New Owners of Elm Lawn, 4 Area Cemeteries Take Over Dec. 31 in Fraud Case
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Entrance - Bay City's Elm Lawn Cemetery
The 13,000 dead in Bay City's Elm Lawn Cemetery and thousands of departed souls in four other tri-city mortuary facilities, may soon be able to rest in peace.
And hundreds of owners of cemetery plots, who hope to rest in peace for eternity, may be comforted that they will have the place they paid for in which to rest.
That is when the complicated cemetery scam case involving 67-year-old Oklahoma oil and gas speculator Clayton Smart is finally concluded. (Smart is pictured at right)
Smart, of Okmulgee, Oklahoma, purchased 28 Michigan cemeteries in August 2004. Then, according to state charges, he proceeded to loot the living and the dead.
The State of Michigan has agreed to sell the 28 cemeteries, including Elm Lawn, Saginaw's Eastlawn and Roselawn Memorial Gardens and Oakwood Mausoleum and Midland Memorial Gardens to a temporary owner, David Shipper, who has been managing on behalf of the State.
The $32 million deal with Detroit Memorial Group, includes a $21.9 million deposit to replenish funds that were missing from certain trust accounts at the 28 cemeteries when the state assumed control under court-appointed conservator, Mark J. Zausmer, last December.
Mr. Shipper, of Ewing, New Jersey, owns 12 cemeteries in Indiana and two in New York and has formed Detroit Memorial Group to acquire and operate the 28 cemeteries. He is the past president of the International Cemetery and Funeral Home Association and former vice-chairman of the New Jersey Cemetery Board. The deal is expected to close on December 31, 2007.
On December 18, 2006, the Department of Labor & Economic Growth (DLEG) assumed control of the cemeteries amid allegations that owner Smart had embezzled cemetery trust funds.
"I am confident that the new owner will operate the cemeteries in accordance with the cemetery regulations of this State. The public can be assured that the Cemetery Commissioner and the Department made every effort to select the best possible person to operate these cemeteries," said DLEG Director Keith W. Cooley.
Under the agreement, Detroit Memorial Group will deposit $21.9 million into merchandise trust accounts for the 28 cemeteries bringing the cemeteries into compliance with the funding requirements of the Cemetery Regulation Act - which protects consumers that pre-purchase cemetery merchandise and services.
Detroit Memorial Group has committed to fulfilling all contractual obligations to consumers in accordance with other applicable laws of the State of Michigan. The remaining $10.1 million of the $32 million purchase price will go into cemetery operating accounts to be used to complete mausoleum construction projects, make repairs to cemetery buildings and roadways, upgrade cemetery equipment, and to meet other operating obligations.
Ingham County Circuit Judge James Giddings entered an order Sept. 28 temporarily freezing the bank account of Bloomfield Hills attorney Craig R. Bush, previous owner of 28 Michigan cemeteries. Mr. Bush sold the cemeteries to Smart's company, Indian Nation, L.L.C. for $31 million in cash plus other financial considerations.
Bush had withdrawn $250,000 from the account and had a $5 million withdrawal request pending at the time of this action, according to the attorney general's office.
The Attorney General claims in his lawsuit that Smart and Bush used money that should have been set aside to fund the cemeteries to pay for the sale of the cemeteries.
According to the Detroit News, another $10 million could be recovered from Mark Singer, a former Smith Barney vice president and broker, who is accused of abetting the fraud by helping Smart and Bush transfer cemetery money into personal accounts.
Mr. Zausmer and the state are also suing Smith Barney, Deutsche Bank, the former trustee of the funds, and Plante Moran, who prepared financial cemetery statements that Smart submitted to the state.
The IRS is investigating millions of dollars that officials allege were deposited in sheltered accounts in the Cayman Islands, a venue notorious for harboring illegal cash.
The new owner, Mr. Shipper said he plans to meet with cemetery employees to solve problems with management and plan for the transition of the cemetery properties.
"We want people to know their investment is safe," said Mr. Shipper. "We know how to run the cemeteries, and they are in good hands," he said. "They are losing a lot of money, but we can turn them around. We have to earn the respect of clients, our vendors and the public."
Smart acquired ownership of 28 Michigan cemeteries in August 2004 from Craig Bush of Bloomfield Hills, Michigan. Under Michigan law, all cemeteries of 10 acres or more are required to maintain trust accounts to ensure the future operation of the cemeteries. When Smart acquired the cemeteries, there was approximately $61 million in trust. An estimated additional $9 million should have been placed in trust, for a total of $70 million, according to court records.
