Former cemetery owner avoids prison time

January 8, 2010

A former cemetery owner who pleaded guilty in July to theft and securities fraud will avoid prison and instead serve an eight-year sentence through community corrections programs.

Robert E. Nelms, 41, was formally sentenced Friday morning in Marion Superior Court to four years of home detention and four years of work release—in addition to two years of probation.

Nelms was accused of raiding millions of dollars from trust accounts of Memory Gardens Management Corp., which is now under the control of a court-appointed receiver.

Marion County prosecutors charged Nelms and his wife Deborah Johnson in January 2008 in a scheme in which they siphoned away $24 million set aside to maintain the graves of people who had paid in advance for their funerals.

Prosecutors dismissed all the charges against Johnson in July after she agreed to testify against Nelms.

The couple bought the Indianapolis-based cemetery and funeral home business for $27 million from Fred Meyer Jr. and his family in December 2004.

Within days, the couple drained all $24 million from their newly acquired company’s trust fund, which was supposed to be used to maintain grave sites in numerous cemeteries.

Memory Gardens operated six other cemeteries in Indiana, including Forest Lawn Memory Gardens & Funeral Home in Greenwood and Lincoln Memory Gardens in Boone County.

Most of the money, about $13.7 million, was transferred to repay a $13.5 million loan that Nelms used as a down payment to buy the business.

The Meyer family filed suit in early 2008, asking the court to appoint a receiver to oversee the business amid questions about the status of the trust fund.
Marion County prosecutors filed charges two weeks later.

Richard Shevitz of Indianapolis-based law firm Cohen & Malad LLP filed the complaint on behalf of the Meyer family. Shevitz is seeking class-action certification to include everyone who paid into the trust funds—a number he estimated to be “in the thousands.” The suit is set for trial in June.

Johnson Circuit Court Judge Mark Loyd ordered the company sold as part of the civil suit transferred to his court and consolidated with the receivership proceedings.

As part of a court order, any buyer of Memory Gardens would have to refund at least some of the millions of dollars missing from the trust funds. The remainder could come from a judgment in the civil suit, if successful.

Lynn Gray, a Franklin attorney, has been appointed by Johnson Circuit Court to oversee Memory Gardens’ operations.

Indianapolis-based Wilson St. Pierre Funeral Service & Crematory has emerged as a potential suitor of Memory Gardens, according to court filings.

Wilson St. Pierre already operates seven funeral homes—one in the Fountain Square neighborhood and two on the south side of Indianapolis, and one each in Greenwood, Franklin, Bargersville and Pendleton.

It is competing against the much larger StoneMor Properties in Pennsylvania, a publicly traded company that operates 235 cemeteries and 59 funeral homes in 25 states and Puerto Rico.

Wilson St. Pierre once managed the Greenwood cemetery and funeral home on State Road 135 for the Meyer family, but Nelms terminated the contract after he purchased Memory Gardens. Wilson St. Pierre then sued Nelms, claiming it had not been paid for management work and that Forest Lawn continued to use its name after breaking the contract. That lawsuit is pending in federal court.



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