How do you turn a profit off a cemetery? That is the question now facing a financially troubled international firm owning what were once community-run cemeteries across the country. The answer has far reaching implications for grieving families seeking comfort in the new ‘death care industry’ where there are few regulations.
StoneMor Partners L.P., a Trevose, Pennsylvania headquartered company, owns 322 cemeteries and 90 funeral homes in 27 states and Puerto Rico. Its stock is traded on the New York Stock Exchange under the ticker $STON.
The company has struggled financially over the past 3 years. In a Securities and Exchange Commission (SEC) filing dated July 28, 2017 the StoneMor Partners LLC admitted they have technically defaulted under the terms of their credit agreements–agreements which allow for creditors to call due $151 million in outstanding loans, immediately if they so choose.
While the company sought relief from its creditors, industry analysts remained skeptical, saying the company is unlikely to meet its credit obligations because “the company has no history of generating cash flow and had only $15 million of cash the last time it filed audited financials, yet it has continued to pay dividends and even expanded its sales force.” Required financial reports are often filed past-due.
Why is cash flow difficult to obtain from a cemetery? According to StoneMor’s 2019 First Quarter earnings report, revenue declines were driven primarily by “a decrease in interment revenues” and “lower sales of funeral related merchandise and services.” Keep these revenue sources in mind for later–it becomes important in appreciating how StoneMor employees interact with grieving families.
In February 2019, StoneMor announced “a bank waiver and amendment of certain loan covenants, as well at $35 million in financing from Axar Capital along with an agreement for Axar to buy up to 27.5% of the partnership units.” In May 2019, the investment bank Houlihan Lokey was hired by StoneMor to help it refinance its credit lines of nearly $200 million. (Source)
The multi-year financial struggles come on the heels of a class action lawsuit filed in federal court in November 2016, in which investors accused the company of providing misleading and falsified earnings numbers designed to make the company appear profitable. The complaint said StoneMor promoted the false figures while ramping-up dividend payments to investors each year, yet never actually generating sufficient cash flow to make these distributions. Instead of issuing cash distributions, the company simply kept issuing new securities and used those funds to pay off old investors in what has been called a ponzi-like scheme.
The class action complaint says StoneMor financial statements were “premised on a financial shell game that involved raising fresh capital from investors just in time to distribute a portion of it back to investors”
As a result, the company’s stock has taken a nose-dive, down 60% since August 2016, further increasing pressures for the company to demonstrate results.
What does this mean for StoneMor owned cemeteries and the grieving families which utilize their properties? Already, the struggling company has been accused by customers at multiple cemeteries of property neglect and squeezing grieving families for cash by utilizing harsh sales-driven policies. (sources below)
My investigation has found a pattern of questionable business practices and low to non-existent regulatory oversight.
Here’s how it manifests for consumers:
Sales Representatives misrepresented as Counselors
StoneMor is currently recruiting 128 sales representatives nationwide, according to their corporate website. Below is the job advertisement as it appears on the StoneMor website, each position is identical in wording with only the location and name of the cemetery changed. The positions are commission-based and promise high income.
Note the highlighted language:
However, the persons hired into these sales positions provide grieving families conducting business at the cemeteries with business cards identifying their position as that of a “Family Service Counselor“.
No mention of their role in sales is provided to consumers nor are families told they are working on a commission basis. No counseling services are provided. A search for ‘family service counselor’ on the StoneMor ‘careers’ website returns zero results and redirects to the ‘sales representative’ positions.
How do the Family Service Counselors/Sales Representatives from 20 different StoneMor owned cemeteries describe their work–is it counseling or is it sales?
In their own words:
“You’re not a counselor, this is a sales role in the death care industry.”
“you don’t get paid unless you make a sale“
“You are made to lie, and cheat customers and in their own words “prey on the emotions” when someone just died. Create the urgency!! is the motto.”
“the atmosphere was predatory“
“Unstable, hostile, and aggressive work environment. High employee turn over rate. Huge financial issues, thousands of dollars and months of overdue payments to their vendors”
“Forget the legal aspects of customer service, forget actually caring for families who have lost loved ones and are grieving, they need stuff and you had better sell it to them.”
“concern is only for “the sale” and how to manipulate any and all into a purchase“
“They want you to bring up past death experiences with families to make them feel guilty about not pre-planning for their families. It’s all about the money.“
“The company is less about the families we are servicing and more about meeting numbers.”
