation plan, the state guaranty associations agreed to pay death benefits on the policies to funeral homes. They would cover the face value of the policies, the Post-Dispatch reported. But those policies were supposed to grow to cover full funeral costs. Undertakers told the paper they would have to cover the difference and might lose money on each funeral.

One Missouri funeral home owner told the court his business had lost $3.2 million to $4 million. "All the partying and carrying on that they did … that was our money," he said.

The FBI's St. Louis chief made a wider point: "This case affects us all because part of the life insurance premium we pay goes to cover such loss from fraud."

What changed

Missouri rewrote its pre-need law in 2009, in response to the NPS collapse. The old law, Chapter 436, was repealed that year (Eighth Circuit). Under the new law, the state board of embalmers and funeral directors must examine every pre-need seller at least once every five years, a deathcare lawyer who advises the industry explained in 2016 (Deathcare Law blog, 13 March 2016).

That helps in Missouri. But each US state writes its own rules. The FTC's warning still stands: "protections vary widely from state to state, and some state laws offer little or no effective protection" (FTC).

Before you sign: seven questions

The FTC suggests several of these questions before you prepay. We added others that the NPS case shows are needed, and what each one protects you from.

Ask this	Why it matters
What exactly am I paying for: goods only, or services too?	A "casket only" contract leaves your family with the rest of the bill
Where does my money go: a trust or an insurance policy? Who is the trustee or insurer?	NPS sent money to insurers it owned, and controlled the paperwork
Can I see proof that my payment reached the trust or insurer, for the full amount?	NPS changed $1,500 payments to $5 on the forms
Who is the beneficiary of any policy?	NPS named itself the beneficiary
What happens to the interest on trust money?	Growth is what keeps a fixed price affordable
Am I protected if the firm closes?	Guaranty associations paid face value only; families and funeral homes absorbed the rest
Can I cancel for a full refund, or move the contract if I move?	Some plans transfer only at extra cost, the FTC warns

And one more of our own: check the seller with your state regulator. Search for your state's funeral board or insurance department. Ask whether the seller is licensed for pre-need sales and whether there are complaints.

If you hold an old NPS contract

NPS has been in receivership in Texas since 2008, and the main liquidation arrangements were made more than 15 years ago. If you or a parent still hold an NPS or Lincoln Memorial contract, contact your state's insurance department and the funeral home named on the contract. We could not find a current public claims page, so we will not guess at one. Keep every original document.

The honest lesson

Prepaying for a funeral is a gift to your family. The NPS customers were right to want that. They were let down by people who controlled their money and by the safeguards meant to watch those people.

Death is the one appointment we all keep. Preparing for it calmly is wise. Here is how to do it after NPS:

• Decide your wishes first, pay second. Write down what you want. You do not have to prepay to plan.
• If you prepay, follow the money. Get the trustee's or insurer's name, and proof that your full payment arrived.
• Tell your family where the contract is. The FTC warns that if family members do not know, "they could end up paying for the same arrangements."
• Review it every few years. Firms change hands. Check the seller is still licensed.

Our free funeral cost estimator shows what a funeral usually costs where you live, so you can judge whether a contract price makes sense. Our free end-of-life readiness check shows what is still missing from your plans.

If you want worksheets, the Complete Planning Library includes a funeral and memorial planning sheet and a "where to find everything" list, so your family knows what you bought and from whom. It costs $39, once, with a 30-day refund. It holds no money and sells no contracts. It makes your choices clear.

The same weakness showed up in the UK, where 46,000 people lost most of what they paid into one plan provider. Read Safe Hands Funeral Plans: Where 46,000 People's Money Went. For the rules on funeral prices, see Funeral Home Price Tricks: What the FTC Funeral Rule Says.