Tag Archives: Lawsuit

ED HILLE / STAFF PHOTOGRAPHER

Stonemor Might Be Writing Its Own Obituary

By by Laura McCrystal, Staff Writer for Philly.com 

When the Archdiocese of Philadelphia two years ago announced plans to lease its 13 cemeteries to a private company, the deal was heralded as one to help the church recover from a dire financial situation.

Now, the Bucks County-based StoneMor Partners LP could be facing money problems of its own.

Its stock plummeted in the fall after the company slashed its quarterly dividend to shareholders. Investors claim in lawsuits they have been misled. Some municipalities and school districts are locked in battles with StoneMor over property taxes on the cemeteries.

The changes are worrying investors and giving new ammunition to local Catholics and funeral directors who in the past complained about aggressive sales tactics by the company, which oversees about 7,000 Catholic burials a year in the Philadelphia region.

“We just don’t want to see consumers taken advantage of if this company gets in even more financial distress,” said Paul Cavanagh, a director at Cavanagh Family Funeral Homes in Delaware County.

StoneMor executives have acknowledged a cash-flow problem. But the archdiocese calls its relationship with StoneMor a positive one. And both sides declare the partnership, locked in for decades, to be a success.

“Other than the cash drain, which we had anticipated, it’s a terrific acquisition, and we’re hoping to find other archdioceses that are willing to partner up with us,” StoneMor CEO Larry Miller told investors during a conference call in December.

To bring in more cash, StoneMor has started burying empty vaults purchased by Philadelphia-area Catholics who have not yet died — a move that allows it to access money otherwise held in a trust until someone is buried. And the company plans to open its cemetery gates to non-Catholics.

In 2013, the Archdiocese of Philadelphia, which had always run its cemeteries, handed operations over to StoneMor, a publicly traded firm that owns or manages 317 cemeteries nationwide.

The 60-year lease called for the company to pay the church $89 million over 30 years. In return, StoneMor maintains the cemeteries, arranges burials, and sells plots, vaults, and caskets.

Within months of the deal, some local Catholics and funeral directors began complaining that StoneMor was misleading or harassing mourners with aggressive sales tactics at a time when many are most fragile or vulnerable.

Miller maintains such complaints were stirred by funeral directors simply concerned about new competition in selling caskets and burial vaults.

Ken Gavin, a spokesman for the Philadelphia Archdiocese, said the number of complaints that come in are largely consistent with what the archdiocese saw before leasing the cemeteries. He said church officials maintain  “a positive working relationship” with StoneMor and have a right to inspect its records and monitor compliance with terms of the deal. “We communicate with them regularly regarding the cemeteries,” Gavin said.

Last year, StoneMor reported a decrease in cash flow, cut its dividend, and became the target of investor lawsuits.

Seeking to ease shareholder concerns, StoneMor executives used the December conference call to lay out plans to bolster their sales force and increase cash flow.

One solution they explained: Getting more money from Philadelphia-area Catholics before they die.

State law requires funds from cemetery sales made ahead of a person’s death to be held in a trust until a vault is delivered and installed, which traditionally occurs after the death. StoneMor has a practice of burying those prepurchased vaults at the cemetery long before the intended occupant’s death, giving it access to the trust funds.

In its call to investors, the company said it would begin burying the 3,700 vaults it sold in the last two years to Philadelphia-area consumers to cash in on $8 million in trust funds.

Miller defended that practice in an interview last week as “the right thing to do” because, he said, buried vaults secure and reinforce the ground at the cemetery.

“We did make a very conscious decision that we were not going to install vaults (in the Philadelphia-area cemeteries) for two years,” Miller told investors in December, according to a recording of the call posted on the firm’s website. “We wanted to make sure that we were supported by the Catholic families, and we are, and we’re now installing those.”

It’s not a fine-print issue. When StoneMor customers sign prepurchase contracts, they also sign paperwork authorizing delivery and burial of their empty vaults before they die, the company says.

Still, State Sen. Tommy Tomlinson (R., Bucks), who is a funeral director, said he believespre-delivery of vaults does not follow the law’s intent: to protect the consumer and keep their money safe until they need to be buried “They certainly are violating the spirit of the law,” Tomlinson said, “and they are not being consumer friendly.”

Sen. Tom McGarrigle (R., Delaware) introduced a bill last session that would have required all prepurchase money be kept in a trust until a person’s death. It passed the Senate but stalled in the House. He plans to reintroduce it this year.

“My goal is to ensure that merchandise which consumers purchase is available to them and in the condition they expect it to be when the time comes for it to be used for its intended purpose,” McGarrigle said in a statement last week.

Miller dismissed the opposition over burying empty vaults as a tactic from funeral directors frustrated that StoneMor is cutting into their business.

“When we took over the archdiocese cemeteries, we started to sell the merchandise, and that inflamed a handful of funeral directors,” he said. “And they’ve been fighting it ever since, trying to protect their turf.”