“business model is based on outdated vacuum sales tactics that are to be expected on a car lot and not in a cemetery.”
“Tells you to put family first but only cares about profit unless there is the chance of lawsuit!”
“Commission only!…The “leads” were going through family members of people buried in the cemetery”
“Money hungry! And will say and do whatever necessary to get it out of families!”
“Unethical means of generating leads.”
“Vultures….Let us circle the dead and pick the families wallets clean..If you do not do this you are not considered worth their time.”
“location manager don’t care about families, all they want is the sales… even if the families are having money problems.“
“They mark the memorials up 350%. You heard that right. Ripping people off at a time of desperate need.“
“The operating Officials should spend a day in an office. They should also experience a death. This industry has to change. I feel very sad for the communities that have to deal with the steady rule changes and never having a steady friendly face.”
“Issues needing to be resolved are put on the back burner as selling pre-need is “more important” – according to management.”
“If you’re gullible, you may even trick yourself into thinking you are helping people”
“I have heard more complaints from families than praise“
“they are drowning in debt. 3-4 mths behind in payments to vendor”
What happens at the community level when distant profit motives intersect with grieving families & low regulatory oversight? A case study
When you have a financially troubled distant corporation striving to meet shareholder expectations and commission-earning staff incentivized to sell products, the outcome for families utilizing a cemetery is almost inevitable. To better illustrate the local impact, here’s how this corporate profit squeeze has played out in one North Carolina cemetery:
Wayne Memorial Park is a 40-acre perpetual care cemetery located in Dudley, North Carolina–a rural farming community in Wayne County where the average income is $34,598. The property is an ideal spot to watch military jets fly low overhead as it lies directly at the end of a runway for Seymour Johnson Air Force Base in nearby Goldsboro, NC. Due to the proximity to a large military base, the cemetery is a popular final resting place for Veterans and their families as well as the community’s predominantly farming and blue-collar residents.
Founded in 1948, the cemetery underwent many changes in ownership over the years, but it was not until 1996 that non-local management took control of the property when Wayne Memorial Park, Inc merged with Townson-Rose Funeral Home and Forsyth Memorial Park and became SCI North Carolina Funeral Services.
In 2007, StoneMor Partners L.P. obtained a license from the NC Secretary of State to begin doing business in North Carolina. Two years earlier, local tax records show Wayne Memorial Park was one of their acquisitions, purchased in 2005 for $1,013,500 under the entity StoneMor North Carolina LLC whose state filings show no principal office in the state but rather list StoneMor’s Pennsylvania officers and address.
During StoneMor’s tenure as owner of Wayne Memorial Park, notable changes have occurred:
- High property staff turnover. A 17 year employee and former manager confirmed the 2017 revenue quota for the Dudley cemetery is $1.7 million, with each month having a specific income target….a target difficult for local staff to meet in a small community cemetery. As a result of demotions and penalties for failure to meet monthly sales quotes, there were three managers of the cemetery in 2017 alone.
- The overall appearance of the property declined dramatically as reinvestment in upkeep diminished. The grass covering the graves slowly turned to weeds and bare ground appeared.
- This is what Wayne Memorial Park looked like in July 2012
- This is what Wayne Memorial Park looked like in July 2017 taken by the same sidewalk. A May 2019 photo of same area, different angle from the farther sidewalk showing continued decline. Little grass left, nearly all weeds and bare soil.
- This is what the ‘Garden of the Good Shepard’ looked like in June 2010
- This is what the ‘Garden of the Good Shepard’ looked like in June 2017, same place.
- Garden of the Good Shepard, May 2019 (above statue is visible to the upper left of frame)
- Temporary grave markers–historically provided free by funeral homes as part of their comprehensive services–were banned to encourage the purchase of ‘keepsake’ temporary markers–available only from 1 supplier (the cemetery) and at 1 price pointSole source in the funeral industry is a practice not permitted under regulations, yet there is little oversight which will be detailed later in this article.
- The perpetual care cemetery currently neither places nor allows placement of temporary markers on the day of burial to designate where human remains are interred. The temporary markers, designed of a laminated paper material to last only until a permanent bronze and granite marker can be in place, were traditionally placed after the grave was covered at the conclusion of burial by local funeral homes as part of their services.
