CemOps.com Blog

Recession Proof Industry?

There is evidence that the death care industry may not be as recession proof as it has thought.  An article out of the San Francisco Bay Area tonight, concerning the impact the recession is having on cemeteries there now, touches on the present circumstances of locations that have invested heavily in their cemeteries only to learn with the recession that pre planning has slowed due to the present economy.

Considering the recent wave of layoffs and cutbacks, has it occured to you that at need may also become affected by these trends as well?  Payment for at need services may not be available for many, given individual circumstances.  The industry has learned from the past that this is required for a reason, but can the industry gamble on this continued practice if our economy continues to slide?

It is CemOps belief that the death care industry should be looking at alternative offerings and plans in the event this contiues for a protracted period of time.  Those that find ways to provide the necessary services and make it possible for affected families to pay (other than cash now or nothing) will survive.  Those that don’t may find themselves in a position not unlike those families that have been laid off or cut back on salaries, etc.

Another obvious item, is shoring up policies and procedures, and maintenance budgeting and practices to lower costs while maintaining high levels of service at the same time.  This is a challenge that isn’t going away anytime soon.  It will take creativity and structure to see us through some tough times ahead.

Part 5 of CemOps Cemetery Reports

By now, you must be wondering what has happened to this situation.  Well, it is ongoing with no end in sight, and more charges have been filed.  Now we must discuss the greatest risk you run if you don’t absolutely account for every dollar of perpetual care trust funds, sometimes referred to as endowment care funds.

You may be one of the better operators in the industry, but if you are off on your trust accounts you run the risk of exposure to extensive investigations.  Insuring your location office managers and operations staff fully understand all the principles and tasks involved in your individual state requirements is key to insuring your safety during an audit of any of your locations.

This may appear redundant or elementary to many who read this, but so many have been found to be off and opened themselves to scrutiny which feeds audit agencies to look deeper into an industry that is already under the microscope.  The risks of being off is a minor portion of the overall issue.  It is much about how your location personnel handle the audit as it is the outcome.  Do your people at the location level know what to expect during and audit?  How to act and what is expected of them without making them uncomfortable?  Do you know what is required to prove a difference in the endowment care deposit versus the contract retail fund deposit requirements?  Does your local operations staff?

Many audits have gone south when the location personnel don’t have a clue what to expect or how to act.  Many audits have gone south when location personnel make statements out of ignorance that cause doubt in the mind of the auditor.  You may be on your game at the “home office”, but if the location personnel are not-you could be in trouble.

If you have utilized trust funds of any kind, replenish them NOW!  The upcoming lessons to be learned from recent indictments will teach you if you are watching, that this risk is hardly worth it.  Every time an owner is put under scrutiny causes a ripple effect in the industry.  Auditors from different states do watch the records to learn from audits around the country.  Don’t be one of those that thinks an audit is simply an accounting.  Little things can come out of an audit that you could be completely unprepared for.  Train your personnel thoroughly.  If you don’t know what to train them on, contact CemOps.  We can assist with the proper training, not only for appropriate trust accounting and deposits, but employee behaviors that can save you unnecessary grief at the time of an audit.

Trust accounts are to be set aside in a proper third party trust account.  Don’t get caught doing anything else with them.  It could mean your reputation and freedom.  States are getting more proactive on this issue, so don’t get caught being an abuser.  If you need help, call.  Help is available, and is always better than the alternative.

The outcome of the case mentioned in the past 5 entries is a distant reality yet to come.  This will be the last post on the subject until an outcome is upon us.  Be safe, be smart, be legal. 

Another Avoidable Cemetery Dispute

Checking the latest news link:  http://www.gazettetimes.com/articles/2008/10/26/news/community/1aaa02_twinoaks.txt

Yet another article in the news about a cemetery with avoidable issues.  This particular article speaks to a subject CemOps has dealt with for 4 years now.  The need for requirements of due diligence prior to buying or selling a cemetery.  This is another case where that requirement may have precluded a business failure and unnecessary additional family grief.

The former owner is suing, stating the new owner defaulted on the note for the purchase of the cemetery.  One of the new owners contends the former owner “intentionally misrepresented that the cemetery had certain characteristics, income potential, and contractual rights, trust funds and physical characteristics that were not true.”

If ever there was a cry for due diligence this is it.  The former owners counter this claim by stating:  “They bought the place subject to their own audit, liabilities and all.  They had the opportunity to inspect the whole operation, and there are routine audits by the board that oversees this business.  There was never a problem when we ran the place.”

Now we look at the other issues here, covered by the story, but not covered by the story.

According to accounts by a family, neither owner reacted properly regarding markers sold and not delivered to the families that purchased them.  Another issue here, is a funeral director (the new owner), who is not a cemeterian by trade, and trying to run a cemetery.  One of the most complex businesses to operate properly, with laws and regulations that would rival any business in the world.  This funeral director started with the cemetery as a lessee, who built a funeral home on the property.  This funeral experience does not automatically qualify the new owner to operate such a business.