Miller also told investors in December that additional cash would come from opening burial gardens in the Philadelphia area Catholic cemeteries for non-Catholic Christians. In the interview last week, he said he still had plans to do so but provided no timeline for that move.

Gavin, the archdiocesan spokesman, said any such move must be approved by the archdiocese, and StoneMor “has not yet sought permission to do so.”

Some investors have expressed skepticism about StoneMor’s plans.

“There’s been no specificity, it’s basically been trust us, things haven’t worked so well recently, but they’re going to get better,” one, Jeffrey Schwarz of Metropolitan Capital Advisors, said in the Dec. 14 call. “I could be wrong, but I for one would love to see a little bit more meat on the bones.”

One lawsuit, filed in Philadelphia on behalf of a shareholder by the Berwyn-based Weiser Law Firm, calls StoneMor’s business model “a financial shell game” based on making false and misleading statements.

That and other lawsuits allege that StoneMor had to amend its financial reports last year because the Securities and Exchange Commission required it to stop relying on flawed metrics, and that their new reports resulted in lower revenue and distributable cash flow.

Miller said last week the lawsuits had “no merit.” He characterized investors’ allegations as confusion over StoneMor’s business model, because it relies heavily on pre-need sales.

“We have an enormously strong balance sheet,” Miller said. “The company is a very, very strong company.”

Gavin, the spokesman for the archdiocese, said the lease with StoneMor allows church officials to monitor the company’s records and compliance.

It also requires StoneMor to pay property taxes on the cemeteries where they are taxed, although the archdiocese must shoulder some of the tax burden for the first 11 years.

One such battle is ongoing in Delaware County, where the Marple Newtown School District claims the $1.85 million assessment for the 321-acre SS. Peter and Paul cemetery should be millions more than it is, and StoneMor claims the property deserves tax exemption as a religious worship site.

Similar cases are underway in Montgomery County, where StoneMor is challenging the county board of assessment’s decision to revoke cemeteries’ tax-exempt status after they were leased to StoneMor.

Miller attributes the company’s decrease in cash flow to leasing the Catholic cemeteries in Philadelphia and costs associated with building up a sales force here. Despite the ongoing litigation and criticism, he said StoneMor officials remain confident and hope to make similar deals with other Catholic cemeteries across the country.

“We make attempts periodically to reach out,” Miller said, “because there’s a lot of archdioceses in financial trouble.”

'12 Philly.ComLogoSee original article, “Company operating Philadelphia Catholic cemeteries faces lawsuits, criticism” on Philly.com

Eden Memorial Park CEM7944_1420932474

Big For-Profit Cemetery Owner Settling Suits with Jews Who Say It Dug Up Their Loved Ones’ Bones

By Julie Masis, January 17, 2017

Not long ago, Jean Bergman, an 88-year-old retired manicurist, received a check for $1,000. She deposited it without giving it too much thought.

“I wasn’t told any of the details,” she said.

The check arrived in connection with her husband’s grave at Eden Memorial Park, a Jewish cemetery in Los Angeles. The cemetery has been sued twice after allegations that gravediggers were instructed to throw human bones interred there into a dump pile to squeeze in more graves and thereby maximize profits.

“They were basically putting in plots too close to one another. As they would dig a grave, it would break the outer burial container, and the bones would spill out,” said Gary Praglin, the attorney who represented Bergman and about 150 other plaintiffs in the lawsuit, which was settled in 2015. “They didn’t tell anybody until groundskeepers wanted to go public.” The groundskeepers, Praglin said, “did describe it as a bone pile, a big pile, horrible.”

The total amount of the settlement is confidential and could not be disclosed, Praglin said.

Service Corporation International, the for-profit corporation that owns Eden Park Memorial, is the largest cemetery company in the United States. Its officials would not comment on this lawsuit – or on a previous lawsuit involving the same cemetery and identical allegations, which the company settled for $80 million in 2014. The second lawsuit covered those whose loved ones were buried in the cemetery before 1985, when SCI purchased the cemetery, and after 2009, when the first lawsuit was filed. This time period was not included in the original lawsuit. Those who joined the second lawsuit, therefore, were claiming that SCI continued to disturb established graves and to dispose of bones even after the first suit was filed.

The State of California’s Cemetery and Funeral Bureau inspected Eden Memorial Park and found no evidence of wrongdoing, according to the spokeswoman for the state’s Department of Consumer Affairs, Veronica Harms.

SCI also admitted no wrongdoing. Yet the company settled the suit instead of going to trial. And many in the Jewish community are concerned, because SCI has also been sued in connection with similar charges at other Jewish cemeteries in other parts of the country. The company has acquired more Jewish cemeteries in recent years.