The investigation revealed that, after owning the cemeteries for several weeks, Smart diverted these funds for improper purposes. It is specifically alleged that Smart wired at least $21 million in trust money to Bush after the transfer of ownership.
Mr. Smart of Okmulgee, Oklahoma, has been charged with 39 felony counts in connection with the alleged embezzlement of up to $70 million in cemetery trust funds affecting 28 cemeteries in Metro Detroit and throughout Michigan including racketeering, failure to trust cemetery proceeds, and embezzlement. Mr. Smart is currently in jail in Tennessee awaiting trial in connection with similar allegations regarding cemeteries he owns in that state.
The 39 charges have been filed in the 36th District Court in Detroit. If convicted as charged, Smart could face up to 20 years in prison.
"The defendant's actions are appalling -- embezzling trust funds that were set aside to care for cemeteries and burials," said Cox. "The citizens of Michigan and, most importantly, the families with loved ones in these cemeteries should rest assured that this conduct will be prosecuted to the fullest extent of the law."
There are 152 cemeteries in Michigan required to place funds into a trust under the law. The 28 cemeteries pillaged by Clayton Smart account for nearly 20 percent or 1 in 5, of all regulated cemeteries in Michigan.
In addition, according to 2005 figures, all non-Smart cemeteries in Michigan that were required to place monies into a trust had deposited a total of more than $150 million. Smart should have placed $70 milliono in trust for these 28 cemeteries. Nearly a third of all trust dollars in regulated Michigan cemeteries are involved in this case, according to estimates.
Atty. Gen. Cox has obtained a court order placing a hold on a bank account with $22 million in Bush's name that allegedly came from trust monies paid over by Smart. Mr. Cox is seeking court permission to transfer this money back to the cemetery trust accounts.
Smart is also the owner of cemeteries and funeral homes in Tennessee, Arkansas, and Oklahoma. State officials in at least Tennessee and Oklahoma are examining Smart's business dealings in their state as well.
Cemeteries involved in the case
1 - Acacia Park Cemetery, 31300 Southfield Rd., Beverly Hills;
2 - Cadillac Memorial Gardens East, 38425 Garfield Rd., Mt. Clemens;
3 - Oakview Cemetery, 1032 N. Main St., Royal Oak;
4 - Roseland Park Cemetery, 29001 N. Woodward, Berkley;
5 - Washtenong Memorial Park, 3771 Whitemore Lake, Ann Arbor;
6 - Mount Hope Memorial Gardens, 17840 Middlebelt Rd., Livonia;
7 - United Memorial Gardens, 4800 Curtis Rd., Plymouth;
8 - Cadillac Memorial Gardens West, 34424 Ford Rd., Westland;
9 - Woodlawn Cemetery, 19975 Woodward Ave., Detroit;
10 - Woodmere Cemetery, 9400 W. Fort St., Detroit;
11 - Grandlawn Cemetery, 23501 Grand River, Detroit;
12 - Forest Lawn Memorial Park, 11851 VanDyke, Detroit;
13 - Oakland Hills Memorial Gardens, 43300 W. 12 Mile Rd., Novi;
14 - Eastlawn Memorial Gardens, 7475 E. Holland, Saginaw;
15 - Oakwood Mausoleum, 5950 Gratiot Ave., Saginaw;
16 - Midland Memorial Gardens, 565 N Meridian Rd., Midland;
17 - Elm Lawn Cemetery, 300 Ridge Rd., Bay City;
18 - Roselawn Memorial Gardens, 950 N. Center Rd., Saginaw;
19 - Forest Lawn Memorial Gardens, 5301 N. Michigan, Dimondale;
20 - Hillcrest Memorial Park, 1425 Elm Rd., Jackson;
21 - Albion Memorial Gardens, 26905 B Drive South, Albion;
22 - Kent Memorial Gardens, 7101 Clyde Pk Ave SW, Byron Center;
23 - Floral View Memorial Gardens, 0-5371 Eight Ave SW, Grandville;
24 - Restlawn Memorial Gardens, 994 Pawpaw Dr., Holland;
25 - Graceland Memorial Park, 4341 Cascade Rd., Grand Rapids;
26 - Oaklawn Chapel Gardens, 15264 South M-129, Sault Ste. Marie;
27 - Northland Chapel Gardens, 239 Midway Dr., Negaunee;
28 - Garden of Rest, 6556 Hwy US 2 & 41, Wells.###
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