Families who wish to avoid an unmarked grave must purchase the ‘keepsake marker’ as the only alternative. The ‘keepsake marker’ is a small stone plaque measuring 10 inches by 6 inches etched with the decedent’s name & year of their birth & death (not full date) and no other personal information. It is available for purchase only from the cemetery at a cost of $176.14. Since it takes approximately 2 weeks to be installed, in the time between the burial & placement of the temporary keepsake marker there is nothing marking a grave.
- The sales pitch on the temporary ‘keepsake marker’ is that this cost will be deducted from the permanent granite and bronze marker if it is purchased from the cemetery rather than from an outside vendor. The permanent granite marker is not currently required to be purchased from the cemetery, a consumer protection under NC law. The starting costs are $4,550 for what was described to me by the sales representative as a ‘basic’ marker going up to $8,000+ range–significantly higher than prices charged by outside vendors I surveyed.
- If a family chooses not to purchase the permanent marker from the cemetery, then they are out the $176.14 temporary ‘keepsake marker’ fee plus the cemetery will then charge an additional ~$200 ‘installation fee’ for the permanent marker, even though they are not actually installing the marker (the outside marker vendor does that). It is unclear why an install fee is charged if the marker is not purchased from the cemetery and no install work is therefore done by them. I say the cost is ‘around $200’ because I was unable to get an exact fee from the Family Service Counselor/Sale Representative I met with, who said a printed price list was not available due to the ‘variable nature of their products’.
- I asked what happens to people who do not purchase the temporary ‘keepsake marker’—how do they locate their loved one’s grave in the future once the grass grows and it isn’t possible to tell a fresh grave had been dug. I was told ‘the family just has to know’ but that they could also pay the cemetery a ‘location fee’ to survey the lot again. The cemetery keeps paper records of where burials occur, but does not physically/visually mark specific grave locations.
- Because some families can neither afford the ‘keepsake’ nor immediately outlay the $4,000-$8,000 for permanent marker (recall this is a community where the average income is $35K), many graves now go unmarked for extended periods of time, sometimes indefinitely. Consequently, exactly where bodies are interred has been questioned. Reports have emerged of family members with valid deeds attempting to bury a loved on what they thought was ‘their family plot’, only to discover someone else was already buried in the same location….the same plot had been sold twice.
- Why this matters: One unmarked grave’s evolution…..
- Grave tents are banned out of liability concerns.
- Customary practice among the area funeral homes I surveyed is to leave the funeral tent up for approximately 5 days to both mark and protect the fresh grave from the elements. Additionally, it serves to shield the flowers from the wilting sun. However, Wayne Memorial Park now bans this practice. I have confirmed reports that tents are erected the day of the funeral and before the last of the mourners leave a service, cemetery staff begin taking down the tent and closing the grave.
- I was told by the Family Services Counselor/Sales Representative that tent use after a service’s conclusion is banned out of ‘liability concerns‘. Yet oddly, tents are permitted to be in place during the service when the greatest number of people are around it. I was unable to obtain a reason for the disconnect except that it was ‘corporate policy’ of which I was unable to obtain a written copy of the corporate policy.
- Flowers placed by mourners are aggressively removed and the company’s own silk flower arrangements pitched to families as tasteful alternatives.
- If you’ve never had to purchase funeral flowers…they can be expensive, with a single casket spray running $300-800 and individual wreaths from $150-300, among florists I surveyed. In one confirmed instance at Wayne Memorial Park from May 2017, fresh flowers valued over $1,500 were removed from a grave less than 48 hours after burial. With no temporary marker allowed and the flowers removed, there was nothing indicating a body had been interred at that location.
- The scheduling of burial services in the cemetery is more tightly controlled under StoneMor, with hard limits on the number of services occurring on the property per day and their times with no graves permitted to be opened on weekends or holidays. A Monday burial is possible only if the management receives notification in writing by 1pm on Friday.
- In one confirmed case, a death occurred on a Friday afternoon at 3pm and the family preferred to schedule the funeral for the following Monday or Tuesday. However, the cemetery said that if they weren’t notified by 1pm on Friday, they could not ‘open a grave’ on Monday. The family was then unable to bury their loved one on Tuesday because the cemetery also limits the number of services which can take place each day and they were ‘already booked’ for Tuesday with other persons ‘backed up’ who died after the 1pm Friday notification deadline. So that left Wednesday as the family’s only alternative. The day/time of the funeral was entirely driven by when corporate policy said it could be done and not when the funeral home, minister, musician, florists were available or when the family wanted. The family of the deceased had to meet the cemetery’s needs, not the other way around.
