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The Honolulu Advertiser
Posted on: Monday, March 13, 2006

We need oversight of cemetery trusts

The Web site for RightStar Hawaii declares that the company's mission is "to deliver the highest quality of customer service with compassion, warmth, and understanding."

Perhaps that statement needs revision.

A court-ordered review of the cemetery operator's pre-need trust funds concluded that the trusts "have been routinely misused, mismanaged and looted by those who operated the RightStar companies."

The review is among the byproducts of lawsuits and a state criminal investigation into the alleged mismanagement of the trust funds underpinning the funeral plans and plots purchased by Hawai'i residents. As a report by Advertiser writer Jim Dooley indicates, the result is a shortfall in the accounts held for the benefit of 40,000 to 50,000 customers.

It certainly looks as if state regulatory officials were asleep at the wheel. There was a disgraceful lack of oversight exercised since November 2001, when the state licensed RightStar to operate cemeteries and companies that sell "pre-need" funeral plans.

Rules barring the dispersal of trust money, and requirements for regular reporting to the state, were in place from the start. Missing, however, were any barriers that might have held RightStar to more prudent financial practices.

State officials underscore their pledge that all consumer contracts will be honored while the sale to a new owner and operator are negotiated. But going forward, holes in the safety net have to be repaired.

This particular disaster may have originated some time ago, but enough years have passed that the current administration surely owes the public a radical course correction.

Whether this means more stringent regulations need to be adopted, or simply better administrative follow-through by state regulators, continued lapses can't be tolerated.

Consumers deserve an answer, and a plan for more deliberate oversight, from those who are supposed to be protecting their money.