CHARLESTON, W.Va. -- A Charleston funeral home director knowingly misappropriated tens of thousands of dollars meant for clients who had paid for advance death services, even though the man has said he had simply forgotten to report the accounts to state authorities, an assistant state attorney general said Wednesday.
Elk Funeral Home director William Ray Surratt told reporters two weeks ago that he did not intend to rip off some of his "preneed" clients, who had agreed to a contract for a prearranged funeral.
After a preliminary hearing Wednesday, Assistant Attorney General Chris Hedges said that an investigation into the funeral home has discovered that Surratt had direct knowledge of the misappropriated contract funds, and essentially created a pyramid scheme by funneling the funds into his personal accounts.
Surratt paid for the funerals when the time of need arrived, Hedges said, but did not create a separate trust fund, as required by state law.
"They died not knowing they were victims of misappropriation," Hedges told the Gazette. "He provided some measure of funeral service, but he knew exactly who they were."
On Wednesday, Kanawha Circuit Judge Paul Zakaib Jr., granted a preliminary injunction against Surratt after he reached an agreement with the attorney general's office, promising that he would not enter into new preneed contracts until the civil action pending against him is resolved.
Attorney General Darrell McGraw's office filed the civil action in May, after a months-long investigation into Surratt's preneed contract accounts. Under state law, funeral home directors must report each preneed contract to the attorney general and set up a trust fund that must remain untouched until the time of death.
State auditors have so far discovered that Surratt did not report 19 preneed contracts, and say he misappropriated at least $77,000. The civil action seeks to permanently bar Surratt from entering into any more preneed contract arrangements.
Hedges said that once McGraw's office filed the civil action, Surratt called some of the clients who held the preneed contracts he did not report to the state.
"Somehow, he knew precisely who to call once the lawsuit was filed," Hedges said. "He had a record, he knew whose money he had taken."