- Consumers and deed holders are unable to obtain a written copy of the current cemetery policies and prices upon request.
- I asked via written email, phone call and in-person visit for a copy of the cemetery’s current policies and prices. After 5 days of inquiry, I finally received a 47-page document detailing the cemetery’s policies. However, it was dated 2002—five years before the company was licensed to do business in NC and when the cemetery was under different ownership. The 2002 document has no mention of current polices pertaining to temporary markers, ‘keepsake makers’, tents or funeral flower removal. I have been unable to get such current policies or pricing in writing. State statues indicate consumers must be able to easily obtain a copy of prices and policies upon request.
- Families are pressured to return after burial for additional sales opportunities. Consumers receive multiple phone calls following burial from the Family Services Counselor/Sales Representative asking for an in-person “after-care appointment“.
- No counseling or support services are provided and no additional business conducted. A ‘counselor’ confirmed to me this meeting serves as an opportunity for the cemetery to market their permanent markers, silk flower arrangements and pre-planning services.
- I have also confirmed cases of long-time plot deed holders being contacted by phone and told they need to come in to ‘confirm their deed‘. At such confirmation appointments, pre-planning services and products are pitched.
What is the law governing cemeteries?
Current rules and regulations were passed during a time when cemeteries were locally-owned enterprises and not owned by New York Stock Exchange trading level international conglomerates–regulation has not kept up with changes in the industry.
The Federal Trade Commission (FTC) regulates funeral homes to protect consumers, but not cemeteries except in limited situations. The Funeral Rule, enforced by FTC, makes it possible for families to choose only those goods and services needed and to pay only for those selected, whether making arrangements when a death occurs or in advance. The Rule allows for easy price comparison among funeral homes, and makes it possible to better select the funeral arrangements wanted. However, the Funeral Rule does NOT apply to third-party sellers, such as casket and monument dealers, or to cemeteries that lack an on-site funeral home. In recent years, the FTC has expressed a desire to extend the Rule to cemeteries, but so far this has not happened and it is unclear the current administration’s view expanding federal authority.
At the state level, cemeteries operate under a myriad of rules. In North Carolina, perpetual care cemeteries, including those owned by StoneMor, are overseen by the NC Cemetery Commission, created under the main legislation governing cemeteries, The NC Cemetery Act aka Article 9, Chapter 65. The 9 member Cemetery Commission is appointed by the Governor and the General Assembly; 7 of the members represent the cemetery industry and hold financial interests in cemetery and funeral related businesses, 2 appointees represent the public.
There are no ‘consumer guides’ published by the Commission to put the law in simple terms for consumers. The statues themselves are not an easy read. In the NC Cemetery Act, there are named provisions that a cemetery cannot force a family to purchase vaults and caskets from the cemetery, but there is nothing specific to temporary markers or other products which may be deemed as ‘required’ under individual cemetery policy. The intent of the NC Cemetery Act appears clear–the General Assembly was trying to prevent families from being preyed upon during times of grief–however, the Act was written in an era before for-profit corporations began purchasing nonprofit and community cemeteries. All forms of current burial practices, which many run counter to custom and tradition, were not foreseen and therefore are unaddressed.
From ancient times, a defining moment of civilization was when humans began to honor the dead. Marking graves is simply what generations have intuitively done as the first act of grief to demonstrate dignity and respect for the deceased.
Not isolated problems
My research finds that the issues detailed above are not limited to Wayne Memorial Park nor North Carolina, but rather are being reported at multiple StoneMor properties. From news reports, the consensus appears that consumers have little recourse under current (or non-existent in some states) regulations. Scenarios are arising which are not addressed under current consumer protection laws.