Now, this new owner who is in default of his note apparently, and in foreclosure proceedings-has the audacity to look to the state to step in and take ownership!  This is possibly the most offensive portion of this entire story!  Buy a cemetery, screw it up, and expect the state to come in and save the day.  This particular issue is playing out in other states, and if someone doesn’t get involved from a legislative position this is going to grow as a problem.  Five cemeteries were abandoned in Mississippi last year.  The state has told the municipalities they must take control of these locations.  Most municipalities are not prepared for such an undertaking anymore than the previous owners that failed and ran from the situation.

If the states were to get involved, it is CemOps hope that these states would pass legislation forcing proper due diligence and disclosure before a change of ownership can take place.  Stated numerous times in the past, by CemOps, is the simple fact you are required to satisfy more requirements to buy a house than a cemetery.  Cemeteries are much more complex, and with the perpetuity aspect of these businesses, requirements should be much more involved than buying a house.

And lastly, here is yet another story about inappropriate cemetery ownership making the news, causing another black eye for a profession that just cannot afford many more.  The professional and good people in this industry do not deserve the avoidable negative press achieved by these “fly by nights” who keep making the news. 

It is time someone in these states stand up and make moves necessary to prevent this sort of occurence in the future.  The state has no business taking these locations on, but they do have a duty to make changes in legislation to preclude further issues of this type. This isn’t rocket science, but it is getting out of control.  CemOps can help, but it takes interested parties to bring CemOps into the fold.

“You can lead a horse to water, but that tail is not a pump.”

Part 4 of CemOps Cemetery Report-Do You Own The Liabilities Alone?

In Part 4 we will point out a little known avenue for decreasing liabilities from a purchase in question form.

You buy a cemetery, and discover a number of issues.  Let’s say, for the sake of education a family walks in and asks, “who is buried in our spaces?”  You research the paperwork and discover what went wrong.  You tell the family this problem is from prior ownership, and think you are in the clear.  The family has talked to someone, and fire back at you that you own the liabilities now, and are responsible for not only the cure, but the costs-including possible court costs.

Do you know there are circumstances that may give you relief from some or all of these costs?  Do you know what to look for to find these avenues of relief?  Do you know what the most common causes of risk are?  Do you know what the most common lawsuits are from these liabilities?

First, you need to know how to avoid being in this position.  Second, you need to insure your location management team is trained on procedures for handling these situations.  It isn’t as simple as you may think, and improper handling has been the root cause of events making it to trial.  Third, do you know how to spot items that share liability?  Do you know a former employee or owner can also be liable, even beyond the sale?  Why should you suffer all the losses over the sins of others?  And definitely don’t ignore these issues out of fear, they will not go away.  Meet them head on, realizing it will strengten your position with employees, the families you serve, and the community in which you do business.

CemOps has discovered over time the means to spread liability.  It isn’t always the case, but you need to know what to look for and how to react to that information once known.  Then, you need to know how to proceed once identified.

No cemetery manager should operate a location without proper training in this most important aspect of operations.  No cemetery owner should, either.  CemOps can teach these methods of research and communications, saving you possibly millions of dollars.

Go to our Contact Us page or Forms page and fill out the information.  The cost of this service is minimal, considering the peace of mind you will derive from this most important management training tool.  In the previous 3 posts, this is realized by the cemetery owner in the series, and he is not sitting alone on the liability front.  You shouldn’t either.

Part 3 Of CemOps Cemetery Report-Imagine You Own A Cemetery……

During investigation of 72 legal files and numerous interviews, CemOps has discovered the following in preparation for expert witnessing:  1.  There was a trustee in place and funds were never in ownership control.  2.  There was an accredited Investment Advisor from a worldwide bank in place.  3.  Another Registered Investment Advisor, working for one of the largest banks in the world, developed the financing package for this acquisition.  4.  Lending support was also provided through these two banking firms.  This bank also gave seminars regarding this loan package to a large cemetery holding group, proving this was moving forward in the industry.  5.  Due to the originality of this funding package, legal opinions were sought from 6 different law firms in 4 different states.  The structure is 92 pages in length, and the owner who is in question sought legal assistance due to the sheer complexity of the structure. 

CemOps has studied this structure writing, and has found nothing truly out of the ordinary to report on.  This was to be the up and coming structure that cemetery owners would use in the future, to acquire additional properties and grow their businesses.  Given the professionals in the banking industry involved, the legal opinions garnered, and proper trustee in place, the owner had no reason to believe moving forward would be anything short of positive.

There will be more posts on this subject as time continues.  This is a very extensive legal case, with many players and directions to investigate.  As permissions are given to report on this, we will continue to educate through this forum.

