St. Louis, MO: A settlement has been reached between Pettett Funeral Home individually and Merrill Lynch, Pierce, Fenner & Smith, Inc., et al. totaling more than $40,000,000. The consumer fraud class action (In the United States Disctrict Court for the Southern District of Illinois, CIVIL NO. 09-390-GPM, consolidated with CIVIL NO. 09-1008-GPM and CIVIL NO. 10-1000-GPM) was filed on behalf of funeral directors in the State of Illinois who suffered significant financial losses due to the mismanagement of the Illinois Funeral Directors Association' (IFDA) Pre-Need Trust.
The Trust gathered deposits as prepayment for subsequent funeral services. The funds were to be invested in a manner that would ensure capital was adequately preserved and there would be a small rate of return sufficient to overcome the rate of inflation.
The legal and financial advisors who directed the IFDA' handling of the Tax-Exempt Trust led the association to purchase life insurance policies illegally and in violation of the interests of those persons paying into the Trust. Because of this considerable indiscretion, there was a severe shortfall and funeral directors were left to bear the financial burden of covering the gap between actual funeral costs and the underpayments which were accessible from the Trust. Individuals who had purchased Pre-Need policies and suffered losses when they terminated their accounts and withdrew funds from the Trust are also to receive payment pursuant to the terms of the settlement.
