In a case that has lasted over a decade, clients of Reilly LLP were awarded over $7 million in attorneys’ fees and costs over $139,000 in a Feb. 21 order from Senior Judge Richard Webber of the Eastern District of Missouri.
“Our clients are pleased, which is what matters most,” said Daniel Reilly of Reilly LLP. “We think it’s a fair and reasonable award under the unique circumstances of this case.”
The case involved a group of plaintiffs, some banking and accounting firms, and other individuals asserting that Allegiant Bank, the original trustee of the National Prearranged Service Inc. fund, breached “multiple trustee duties” and failed to control trusts, protect assets and keep adequate records of activities, according
to the Reilly LLP website. All of the original defendants either settled or were acquitted, except PNC Bank, which was sued as successor to Allegiant Bank.
The plaintiffs alleged that NPS sold pre-need funeral contracts, which were supposedly backed by life insurance companies affiliated with NPS. NPS is no longer in existence, and the liability has passed through several banks as they were acquired by others.
Beginning in 1998, some “bad actors” in NPS ran a Ponzi-esque scheme in which money from policy buyers was used to pay out then-current funeral claims, Reilly said. In the process, as described in a 2012 amended complaint, money was taken from the pre-need trusts by people at NPS, and meanwhile, the policies’ cash value was depleted.
This was accomplished by actions such as taking out policy loans and replacing insurance policies that were fully paid with policies that were paid on a continual monthly basis. These actions took place between 1998 and 2004, Reilly said. Roughly 45,000 consumers were affected by these actions.
NPS was required to place 80% of money collected into a bank, Reilly said. The bank itself was not part of the Ponzi-esque part of the scheme but was involved because money was allowed to be drawn from the fund whenever it was wanted. Further, money was removed from the bank soon after it was deposited.