A federal jury ordered PNC Bank to pay $391 million in damages for its role in an alleged insurance scam involving prepaid funeral contracts at the now-defunct National Prearranged Services (NPS).
According to the lawsuit, funeral homes and consumers were led to believe the funds entrusted to NPS, a St.Louis-based company that sold prepaid funerals, would be safeguarded in a trust and backed by life insurance policies. However, the defendants allegedly siphoned off money from the funds.
PNC Bank is the successor to Allegiant Bank, which served as a trustee for the company from 1998 to 2004.
Allegiant and other trustees failed to supervise NPS's assets and allowed the company to pillage the NPS trust assets, according to the complaint filed in 2009 by state life and health guarantee associations and a Texas special receiver set up to wind down NPS.
The jury on Monday said PNC must pay $355.5 million in compensatory damages and $35.5 million in punitive damages, according to a court document.
The jury also ordered Forever Enterprises Inc, a family-owned company that owns funeral home and cemetery properties in the United States, to pay $100 million in damages.
Reuters could not immediately reach PNC Bank for comment outside regular U.S. business hours.
The case is in the United States District Court for the Eastern District of Missouri; Case no: 09-cv-01252-ERW.
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