Did This Guy Have a Pre-paid Funeral?
If there was a Hall of Fame for Missouri fraudsters, J. Douglas Cassity of Springfield would be a first ballot entrant.
Cassity was socially well-connected. John Ashcroft, then Missouri's state auditor (later Governor, Senator and US Attorney General), made Cassity a key Greene County fundraiser for his 1974 re-election bid.
Cassity was a lawyer but primarily an entrepreneur with abundant investment ideas. In 1981, the FBI and the IRS said Cassity was tied to 138 businesses, many of which functioned as tax shelters. His real estate ventures included Springfield apartment complexes, an Indiana motel and a Stone County timeshare resort.
In the early '80s, many of Cassity's ventures collapsed. Multiple Springfield investors — doctors, lawyers and businesspeople — lost hundreds of thousands of dollars.
Following an 18-month FBI/IRS investigation, Cassity accepted a plea bargain in December 1981 and pleaded guilty to conspiracy and tax fraud charges. He was sentenced to two years, and served six months. He surrendered his law license.
After serving less than half of his six-month prison term, Cassity asked a federal judge to allow him to be released early, by Easter of 1982. The judge denied the request.
He moved to the St. Louis area when he got out of prison. Cassity's schemes, once denominated in mere thousands of dollars, climbed into millions. His name resurfaced in February 1994, following a $20 million settlement hashed out between "pre-need" funeral company National Prearranged Services (NPS) and the office of then Missouri Attorney General (and later Governor) Jay Nixon.
NPS was the "brainchild" of Cassity, the Springfield News-Leader reported. State law mandated that such companies must deposit 80 percent of what someone prepaid for their funeral into trust accounts, but were allowed to use the remaining 20%. Nixon said NPS was investing the 80% itself, rather than depositing the funds according to law. A 1992 audit found that $13.5 million already should have been held in trust.
Cassity denied being involved with NPS since the early '80s, other than providing occasional consulting services. But records from 1993 showed that 88.3 percent of NPS was owned by an entity called RBT Trust II. The trust's beneficiaries were Cassity's wife and two sons. (Right!)
Through their interest in NPS, the Cassity family controlled three Texas-based insurance companies that insured or reinsured NPS funeral plans. They also controlled nine funeral homes through an entity called Cassity National Heritage Foundation. Cassity's elder son, Brent Cassity, was president of the foundation.
In a somewhat related case involving pre-arranged funeral insurance fraud in 2013, Cassity pleaded guilty to fraud and other charges, and he and other defendants were ordered to pay $435 million in restitution.
Cassity received nine years and seven months in prison; his son Brent got five years.
Cassity was released from prison early, as part of the COVID prison release program and died in his Central West End apartment in St. Louis in 2020.
His lawyer, who got three years, was released in 2014 after serving a little over a year because he was "terminally ill," but he remains alive today. (Isn't everybody terminally ill? And since he outlived the remaining sentence, shouldn't he go back to jail?)
But the wreckage from Cassity didn't end with his death. State regulators from seven states who had to pay out millions because of Cassity's crimes had sued PNC Bank in 2015 as successor to National City Bank, which in turn was the successor to Allegiant Bank. (Remember the Shaun Hayes story? St. Louis is a small town!)
The regulators alleged that Allegiant, under the "know your customer" rule, should have figured out what Cassity and his compatriots were doing.
After a trial, and retrial, and appeal to the Court of Appeals for the Eighth Circuit, that court ruled in October 2021:
Although Allegiant had not participated in the scheme, its failure to detect it was "an egregious breach of trust" that justified the 2019 award of compensatory and punitive damages to the receiver for NPS and several state life insurance guaranty associations.
The court upheld a $105 million judgment (it was more than three times that in the original trial) against PNC, whose only "crime" was to have purchased a bank dumb enough to buy a bank formed by Shaun Hayes!
I've summarized the litany of Cassity's life, but you can Google his name to get all of the details.