Imagine You Own Cemeteries And This Happens………

Imagine you purchase a number of locations and the following happens:  What would you do?

You purchase locations complete with debentures, both collateralized and uncollateralized.  You increase market share and gross revenues greatly, and some employees along with the former owners work together toward a possible hostile takeover bid.  Information is leaked about the debentures, causing doubt as to your business practices.  Through this all, you hired attorneys for legal opinions on 25 occasions to insure you were structuring your finances properly.  You hire a trustee to insure trust accounts are maintained according to the law.  You are audited annually by the State Agencies and are not found to be out of compliance, except for some minor deficiencies.  You finance through the largest bank in the world.  Then comes the state, accusing you of wrong doing and charging you with a sundry of counts of violations of law.  You prove your diligence in insuring the laws were covered.  You prove you had no desire to violate any laws.  You run into an AG that goes as far as to publish on an official state webpage how you are convicted prior to any convictions taking place.  You obtain appropriate financing to clear your name and reputation, only to have the state come after you again in an obvious attempt to kill the refinance opportunity.  You have to question what the real motive is, and who is behind this.  The former owners had unsecured debentures in their company names.  Those were in violation of the “self dealing” laws, and were unregistered securities, but blind eyes meet those facts.  The new owner now has those liabilities due to the structure of the purchase, but nobody seems interested where it all began.  It is convenient how these former owners continue to avoid prosecution, but the new owner does not.  Too many times, this plays out in varying forms, but as stated in other posts-disclosure is not required at the level of a home purchase for cemeteries.  You could never get away with this in selling a home.  So why is our system willing to allow this in such sensitive purchases?

This is a story that is currently playing out.  This is a story that could play out with any cemetery owner in the country.  You think you have dotted your i’s and crossed your t’s, and later learn that innuendo, politics, and perception can cause such trouble.  What would you do?

CemOps is here to assist with this and other type issues that you may face.  Look here for further updates to this post.  CemOps has acquired legal documents from the above referenced account, and we continue to study those and seek additional opinion.  This will continue to play out, and CemOps will be here to watch and report as this progresses. For all your concerns, CemOps will handle your questions and concerns with the utmost confidentiality.

Upcoming Posts Regarding Those Accused In This Industry

In the coming days, you will find new posts regarding a certain party that has been accused of wrong doing in the death care profession.  You will not only see where through careful reading of legal documents, the charges are not founded, but also see how this could happen to any owner of a cemetery.  You will see where a State Official has tried and convicted one man prior to any conviction taking place, inappropriately on his official state website.  You will learn how this man has fought back and will prevail against a system that is broken.  Yes, there are others out there that are in jail and deserve to be.  But this particular individual stands out and is willing to prove his innocence.  Once legal clearance is given to publish the post on this blog, you will see it here first, and in my own words.  Expect it by post Labor Day.  You will learn, that the statement “innocent until proven guilty” exists for a reason.  You will also learn in the months to come, how one man can not only stand up to this broken system; but he can also now turn the tables and litigate his damages and rebuild his reputation.  I assure you this will be eye opening.  Check back for updates.

Take your cemetery features solar

If you have fountains in your cemetery that have been filled in with dirt, consider cleaning them out and using solar as an energy source to resurrect those once very beautiful features.  I ran the numbers on electrical usage for a fountain versus solar, and it wasn’t even close!

The cost of solar, which is installed at the source instead of running hundreds of feet of underground wire, is minimal in comparison.  Fitted properly to the size of fountain, gallons per minute based on what nozzle you wish to use, and other considerations will allow you to use your fountain features again and add to the beauty of your cemetery.

Another use, done properly, is the lighting of your flagpoles at night.  Yes, at night!  How in the world, you may ask, can solar light a flag pole when the sun is down?  It’s easy.  So many things are possible with solar power, and showing your customer base you are willing to utilize alternative energy sources will speak volumes about your interest in one of today’s most prevelant debates.

Contact CemOps if this interests you.  We can help you discover what you need, once we determine what it is you wish to accomplish.  We can also ship you the parts necessary with instructions how to assemble.  Your own grounds crew or facility maintenance departments can easily accomplish the installation processes, saving you labor costs.

You can also inexpensively turn your cemetery gates into automatic gates with solar operators.  We have done this, too.  This is not only a convenience feature, but also a safety feature for employees leaving the grounds later at night after working a long day, or opening the gates first thing in the morning.  They don’t have to leave the safety of their cars, all they have to do is push the button on a remote much the same as a garage door opener.

Contact CemOps with any questions you may have regarding Solar as an energy source.  The uses are endless.

Preventing Further Reputation Damage

Additional media and court accounts of issues in the funeral, cemetery, and crematory profession continue to put us in a questionable position.  Most recently, the funeral home in Missouri that has been under AG investigation for mishandling bodies.

