Investigations

Customers who prepaid for funerals may be out thousands

AUSTIN (KXAN) – After decades in business in Central Texas, well-known Austin Peel and Son Funeral Home is under investigation by the Texas Department of Banking for illegally selling prepaid funeral benefit contracts.

The Texas Department of Banking said family-owned and operated Peel and Son illegally collected $539,237.90 in prepaid funeral payments from 247 customers since 2006. These actions were illegal because the owner, Billy F. Peel, wasn’t licensed to sell prepaid funeral contracts.

Now, these customers are left worried about whether the money they say they’ve paid out to the funeral home in advance of their deaths is lost entirely. After the Department of Banking seized the funeral home’s records on August 2, 2018, it reported there was only $3,000 left in the account.

“It was supposed to be seamless.”

Hazel Bonilla’s father, Andrew, passed away in 2014. Although his death was expected, even four years later coping with the loss is still difficult for his adult daughter. She says they shared a special bond.

“I held his hand, just as he took his last breath,” Bonilla said, crying.

As a couple, Andrew Bonilla and his wife, Josie, had been preparing for their deaths. Andrew was a loyal Dallas Cowboys fan and devout Catholic – he wanted that reflected during his funeral and on his headstone.

The couple also wanted to ensure their children would not have to deal with the financial burden of paying for their funerals. Their daughter says the two spent years saving money for the cost – paying what they could, when they could, for more than a decade.

“She’d pay a couple hundred here, $150 there, $200 here,” Bonilla said of her mother. “She's always taught us that if you can be independent and do something yourself, do it. We learned from their example.”

In all, and according to the contract the couple had with the funeral home, the total cost would be nearly $7,000 for Josie’s funeral alone.

However, there are concerns about their contract – it’s not dated – and they say Billy Peel left off something else on the document, as well.

“His signature wasn't on there, the seal wasn't on there, and the license number was not on there,” Bonilla said.

“It was supposed to be seamless. But now, I don't know. I don't know whether to call around and find out if there's another funeral home,” she added, concerned about whether her mother will get the funeral she’s always wanted.

“Her casket. It's supposed to say, 'Beloved Mother' and 'Beloved Grandmother,’” she said, crying. “I want her to have what she asked for. That casket meant a lot to her because it was the last thing that we were going to see her in.”

According to their undated contract, her mother’s casket makes up a significant portion of the almost $7,000 price tag – almost $3,000.

Making matters worse, Bonilla says her mother’s health is declining since her Alzheimer’s diagnosis. She says her mother is no longer able to help track down this information, including her funeral payment receipts.

“She handed me an envelope full of receipts. She saves receipts for everything. We went through the receipts and I don't know which ones related to which services,” she said. “What did [Peel] do with my mom's money? What'd he do with all that money?”

Following the money

Tracking down the money is something the Texas Department of Banking may never learn, either. The state agency is still working to find out whether customers will actually get their money back.

“They likely have lost their money because there are no funds available,” said Stephanie Newberg, the deputy commissioner at the department. “They're going to likely lose the funds, unless through prosecution, we can recover the funds.”

When staff met with Mr. Peel, Newberg said, “He came in and did say, yes, that he had taken the money from these individuals and that he did not have the funds, but that he wanted to honor the contracts and he wanted to try to find a way to repay them.”

State records show Peel was previously licensed to sell prepaid funeral contracts for two decades. In 2006 however, he never renewed the license, as is required every year, but kept selling the prepaid funeral contracts.

“From that point forward, he was not allowed to sell prepaid funeral contracts and he knew the law because he had had a permit,” Newberg said. “We assumed that he was following the law.”

Newberg says she’s worked on a couple of other cases like this one within the last 10 years. In those cases, the funeral homes were able to pay restitution to the affected customers and avoided criminal prosecution. It’s not clear here whether Peel can do the same.

