Funeral home troubles

HOBART, Ind. (WLS) -- The ABC7 I-Team investigated a funeral home with a revoked license. Indiana state officials said one northwest Indiana business overcharged consumers and filed fraudulent death claims.

MORE: Tips on paying for funeral arrangements

In 2010, Lisa Flynn's grandmother, Pauline Stanchina, locked in a funeral price of $8,256 and gave the money to Kraft Funeral Services in Hobart, Ind.

"I don't know how we would have been able to pay for her funeral," Flynn said.

According to state law, that money was to be placed in a special trust fund and remain transferable. Flynn says they decided to switch funeral homes.

"They then called the Master Choice trust fund account and said there was no money deposited into the account," Flynn said.

When Flynn's grandmother went into hospice in January, she wrote this letter to Kraft demanding the money. She received this cashier's check, including interest, from Kraft along with an apology letter more than a week later.

"I got the money the day she passed away," Flynn says. "I got a check in the mail. I was at the new funeral home making arrangements and got a missed certified letter the day she passed away."

If the funeral home had closed or gone bankrupt, Flynn says, "We would have had no money, nothing, zero."

There is an Indiana State Consumer Protection Fund, but getting a reimbursement can take time and there are no guarantees the money will be there.

The Funeral Directors Association says if you are prepaying for a funeral, you should make the check payable to the trust fund or the insurance company, not directly to the home. You should also get confirmation that your money has been deposited into the protected fund.

The I-Team found that Kraft Funeral Services' license was permanently revoked in February.

Recent legal action by the Indiana State Attorney General's Office and the State Board of Funeral and Cemetery Service says that Kraft Funeral Services and its director, Russel A. Kraft, filed fraudulent death claims for five individuals who had not died and that Kraft received checks from their "pre-need" burial insurance policies. The state says Kraft reimbursed one third party payee and individual customers didn't end up losing their "pre-need" funds.

The board also ordered Kraft to pay $25,000 in restitution to other customers who were wrongfully charged for services that were not performed.

Flynn showed the I-Team a March 26 obituary in a local paper and a smartphone video she says she took outside of that memorial, but the state says because of the funeral home's current standing, it can't hold any visitations, memorials or services, which require a license.

When the I-Team went to the funeral home no one was there. An attorney would only say that Kraft didn't know his license was revoked and pointed out that Flynn had been reimbursed.

"I was stressed out because I didn't know if we were going to have the money to pay for it," Flynn said.

The Indiana Professional Licensing Agency says it received Flynn's complaint, but she was not part of the board action.

As for that, an attorney for Kraft Funeral admitted that overall mistakes were made, but denied intentionally harming anyone.

The attorney also says Kraft Funeral Services apologizes to customers and that the funeral home will now be following all state guidelines.

If you have purchased a prearranged funeral, you should make sure your family has the documents.