“We had a horrific burial, it was unbelievable,” Smelcer said. “Yes, I just want to get my husband out of here. But I pray that everybody else’s issues here get solved because this cemetery is just nothing but a joke.” Avon, Ohio
From newspaper and TV accounts:
- Pinelawn Memorial Park in Kinston, NC: families report tall grass, fire ants, and weeds covering graves. Reported by the Kinston Free Press 7/14/2017
- Anniston, Alabama: No grass, soil erosion, trucks driving over graves, downed limbs. Families call the condition of their loved one’s grave ‘heartbreaking’. ABC news 33 8-8-2017
- Philadelphia, Pennsylvania: “allegations of high pressure sales tactics”, “In two dozen interviews with families and funeral directors, similar themes emerged: Complaints that StoneMor had harassed and misled mourners and customers, upsetting or bewildering some when they may be most fragile.” Philadelphia Inquirer 10/26/2015
- Philadelphia, Pennsylvania: Family “pushed to buy” additional plots following death of son, rules prohibiting chosen monument. “It’s all about money to them,” say the parents “Losing Matthew broke our hearts,” he says. “Dealing with All Saints (cemetery) broke them all over again.” Philadelphia Inquirer 2-12-2017
- Delaware: lack of price lists, pressure to pre-arrange services, handing out sales material to people leaving burial services. “In a 48-hour period, we had six clients calling about being harassed on the telephone by StoneMor sales people,” Delaware County Daily Times
- West Virginia: “Families outraged over condition of burial plots” reports of ‘rude employees’, flooding, broken stones, disrepair, history of complaints regarding condition of cemetery, Register-Herald 5-31-2016
- Allentown, Pennsylvania: Graves sold twice. Only discovered when marker stone was to be installed. ” The plots that we had purchased were previously sold to another couple” The Morning Call 10-6-2016
- Annville, Pennsylvania: “Complaints pile up against cemetery” reports of disrepair, lack of upkeep ABC TV 27 June 8, 2016
- Avon, Ohio: May 18, 2019 ABC Cleveland News Cemetery issues trigger more complaints, community meeting “We had a horrific burial, it was unbelievable,” Smelcer said. “Yes, I just want to get my husband out of here. But I pray that everybody else’s issues here get solved because this cemetery is just nothing but a joke.”
And there are many more.
I don’t like to present a problem without offering a possible solution. With that in mind:
- In North Carolina, the General Assembly needs to:
- Revise statue to clearly include consumer protections for all customary burial products and services such as temporary markers, tents, flowers.
- Sole-source purchase ban should be expanded to cover all cemetery goods and services, not only caskets and vaults as current law dictates.
- Price lists and policies should be written, clear, current and available upon request.
- Minimum property upkeep standards for perpetual care cemeteries should be defined.
- Closer monitoring and enforcement of existing regulations is also needed.
- The regulatory body should be diversified to include more non-industry representatives.
- Consumer education guides should be created to spell out clearly the rights of families.
- An easier complaint process should be implemented with independent investigation and the ability to provide anonymous tips. Currently complaints received by the NC Cemetery Commission are forwarded to the cemetery in question for comment and resolution. I was unable with repeated attempts to get anyone to answer the phone at the number provided for the NC Cemetery Commission..number goes straight to voicemail..so anonymous tips from consumers or employees of unethical or illegal practices is not possible.
- At the national level, the Federal Trade Commission needs to expand the Funeral Rule to include cemeteries. Currently they only regulate cemeteries who also own a funeral home on the cemetery property. There needs to be greater consumer protections via regulation of the cemetery industry, similar to that which already exists in the funeral home industry.
- Importantly, consumers need to be aware that their local cemetery may be a for-profit corporation. I suspect few people realize that cemeteries are now stock market traded corporations and the person counseling them on burial arrangements earns a commission-only income. While every business must make a profit, the death industry is unique because it catches consumers at a vulnerable time immediately following the death of a loved one. Protections are needed to ensure ethical conduct. Greater transparency is needed so consumers can be fully aware.
I was compelled to research StoneMor because my family is buried in Wayne Memorial Park and one day, I may be as well. My grandparent’s and extended family’s graves are there and most recently, my father was buried there. My parents pre-planned their burial, purchasing plots in 1990 at a time before the cemetery was owned by StoneMor. When Dad died, we did not know the cemetery had changed hands, yet the difference in the experience was striking. Red flags of things which ‘didn’t seem quite right’ I encountered during our burial experience prompted me to research the company. I therefore make no claim of un-bias, rather I have tried here to present what I found as factually as possible. I encourage news outlets to conduct their own independent research to verify and expand upon what I have presented. I am happy to share sources and collaborate with verified members of the news media.