Baltimore Funeral Home Owner Sentenced to over Four Years For Defrauding Customers and Bank of over $925,000 in Prepaid Funeral Expenses

Baltimore, Maryland - Chief U.S. District Judge Benson E. Legg sentenced Paul Stella, age 43, of Forest Hill, Maryland, today to 53 months in prison, followed by three years of supervised release for bank fraud in connection with stealing over $925,000 in prepaid funeral expenses to pay for gambling, hotels, trips and lavish gifts, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Legg ordered Stella to pay $757,521.22 in restitution.

U.S. Attorney Rod J. Rosenstein stated, “Paul Stella defrauded 191 customers of over $925,000 in prepaid funeral funds. He stole from elderly, sick and financially strapped people so that he could maintain a lifestyle that included extravagant gambling, vacations, eleven expensive vehicles and lavish gifts.”

William D. Chase, Special Agent in Charge of the Baltimore Division of the Federal Bureau of Investigation said, “The actions of Mr. Stella in stealing monies designated for funerals was an egregious breach of trust.” Mr. Chase also thanked the FBI’s Bel Air Office for their hard work on this case.

According to his plea agreement and court documents, Stella owned and operated Paul Stella Funeral Home located at 7527 Harford Road, Baltimore. Customers who wanted to pay in advance for the cost of their funeral entered into contracts with Stella. Stella defrauded the customers using two schemes.

First, Stella falsely represented to approximately 75 customers that he would safeguard their money and hold it in trust so the money would be available to pay for the customers’ funerals when they died. Instead, from 2003 to December 2006, Stella cashed and/or deposited over $370,000 of the customers’ monies into his personal and business bank accounts.

In the second fraud scheme, Stella looted over $550,000 in prepaid funeral funds from bank accounts which were established under the former owner of the funeral home. From June 2004 to January 2005, Stella illicitly closed 111 customer bank accounts by forging and causing to be forged customers’ signatures on letters to the bank purporting to authorize the closing of the prepaid funeral expense accounts. As a result, the bank closed the accounts and issued checks payable to the customers. Stella then fraudulently endorsed the bank checks and deposited the proceeds in bank accounts he controlled.

Many of the funeral home customers had particular health or financial problems that caused them to seek out the funeral arrangements. Some suffered from severe health problems including dementia, cancer or lung disease. Many were retired individuals on fixed pension incomes.

Stella spent the ill-gotten gains from the above schemes on extravagant gambling in Atlantic City, New Jersey and Las Vegas, spending over $500,000 at casinos and hotels. He also used the money to lease and make loan payments on 11 high-priced vehicles, and for a horse for his daughter, home improvements, vacations and lavish gifts.

Eventually, customers started to ask questions about their money and complained to the State Board of Morticians (Board). When the Board initiated an investigation, Stella asked one of his employees to take funeral files home, and falsely claimed that all prepaid funeral expense account monies in the bank accounts had been reinvested in life insurance products. The Board suspended his license on November 30, 2006.

United States Attorney Rod J. Rosenstein praised the Federal Bureau of Investigation and U.S. Postal Inspection Service for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorney Harry Gruber, who prosecuted the case.