Funeral insurance company officers indicted for fraud

ST. LOUIS (Reuters) - Six officials of a company that sold pre-arranged funerals were indicted for allegedly diverting as much as $600 million in insurance policy money for personal use, federal authorities said on Tuesday.

Officials said National Prearranged Services Inc preyed on people who wanted to buy policies to insure against their relatives being stuck with funeral bills.

The indictment filed in U.S. District Court accuses the company officials of fraud, embezzlement, money laundering and conspiracy. The company, based in the St. Louis suburbs, stopped selling policies in 2008 after the Texas Department of Insurance forced a liquidation of the firm.

The 50-count federal indictment seeks recovery of money allegedly diverted from the customers' policy payments and used to buy real estate in Mill Valley, Calif., Los Angeles, Nantucket, Mass., St. Louis and Naples, Fla.

Those charged include James Douglas Cassity, 64, who bought the company in 1979; and his son, Brent Cassity, 43, both of Clayton. The others included the former chief financial officer and a former office manager.

The lawyer for the elder Cassity told the St. Louis Post-Dispatch that his client would fight the charges. Lawyers for the other defendants were not available.

The government said the alleged scheme affected about 150,000 people who bought the funeral policies, which are similar to life insurance. Buyers paid from $5,000 to $10,000, which was supposed to cover the costs of the buyers' funerals.

The government alleges the money was supposed to be put in trust but was instead diverted for private use.

The indictment also alleges the defendants borrowed against the policies, something they had no right to do. The diversions allegedly enabled James Douglas Cassity to buy real estate and other companies and to pay personal expenses of his son and family members, according to the charges.

The defendants also face a civil suit in U.S. District Court filed in St. Louis last year by state insurance guaranty companies in Missouri and six other states.

(Reporting by Bruce Olson, editing by Greg McCune and Peter Bohan)