Wyuka Cemetery will reimburse the accounts of several hundred people who purchased pre-need funerals in the early 2000s, according to a report from the Nebraska Department of Insurance.
NANCY HICKS / Lincoln Journal Star | Posted: Saturday, February 16, 2008 6:00 pm
Wyuka Cemetery will reimburse the accounts of several hundred people who purchased pre-need funerals in the early 2000s, according to a report from the Nebraska Department of Insurance.
The pre-need trust accounts were sold by Stewart Enterprises when the national corporation ran the funeral home at Wyuka. The money was transferred to the Wyuka public charitable corporation when it purchased the funeral home in 2002.
When a person buys a pre-need funeral plan, the money is deposited in a trust managed by a trustee, often a bank. The Department of Insurance oversees these trust accounts.
Stewart Enterprises paid the correct amount to Wyuka, about $445,000 for the pre-need trust accounts. But about $20,472 of the pre-need funding was not deposited into the individual accounts after the sale to Wyuka, according to the Insurance Department examination released Friday.
The department could not piece together why Wyuka officials had not put all the money into the trust accounts, legal counsel Joel Green said.
“All we could determine is that the funds were missing,” he said.
There was no basis for Wyuka to retain any of the pre-need funds, according to the report.
In addition, about $5,786 was not accounted for when Wyuka purchased insurance policies in 2003 to replace more than 90 pre-need trust accounts, according to the report.
Wyuka Cemetery has added the money as a liability to each trust account and will repay the money plus 5 percent interest per year when the individual owning an account has died or moved the policy to another cemetery or funeral home, according to the report.
Auditor Mike Foley noted problems with the pre-need accounts in his late January report on the state-chartered Wyuka Cemetery. The auditor’s investigation also revealed that a Wyuka employee, accountant Todd TerMaat, allegedly embezzled about $42,000 from the cemetery. Foley suggested the trustees attempt to determine whether TerMaat was involved with the pre-need shortage.
The auditor’s report also noted that both TerMaat and Chief Executive Officer Mike Hutchinson, employed at Wyuka from 1995 through March 2004, had criminal histories involving theft. TerMaat had two criminal convictions for felony theft, and Hutchinson participated in a pre-trial diversion program as a result of a theft charge.
Hutchinson reimbursed the cemetery in 2004 for pre-need services he purchased but records didn’t indicate any payment, according to the auditor’s report. Hutchinson reimbursed the cemetery this year for a land exchange in which he and his wife were paid for land that should have been titled to Wyuka, the auditor has reported.
The Insurance Department report did not describe any potential criminal activity related to the pre-need funds.
The department provided information to other agencies but did not request a State Patrol investigation, Green said.
The money that should have gone into the trust fund was deposited into Wyuka’s general operating account, said Jeff Schumacher, chairman of the three-member board of trustees.
“I do not believe any money is missing,” said Schumacher, who was not on the board at the time the problems occurred. He said he was not aware of anything that would trigger a criminal investigation.
This was the second insurance examination of Wyuka in the past six years. The department looked at Wyuka’s pre-need trusts through October 2001. The more recent examination looked at records between then and Dec. 31, 2006, according to the report.
The recent examination also described several problems that had been detailed in the 2001 report but not completely corrected.
* Pre-need trust funds were not always deposited with a trustee within the 60 days of purchase, as required by state law.
* Pre-need agreement files did not always contain all of the required documents.
* The Wyuka trustees have agreed to obtain a letter of credit from a lending institution to cover more than $26,000 liability relating to the pre-sale of monuments and markers. A letter of credit lapsed between the two insurance department examinations.
Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.