Information about the Trust’s Receivership

Why was a Receiver appointed for the Trust between 2012 and 2015?

The Trust was placed in receivership in September of 2012 after the Wisconsin Department of Financial Institutions (“DFI”) and the Wisconsin Department of Justice (“DOJ”) claimed that the Trust’s funds were invested and handled in violation of Wisconsin law. They alleged that the Trust’s portfolio was invested too aggressively in high-risk investments. Moreover, they alleged that the manner in which deposits were procured violated Wisconsin securities law. The Dane County Circuit Court appointed John Wirth as Receiver of the Trust to preserve and protect the Trust’s assets and to recover the Trust’s shortfall from responsible parties. Wirth served as Receiver from September 14, 2012 through June 30, 2015.

Who was named as the Receiver?

The Dane County Circuit Court appointed Milwaukee business attorney John Wirth as Receiver for the Trust. He was appointed based on his nomination by the DFI and the DOJ, with the support of the other participants in the lawsuit. Mr. Wirth has many years of experience in serving as a Receiver for a wide variety of businesses, other entities and assets.

What did the Receiver do to collect the Trust’s shortfall?

The Receiver and his team of litigators and other professionals did several things to make the Trust more financially stable, including:

  1. Entering into settlements with prospective or actual defendants, by which the Trust recovered approximately $11.75 million.
  2. Cutting expenses by shrinking the staff and eliminating unnecessary overhead.
  3. Selling the insurance company that had been formed and was in need of significant capital to continue operation.
  4. Changing the Trusts’ investment strategy.

Was the entire shortfall recovered?

The actual cash settlement recoveries of $11.75 million, net of the costs of the recover, actually exceed the principal deposits missing as of the date of the Receiver’s appointment on September 14, 2012.

Will customers still get the funeral benefits they were promised?

Yes. Because of a court-approved Trust Agreement, which incorporates a settlement agreement reached with each funeral home, consumer-depositors will receive all the benefits they were promised. In addition, the aggressive efforts to recover more than $11.75 million helped the individual funeral homes to cover the cost of funerals. During the receivership, the Trust was able to cover 60% of the funeral costs, while funeral homes stepped up and paid the additional 40% to make the consumer-depositors whole. When the receivership ended in 2015, the Trust was able to increase those payments to funeral home operators to 65%, which means funeral homes will only have to cover 35% going forward.

What changes were made to the Trust over the course of the receivership?

Several changes were made over the course of the receivership to ensure the Trust was stabilized. Those changes included:

  1. Reaching a court-approved agreement with every funeral home contractually obligating them to provide services regardless of the amount the funeral home paid from the Trust.
  2. Cutting expenses by shrinking the staff and eliminating unnecessary overhead.
  3. Selling the insurance company that had been formed and was in need of significant capital to continue operating.
  4. Putting in place a new board to oversee policy and naming a new Trustee who will meet the fiduciary responsibilities of that role.
  5. Changing the investment strategy.

All of these changes have put the Trust on more solid footing, and with the support and help of the individual funeral homes, all consumer-depositors will continue to receive the benefits they were promised.

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