“The tradition is that the Jewish community should own our burial sites, not non-Jews,” said David Zinner, executive director of Kavod v’Nichum, a Maryland-based not-for-profit organization that manages the website Jewish-funerals.org. When a corporation owns a cemetery, once all the plots in that cemetery are sold off, the company will no longer take care of the burial ground, Zinner said.

“The Jewish community will have to take care of it. It will be our responsibility regardless,” he said. “Why should we have SCI making money while it’s profitable, and then the burden is back on the Jewish community?”

At the end of 2014, SCI acquired Stewart Enterprises Inc., which was then the second-largest provider of cemetery and funeral services in the country, making SCI a mega-company in the industry. In the process, SCI also came to own many Jewish cemeteries – often leaving the original names of the burial grounds unchanged, according to the Reform and Reconstructionist rabbi Joe Blair, from Harrisonburg, Virginia.

Because of this, many people are unaware that the Jewish community no longer owns their local cemetery, the rabbi said.

Blair said he estimates that more than 60% of Jewish cemeteries in the United States are now owned by SCI.

Zinner compared SCI to a predator that is now getting ready to swallow more prey.

“They took a big bite, and now they’re digesting,” he said.

SCI declined repeated requests by the Forward for comment.

Eden Memorial Park in California is not the only case in which SCI has ‘Why should SCI make money while it’s profitable, and then the burden is back on the community?’been sued in connection with Jewish cemeteries.

In May, a Florida court ruled in favor of the company after a Jewish woman sued it because non-Jews, including a Christian pastor, were buried next to her husband in the SCI-owned Menorah Gardens & Funeral Chapels cemetery in Southwest Ranches, Florida. The widow, Orna Mammon, argued that because she bought a grave in a Jewish cemetery, she had a reasonable expectation that non-Jewish people would not be buried just feet away from her husband. But she lost the case. When reached by telephone this week, Mammon would not speak to a reporter, for fear that the company might sue her for lawyers’ fees, she said.

During the trial, Mammon was questioned about where in the Hebrew Bible it says specifically that non-Jewish people cannot be buried next to Jews. The court ruled in favor of SCI because resolving the case “would require courts to determine what constitutes Jewish custom,” according to a Washington Post story.

In an older lawsuit against SCI in Florida, the company was sued after bones were discovered in a dump pile. SCI originally claimed that these were animal bones, according to a 2002 Associated Press story. But DNA tests confirmed that the bones belonged to some of the people who should have been buried in the cemetery. The cemetery manager, Peter Hartmann, committed suicide when the story broke. The lawsuit, which covered two Menorah Gardens cemeteries, in Fort Lauderdale and West Palm Beach, respectively, was settled in 2003 for $100 million.

At one point, local rabbis held meetings to discuss taking over the Menorah Gardens cemetery in West Palm Beach, said Rabbi Leonard Zucker, chairman of the Cemetery and Funeral Practices Committee of the Palm Beach County Board of Rabbis. But that never came to be, because “we couldn’t afford it,” Zucker said.

Still, Zucker, who is a Conservative rabbi, is not convinced that any wrongdoing took place. He said the mix-up may have been the fault of the company that owned the cemetery prior to SCI purchasing it.

“I had a number of people in my congregation who said, ‘I’m going to sue SCI.’ ‘What for?’ ‘Because everybody is suing them.’ That’s the sort of thing that was happening,” Zucker said. “SCI has deep pockets – so people have the tendency to sue the people with the deepest pockets. That’s why SCI gets sued so much.”

This statement doesn’t sit well with Sheldon Cohen, an Ohio dentist whose father’s bones were found in a dump pile at SCI’s Menorah Gardens cemetery in West Palm Beach. DNA tests confirmed that the bones belonged to his father, Hymen Cohen, an air force veteran who passed away in 1983.

“It was awful. A pretty horrifying thing,” Sheldon Cohen said. Cohen was compensated in the lawsuit, but he said the money does not come close to rectifying what happened.

“It was just too painful to keep proceeding with it,” he said.

Ellen Kleinert, whose husband is buried in SCI’s Fort Lauderdale cemetery, is also dissatisfied. Kleinert was not compensated, and this was because she refused to allow SCI’s staff to disinter her husband’s grave to conduct a DNA test. Disturbing the dead is against Judaism, she explained.

“The way we see it is, we lost my husband, the father of my children, twice. We don’t know where his body is,” she said.

She is working on a documentary film to expose what happened in the cemetery. But back in California, Bergman, whose prepaid grave is waiting for her under a tree next to her husband in Eden Memorial Park, doesn’t know about the DNA tests in Florida. As far as she is concerned, her husband, an architect who died at the age of 83 from Alzheimer’s disease, is still resting in peace on the same spot where he was laid to rest.

Though she joined the lawsuit and accepted the settlement payout, she told the Forward: “Truthfully, I’m not convinced the cemetery did something wrong. Personally I just don’t see it.”

Source: Forward.com