Lebanon Reporter

October 26, 2013

Funeral home owner accused of misusing funds

By Rod Rose
The Lebanon Reporter

---- — Lebanon — Jerry L. Trapp, owner of two Boone County funeral homes, is accused of breaking state law over the disbursement of funeral trust funds, and with obstruction of justice.

Trapp, 67, Lebanon, was arrested Thursday afternoon by Indiana State Police. He has owned the Russell & Hitch Funeral homes in Lebanon and Thorntown since 1986.

An initial hearing on the charges is set for 2 p.m. Nov. 4 in Boone Circuit Court. Trapp was originally held in the Boone County Jail on $10,000 bond, but that amount was reduced to $100 cash or surety.

Dennis Williams, Trapp’s attorney, had no comment Friday.

The charges include three class C felony counts of wrongful disbursement of funeral trust funds, and one class D felony count of obstruction of justice. The C felony counts carry sentences of two to eight years in prison and up to $10,000 in fines. An obstruction of justice conviction carries a sentence of six months to three years and up to $10,000 in fines.

In March 2013, the Indiana State Police and Boone County Prosecutor announced they were conducting an investigation into the possible misuse by Trapp of funeral trust funds.

At that time, Boone County Prosecutor Todd Meyer said that anyone with concerns about a burial policy for themselves or for relatives should contact the company that holds the policy.

State law requires that any pre-payment of funeral expenses be transferred to a funeral trust held by a bank, trust company, savings association or credit union with headquarters in Indiana. The money must be deposited into the trusts within 30 days of being given to the funeral home.

At the time of the investigation, Trapp told The Lebanon Reporter that no money was missing, blaming paperwork errors for the investigation.

“Everybody’s money is safe,” Trapp told a reporter. “It’s all entrusted.”

But, according to court documents, an investigator said Trapp eventually told the investigator he had been behind on his mortgage payment and had used some pre-need burial funds to cover some of his expenses.

The first claim

Court documents filed Wednesday show that detectives were looking into Trapp’s accounts as early as Sept. 5, 2012, after a family told detectives that on Dec. 26, 2008, they had paid Russell and Hitch $7,532 for a “pre-need” burial insurance policy. The family was told that the burial trust would be held by Homesteaders Life Company, according to court documents.

Those documents also show the family paid Russell and Hitch another $1,390 in May 2009 to make changes in their relative’s funeral services. Investigators said they were given copies of a “pre-need funeral agreement and assignment” form, as well as a group insurance enrollment form with Homesteaders Life Company.

A problem was revealed when the relative died in August 2012 and the family chose another funeral home. They told that funeral director they had a burial trust with Homesteaders Life Company.

Although the $1,390 was on account with the company, the second funeral director told detectives that he was told “they (Homesteaders) did not have adequate funds in the trust fund to cover the expenses for the funeral.”

After the relative's death, detectives said that Trapp paid the family $7,979.78 through a check drawn on Northpark Community Credit Union, and also provided a letter saying the amount included “growth on funds.” Neither the check nor the letter have any connection with the Homesteaders Life Company burial trust fund, investigators said.

Investigators allege neither Trapp nor any of his employees deposited the initial $7,532 payment with Homesteaders.

Trapp allegedly told a detective at a Nov. 28, 2012 interview that “he had forgotten all about” the $7,532, and “implied that burial trusts and group insurance were matters that his office manager, Charles Buschman, would ordinarily handle.”

Trapp said the family paid the $7,532 during a time that Buschman was away from work for an extended time, according to court records.

A review of bank records showed that the check was deposited into an account owned by Russell and Hitch, and about $500 was kept out at the time of the deposit.

Additional claims

Investigators alleged that Trapp failed to deposit $9,463.15 with Homesteaders for another burial policy purchased on July 9, 2009. In an April 18, 2013 response to a subpoena, Homesteaders told investigators it had never received a policy application for insurance for that burial policy. Instead, Trapp allegedly paid that amount to Cincinnati Equitable Life Insurance on Feb. 27, 2013, nearly four years after accepting the $9,463.15 payment, investigators said.

A third misappropriation allegedly involved a $9,267.34 payment made by a family in May 2005, for the funeral of a person who died in October 2009. The money was to be deposited with Homesteaders. Records showed no such payment, investigators said.

A family member had checked with Homesteaders, the company he believed held the policy, shortly before the death and learned there was no account for that person. He told investigators Trapp assured them the costs were paid in full, and the family never received a bill following the funeral and burial.

Obstruction charge

Trapp allegedly obstructed justice while they were serving search warrants at the Russell and Hitch Funeral Home in Lebanon on Feb. 28, 2013, investigators said,

A detective saw Trapp “attempting to conceal something inside the front of his suit jacket.” Trapp said it was a file for a funeral in Thorntown he was en route to conduct.

“I examined the file and confirmed that it was paperwork related to a pre-need burial insurance policy and not an actual funeral file, as he had previously stated,” a detective said in a probable cause affidavit.

“Trapp admitted to me that he had lied about the file that he had earlier concealed in his suit jacket,” the detective said. “Trapp said that he had been behind on his mortgage and that he had used some of the money paid to him for pre-need burial policies to cover some of his expenses.”