A St. Louis woman has pled guilty to her role in a massive Ponzi scheme that billed itself as a nationwide leader in the sale of prearranged funerals. Sharon Nekol Province, 69, of Baldwin, Missouri, entered into a plea agreement with prosecutors in advance of a pending August trial date, pleading guilty to six federal charges, including wire fraud, mail fraud, and misappropriation of human premiums. Province is scheduled to be sentenced on November 7, 2013, before United States District Judge Jean Hamilton, and prosecutors have agreed to recommend a maximum sentence of three years in prison, with the possibility that Province could avoid prison time through a sentence of probation.
According to authorities, National Prearranged Services ("NPS") was created in 1979 and based in Clayton, Missouri. Beginning in 1992, and through the use of its two subsidiaries, Lincoln Memorial Life Insurance ("LMIS") and Memorial Service Life Insurance ("MSLI"), it employed an aggressive sales strategy extolling the idea of pre-paying for funeral costs and playing on fears that family members could be footed with the bill. Potential investors were told that the 'funeral contract' was essentially was an insurance policy ensuring that most, if not all, funeral costs would be taken care of upon an investor's death. After agreeing on the amount of the policy, which often ranged from $5,000 to $10,000, investors were given the option to pay the entire policy in full or through periodic installments. To ensure the safety of investor funds, NPS represented that it would deposit the majority of funds with a third-party trustee, often a financial institution, that would hold the funds until they were needed for funeral services. From 1992 to 2008, about 150,000 people purchased prearranged funeral policies through NPS.
However, many of these representations were untrue. For example, the majority of investor funds were not deposited with neutral third-parties as promised, but instead were retained by NPS. Additionally, NPS borrowed large amounts of the cash surrender value of the insurance policies taken out by investors, which in turn reduced the amount of death benefits that would be available to policy holders. Funds were also used from new purchasers to pay policy premiums on the lives of previous purchasers, as well as for reimbursal of funeral services for earlier purchasers.
In 2008, authorities unsealed a 50-count indictment against six individuals that served as officers, directors, or advisers of NPS, including Province and several members of the Cassity family. Province, who started as an administrative secretary, had risen to serve as secretary of NPS and vice-president of LMIS. Her attorneys portrayed her as much less culpable than her co-defendants, who enjoyed immense wealth from their role in the scheme. For example, James Cassity, who had previously served time for conspiracy and tax fraud violations, purchased several expensive homes - including a Nantucket home he sold to Google co-founder Eric Schmidt for $16 million in 2005. Cassity, who is described by some as the "Bernard Madoff of Missouri," has maintained his innocence.
A trial is scheduled for early August for the remaining defendants.