KXAN reached out multiple times to Peel for an interview, but, even when we went to see him in person at the funeral home, he refused to speak with us and refused to give us his attorney’s name and contact information. Minutes after we left the business last month, he drove away.

Meanwhile, Josephine Bonilla’s family remains uncertain about her future.

“If we have to come up with financial means to get her what she wants, we'll start on it right away,” Hazel Bonilla said. “We'll do what we can. We’ll get it done.”

Some customers may have money returned

The Texas Department of Banking will hold a hearing to order restitution and assess fines against Peel. If Peel is unable to pay back the affected customers, the department will turn over its investigation for possible criminal prosecution. Peel could face theft of funds charges.

Although Peel was not allowed to sell prepaid funeral contracts, he was still allowed to do business. He was just supposed to be selling through an insurance company – not on his own.

The state says it discovered a dozen or so prepaid contracts Peel sold prior to 2006 when he still had a license. Those customers will likely get most of their money back because they should be covered under what’s called a “Guaranty Fund.”

Under Texas state law, the Department of Banking maintains and administers funds to guarantee performance by sellers of trust-funded and insurance-funded prepaid funeral benefits contracts. According to their website, “The Guaranty Fund Advisory Council is charged with supervising the operation and maintenance of these prepaid funeral benefit contract funds.”

However, the fund covers those who may have purchased a prepaid funeral contract from a licensed company. The law requires that customers must have a contract and payments in order to make a guaranty fund claim. Customers who purchase a contract from a business that doesn’t have a permit from the DOB will not be eligible to receive the benefits of the Guaranty Fund. For more information about the fund and if you may be eligible to receive the protection, visit their website: http://www.dob.texas.gov/about-us/guaranty-fund-advisory-council-gfac

For now, the Bonilla family’s money, and money from hundreds of others, may be in limbo.

Tips for protecting yourself or a loved one interested in prepaying for a funeral

Do your research before paying anything

In Texas, confirm the funeral home you’re looking to contract with is licensed with the state's Department of Banking. Do not contract with any seller who does not hold a valid permit. Otherwise, you won’t have financial protections for your investment.

To view a list of sellers that have permits or for additional information regarding prepaid funeral contracts, go to the prepaid funeral website or search on the Texas Department of Banking's website. People can also contact the Texas Department of Banking at 2601 N. Lamar Blvd Austin, Texas 78705, by phone at 1 (877) 276-5554.

Any funeral home or cemetery that sells prepaid funeral merchandise or services in Texas must:

  • Have a trust-funded permit issued by The Texas Department of Banking
  • Sell through a third-party trust-funded permit holder
  • Sell through a third-party insurance-funded permit holder.

Familiarize yourself with the contract

One way to know and recognize that you’re dealing with a seller who holds a valid prepaid funeral contract permit in Texas? The seller's preprinted name and permit number should always be included at the top of page one of the prepaid funeral contract.

The Department of Banking says people shouldn't enter into a prepaid funeral contract that has spaces to insert the deceased name or date of service, as that could indicate you're dealing with an unlicensed seller. It also wants anyone to report any suspicious activity such as this in writing to the Department together with copies of any contracts or other information provided by the seller. 

Tell your family about your plans

If and when you make any plans when arranging funeral services, let your loved ones know about them and where any associated documents are located.

File a Consumer Complaint

For information about how to file a complaint against a perpetual care cemetery, a prepaid funeral contract seller, or cemetery broker, visit the funeral complaint section of the Texas Department of Banking's website.

You can also complete the Special Audits Consumer Complaint Form or draft a letter of complaint. The complaint should include the name and office location of the entity. It should specifically and briefly explain the problem in a simple, chronological narrative, making sure to include names and dates. Make legible photocopies of any documentary evidence which supports your claim and include them with the complaint. People can call toll free at (877) 276-5554, email either the Perpetual Care Cemetery or Prepaid Funeral department, or mail the complaint to:

Texas Department of Banking
Special Audits Division
2601 N. Lamar Blvd.
Austin, Texas 78705-4294


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