By ANNIE GOELLER, Daily Journal of Johnson County staff writer
The owner of a cemetery and funeral home on State Road 135 and his wife are facing multiple criminal charges for what state officials called a raid of $22 million in trust fund money.
Robert Nelms, 39, and Debora Johnson-Nelms, 48, have been charged with theft, conspiracy to commit theft, fraud on a financial institution, violations of cemetery acts and loans out of a perpetual care fund. Nelms, who owns Memory Gardens Management Corp., also faces a charge of fraudulent, deceitful acts in connection with purchase or sale of a security.
"There are few things worse than victimizing the families of the dead at a time when they're grieving over their lost loved one," Marion County Prosecutor Carl Brizzi said.
Within eight days of Nelms' 2004 purchase of five Indiana funeral homes and cemeteries, including Forest Lawn Memory Gardens and Funeral Home, Nelms transferred and spent all but $1.1 million in a trust fund that state law requires to pay for care and maintenance of cemeteries. The money was not part of what people spent on pre-arranged burial or cemetery services, state officials said.
Less than four months later, all of the money in the trust fund, estimated at about $24 million, was gone, an eight-month state investigation found.
Nelms, who was arrested Thursday, transferred the funds to different accounts and used the money to pay back a $13.5 million loan for the initial purchase of the properties and to pay for his Center Grove area home, according to court records.
Secretary of State Todd Rokita said Nelms plotted the scheme and planned the theft before purchasing the business.
"Robert Nelms represents one of the worst elements of society; taking advantage of honest people who have chosen to invest their money for respectful purposes," Rokita said.
"We have meticulously detailed his scheme and we are shocked at the extent that Nelms has taken to defraud honest Hoosiers," Rokita said.
"He came into our state with a purpose. Now he'll wished he hadn't."
Attempts to contact Nelms' attorney were unsuccessful.
Officials are unsure if Johnson-Nelms is a co-owner in the business, but she was involved in the scam and is equally as responsible, said Matthew Symons, spokesman for the Marion County Prosecutor's Office.
Thursday afternoon, state officials appeared in Johnson Superior Court II to order a freeze on Nelms' accounts and to decide when to appoint someone to manage the cemeteries and funeral homes.
Officials believe $13 million of the money from Indiana is invested in a frozen account in Michigan, which an appointed owner would work to retrieve, Rokita said.
In December, Michigan officials began investigating Nelms' investment practices in a Grand Rapids cemetery and funeral home. Officials accused Nelms of misappropriating $4.2 million in trust funds.
Rokita did not believe any criminal charges had been filed in Michigan.
According to the Indiana investigation, the transfers began immediately after Nelms took ownership of the properties, with $13.5 million going to pay off a private loan for the initial purchase of the properties.
Nelms purchased the cemeteries and funeral homes from the Meyer family Dec. 21, 2004. In addition to Forest Lawn, at 1977 S. State Road 135, Nelms owns four other Indiana properties, including:
Chapel Hill Memorial Gardens and Funeral Home, Osceola
Covington Memorial Gardens and Funeral Home, Fort Wayne
Lincoln Memory Gardens, Whitestown
Gill Funeral Home, Washington
Johnson-Nelms told investigators her husband did not have anywhere near the amount of money needed for the down payment on the purchase, according to court records.
That's when officials said the couple devised a plan.
First, they asked the Meyer family if they could take control of the trust funds before the sale had been finalized. When the Meyer family refused, Nelms went to an acquaintance to borrow the money, according to court records.
Nelms was then advised by another acquaintance to find a small financial institution to serve as trustee over the trust fund so he could transfer money using certificates of debt, something that would not be allowed in a larger institution, according to court records.
As soon as the sale was finalized, Nelms transferred the trust fund money to another account.
Officials said Nelms transferred about $6 million into Indiana Investments Corp., a company he asked an acquaintance to be president of, according to court records.
Investigators believe Nelms forged financial documents to take money out of the trust fund, said Chris Naylor, state securities commissioner.
They also believe Nelms spent $1.2 million in closing costs for a home on Curry Road.
Under state law, the money in the trust fund can only be used to maintain and care for cemetery grounds.
Cemeteries are required to invest either 15 percent of the purchase price or 80 cents per square foot per burial plot into the fund, said Tracy Hicks, director of the state professional licensing agency, which oversees cemeteries.
Rokita estimated hundreds of Hoosiers could be impacted by the thefts.
While the state had received some complaints, he hoped that the case had been opened early enough that the cemeteries had not deteriorated, he said.
Nelms was arrested Thursday and taken to Marion County jail on $500,000 bond.
By Thursday afternoon, police had not arrested Johnson-Nelms, and they believed she planned to turn herself in, Symons said.
Both were planned for an initial court hearing Friday.