By Steve Lundeberg
Albany Democrat-Herald | Posted: Thursday, July 9, 2009 12:00 am
The state rules they misused proceeds
The state has fined the former owners of Twin Oaks Memorial Gardens & Mausoleum more than a half-million dollars for misusing payments from clients.
The Riverside Drive facility had been under investigation by the Division of Finance and Corporate Securities since November. The division is a branch of the Department of Business and Consumer Services, which announced the findings today.
In an 11-page enforcement order, the DFCS outlined violations committed by Andres and Chantelle Hernandez of Jefferson, who owned the graveyard from 1990 to November 2005, when they sold it to Mike Terwilliger and William Clark Sr.
The Hernandezes were found to have entered into "preneed" contracts without state certification and to have failed to deposit proceeds from preneed sales into a trust fund.
Preneed contracts involve a client paying for death-related merchandise, such as a casket or headstone, ahead of time. Trust fund deposits are required to ensure there is money on hand to cover the costs of the items when the client dies.
The DFCS says that from November 2005 to the present, at least 42 people have been buried at Twin Oaks without the markers they'd purchased on a preneed basis. It also found that during their years of ownership, the Herndandezes sold at least 290 preneed contracts worth in excess of $400,000 and deposited all monies into a bank account used for personal as well as business expenses.
Because of those actions, the state has ordered the couple to pay $540,000 into the Funeral and Cemetery Consumer Protection Trust Fund, which will help Twin Oaks service the contracts the couple sold. The state also fined the Hernandezes the cost of the investigation, another $4,500.
Chantelle Hernandez did not respond this morning to an e-mail seeking comment.
The paper was able to speak with Tre Kennedy, the Lebanon attorney who represents Terwilliger.
Kennedy said his client is "ecstatic" and called the state findings "a complete exoneration" of Terwilliger, who had maintained that it was not he but the Hernandezes who were to blame for the 42 improperly marked graves.
The state did rule, however, to put restrictions on Terwilliger's ability to enter into preneed contracts, including forbidding him from selling grave markers on a preneed basis.
What now?
Andres and Chantelle Hernandez had sought $200,000 from Mike Terwilliger and William Clark Sr. in a lawsuit alleging default on a promissory note from the sale of the cemetery. Terwilliger had filed a countersuit based on the unfunded liabilities that state investigators ultimately found to be the Hernandezes' fault.
Linn County Circuit Court records now show that those suits have been settled and are awaiting a judge's dismissal order.
With the state investigation and lawsuit out of the way, what remains is the resolution of the foreclosure order issued against Twin Oaks after Terwilliger and Clark defaulted on a $600,000 loan as the unfunded liability issue bled the business.
Tre Kennedy, Terwilliger's attorney, is confident.
"Once again we have a viable business," he said. "I think we can approach the people who hold the note and work something out."