After Arrest Threat, New York Funeral Home Complies With Court Order, Produces Information to the FTC

To avoid a possible arrest warrant and other legal action that could result in an injunction and civil penalties, Morehead McKim Gallaher Funeral Directors, Inc. and its director, Michael Bannon, submitted to the Federal Trade Commission all materials and information needed to process the funeral home into the Funeral Rule Offenders Program (FROP), a self-regulatory training and certification program developed by the FTC and the National Funeral Directors Association as an alternative to traditional federal district court law enforcement actions. Funeral homes that choose to participate in FROP make a voluntary payment to the U.S. Treasury in lieu of paying civil penalties of up to $11,000 per Rule violation.

The FTC staff visited the funeral home as part of a routine sweep of funeral homes to verify compliance with the FTC's Funeral Rule. The Funeral Rule requires funeral homes to provide consumers with copies of itemized price lists, and is designed to ensure that consumers know they can purchase only the goods and services they want or need. After completing the test shop visits, the FTC staff had notified the funeral home that it appeared to be in violation of the Rule. The respondents accepted the opportunity to resolve the possible Funeral Rule violations by participating in FROP. The respondents, however, then failed to produce the materials and information that the FTC had requested. The requested materials and information included financial information that would enable the FTC staff to determine the amount of the funeral home's voluntary payment prior to FROP enrollment and other information concerning the home's alleged Rule violations.

The funeral home and Bannon ignored repeated FTC requests for this information, even after the Commission issued and served a civil investigative demand (CID), and after the U.S. District Court for the Southern District of New York, at the request of the Commission, ordered them to comply with the CID. On October 25, 2002, the court cited the funeral home and Bannon with civil contempt for failing to comply with its June 28, 2002 order enforcing the CID. The court ordered the funeral home and Bannon to comply within five days or face fines of $500 per day. The court warned that further noncompliance after 10 days could result in additional sanctions, including arrest.

The order of civil contempt was entered by the U.S. District Court for the Southern District of New York on October 25, 2002. The respondents continued to fail to comply until the FTC staff filed a notice for a motion for issuance of an arrest warrant against Bannon. The respondents promptly arranged for the production of all materials requested by the CID, made their voluntary payment in lieu of civil penalty, and agreed to enroll in FROP.

Copies of the new releases pertaining to this case, and the order of civil contempt, are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the US and abroad.

(Civil Action No. M18-304)