We have the ability as a profession to found and activate a true internal policing system.  Putting such a system in place, to actively field and audit locations on a voluntary basis at first, would protect those interested from the negative light being cast by these cases.  Each and every time these events come out in the press, we are all called into question.  We have the ability to answer those questions with good standing documentation, or audit compliance certificates-to prove individual locations are interested in “showing” their interest in proving their trustworthiness.

Developing a council, where complaints can be delivered and investigated, would also go a long way in restoring the faith of those we serve.  Bringing an independent group, like CemOps, into the fray prior to a full investigation being launched could not only prevent unnecessary damage to the reputation of an honorable location-but could fortify for the State Board involved if there truly is a problem worthy of further investigation. The benefit of utilization of a third party in the front end of this, could also defray any suspicion whether we are reacting properly to each complaint.  There would be no suspicion of professional courtesy, as CemOps would be acting independently of State Boards or other governing agencies.  Only if something truly of violation was discovered, would there be need for further action.

If a violation was to occur in your city or area, you would have the opportunity to show documentation that you are not only separate from the occurence, but that you had voluntarily sought out auditing and have proof of compliance and trustworthiness.  CemOps can provide this for you, and timely follow up visits would insure future good will, also.

It is time we become proactive in establishing a system that insures not only compliance but proof of good standing.  Too many occurences continue, which can only further erode our professional standing in the communities we serve.

Independence of the use of CemOps also allows for audits to be performed at a higher standard than the norm, insuring not only existing but future concerns, as well.  The power of such a system would help avoid many of the questions we field every time one of these issues hits the news.  Proof on interest and compliance can only be of benefit. 

I would be interested in opinions and ideas.

So Do You Really Think You Don’t Need CemOps Assistance?

Given the number of media accounts in 2008 alone, CemOps knows there is a need for assistance.  Six lawsuits, this year already-lost and all avoidable.  Your company may have excellent policies and procedures in place, or maybe you are a small independent and don’t know what policies and procedures to put in place.  Regardless, the issues keep making the media and court dockets.  So why aren’t you calling for audit support?  Do you consider asking for help a form of weakness?  Do you think you just have bad employees making poor decisions?  Do you think you already know it all and don’t need anyone from the outside involved in your business?  If you answered yes to any of the above, then maybe it is your company that is making the news? 

Obviously, all the policies and procedures in the world will not assure your operation is not exposed to risk.  People make mistakes, and unchecked these mistakes are not ever completely learned from.  Take for example, the most recent case where a baby was put into a casket with an unrelated elderly woman and sent to the crematory.  The family of the baby arrive at the funeral home to retrieve the baby, only to learn the baby is not retrievable.  That one is not covered well in most procedures, and it is my experience with that particular company that the policies and procedures are definitely in place.  But the question has always been “who is verifying that these policies and procedures are actually being followed”?  Whose absolute responsibility is it to insure all these policies are enforced each and every time?  Those persons, do they understand without a doubt their accountability?

Company employees often times are too close to a situation to offer any real answers.  Complacency sets in, no matter how diligent you are in keeping your policies and procedures updated.  CemOps believes cursory audits and inspections can uncover most of these lapses and keep people on their toes and accountable.  Phone audits, scheduled inpsections, and uninvolved area managers are not the answer to insuring compliance with your directives.  In many cases, the personnel responsible for these errors aren’t even aware they made a mistake.

In the above mentioned case, there is simply no excuse.  Common sense should have prevailed.  But obviously someone was asleep at the wheel, and this company has all the edicts in place to prevent, but this still happened.  This company suffered yet another black eye, and the family was unnecessarily harmed by such actions.

CemOps not only can offer this cursory service to any company regardless of size, but CemOps is separate from your company and will perform these audits and inspections with no politically associations that limit the scope of a true audit.  You will get unadulterated information by just “stopping in”.  Most audits are scheduled, giving the location time to clean things up for inspection.  Thus, you miss so much vital information by not being cursory.

For state governments, you can learn from this also.  Scheduling an audit annually with your Banking Commission delutes the findings.  Not that location personnel are necessarily dishonest, but giving them time to hide those issues they are afraid of you finding, before they can clear them locally is just an invitation for further problems.  Not to speak of the fear of repraisal from their corporate headquarters if they don’t pass with flying colors. 

If you don’t think you need assistance, then CemOps asks:  “Why do the media accounts and lawsuits continue to mount in numbers, where good policies and procedures are in place?”  CemOps receives a dozen notifications daily, of issues being addressed in the media and courts-nationwide.  The problems aren’t going away, and solutions ARE available.  Call CemOps and discuss your options.  The negative press our industry continues to suffer, tells us there is a definite need.  You know there is a need.  You have to.

CemOps is an industry aide.  The longer you wait, the more at risk you become.