An Obitley investigation comparing continuing education requirements across two professions that serve the same grieving families reveals a regulatory gap that nobody in either industry has confronted publicly.
I hold a New York insurance license. Every two years, I complete continuing education that includes mandatory credits in fraud, waste, and abuse. I sit through those courses because the state of New York decided that anyone who handles consumer money in the insurance space needs a refresher on how people steal it. The requirement is not optional. If I do not complete it, I lose my license.
The funeral director who handles the same family's preneed contract, controls the trust fund, takes custody of the body, and processes the insurance assignment has never been required to take a single hour of fraud training. This is true for all 50 states.
This is not an argument against funeral directors. The vast majority of the more than 19,000 funeral homes in this country are run by honest, independent operators who do this work because they believe in it. They are the ones hurt most when a bad actor destroys community trust. The argument is that the regulatory system lets those honest operators down by refusing to set the same baseline that every other profession handling consumer money already meets.
But the story is more complicated than it first appears. How preneed is funded determines which regulator shows up. And in the cases documented on Obitley's fraud tracker, the bad actors exploited the funding path with the least oversight.
Two ways to prepay a funeral
A family prepaying for a funeral has two main options. Both are legal. Both are sold by the same funeral director across the same arrangement room table. But they trigger completely different regulatory systems.
Insurance-funded preneed. The funeral director helps the family purchase a final expense or burial insurance policy. Because this is an insurance product, the funeral director must hold a state insurance license (either a full life insurance producer license or a limited-lines preneed license). That license brings the full weight of the state Department of Insurance down on the transaction: licensing exams, background checks, mandatory continuing education, fraud training, cybersecurity requirements, and consumer protection rules enforced by the insurance commissioner.
Trust-funded preneed. The family signs a service contract and deposits money into a trust account managed by the funeral home. Because no insurance product is involved, no insurance license is required. The transaction falls under the jurisdiction of the state funeral board, which oversees annual trust reports and conducts periodic audits. But the funeral director who sells these trust contracts never has to pass an insurance exam, complete fraud CE, or maintain a cybersecurity program.
The distinction matters because the fraud cases in our tracker overwhelmingly involve trust-funded preneed. The funding mechanism with the least oversight is the one bad actors exploit.
The "drawer policy" fraud
Here is how trust-funded preneed fraud works in practice.
A funeral director sits down with an elderly family. They sign a preneed contract. The family pays cash or writes a personal check. The director is supposed to deposit that money into a state-approved trust account within 10 to 30 days.
Instead, the director writes the contract on a basic word processor, accepts the payment, puts the contract in a desk drawer, and pockets the cash. The contract never appears in the funeral home's books. It never shows up on the annual trust report submitted to the state funeral board. The desk audit, which reviews paperwork the funeral home itself submits, has no way to catch a contract that was never recorded.
The fraud is not discovered until a death occurs, sometimes a decade later. The family arrives to claim the prepaid services. There is no record. The money is gone. By then, the director may have retired, died, or moved out of state. The statute of limitations may have expired. And the state regulatory body, which relied on self-reported paperwork, never knew the transaction existed.
This is not a hypothetical. Attorneys who practice deathcare law document this exact pattern. The legal term is "lapping" funds: taking new deposits to cover old shortages, creating an ever-deepening hole that collapses when someone finally asks for the money.
Who actually regulates what?
The oversight of preneed funeral money is split across multiple regulators, and the cracks between them are where the fraud happens.
State Department of Insurance regulates insurance-funded preneed. If a funeral director sells an insurance policy, they need an insurance license, they complete insurance CE, and they answer to the insurance commissioner. Fraud in this lane triggers license revocation, civil penalties, and criminal prosecution by the insurance fraud unit.
State Funeral Board regulates trust-funded preneed. The funeral home submits annual trust reports showing deposits, investment income, and withdrawals for deaths. A state examiner reviews these reports at a desk. Unless the funeral home self-reports the fraud or a consumer files a complaint, the board has no mechanism to discover it. Unannounced on-site audits are rare. Most states lack the staff to conduct them.
The FTC enforces the Funeral Rule, which governs pricing disclosure and consumer rights. But the Funeral Rule addresses what the funeral home tells you about prices. It does not address what the funeral home does with your money after you pay.
State Attorneys General and local prosecutors get involved only after the fraud is discovered. By the time a prosecutor sees the case, the money is already gone. Prosecutors file embezzlement and grand larceny charges, but the prevention mechanism, the regulatory layer that should have caught the fraud before families lost everything, was never there.
The FBI enters when the scheme crosses state lines or involves wire fraud. By the time the FBI arrives, families have already been harmed. Federal law enforcement investigates crimes after they happen. Compliance before the fact is someone else's job, and in trust-funded preneed, that someone else barely exists.
The gap is simple. Insurance-funded preneed has a prevention layer: mandatory licensing, mandatory fraud training, mandatory CE. Trust-funded preneed has a detection layer: annual self-reported paperwork reviewed at a desk. Prevention catches fraud before families lose money. Detection catches it after.
What insurance agents must learn
The National Association of Insurance Commissioners maintains Model Law chart PR-20, last reviewed April 2024. It tracks continuing education requirements for insurance producers in all 50 states plus DC. The data reveals a regulatory system built on the assumption that anyone handling consumer money needs ongoing training in ethics, fraud, and consumer protection.
48 of 50 states explicitly mandate 3 hours of ethics per CE cycle. The standard cycle is 24 hours every 2 years. Only New York (15 hours, with ethics covered through Regulation 187) and South Dakota do not specifically require an ethics course as part of their CE hours.
California goes further. Since March 2023, SB 1242 requires 1 hour of insurance fraud study embedded within the 3-hour ethics course. The California Department of Insurance publishes specific guidelines for what that fraud hour must cover.
New Jersey requires 3 hours specifically in "fraud, ethics, or other subject matter required by the commissioner." Fraud is listed first.
Fraud training is not optional. It is built into the CE structure either as a standalone requirement or embedded within mandatory ethics hours. On top of that, insurers themselves are required to maintain anti-fraud plans with employee training programs in at least 20 states, per the National Insurance Crime Bureau's State Mandated Training Guide.
Cybersecurity training: mandatory for insurance, absent for funeral directors
The NAIC Insurance Data Security Model Law (#668), adopted October 2017, establishes requirements for written information security programs, cybersecurity event investigation, breach notification, and cybersecurity awareness training for all personnel.
28 jurisdictions have adopted Model #668: AL, AK, CT, DE, HI, IL, IN, IA, KY, LA, ME, MD, MI, MN, MS, MO, NH, ND, OH, OK, PA, PR, RI, SC, TN, VT, VA, WI.
Section 4.D.5 of the Model Law requires licensees to "provide its personnel with cybersecurity awareness training that is updated as necessary to reflect risks identified by the Licensee in the Risk Assessment."
Every state has also adopted NAIC Model #672 to comply with GLBA requirements, which includes privacy notice and safeguards rule provisions applicable to insurance licensees including agents.
Zero states require cybersecurity training for funeral director licensing. Zero states require funeral directors to maintain written information security programs. The FTC Funeral Rule, the primary federal regulation governing funeral providers, addresses pricing disclosure. It does not address data security.
Senior and elder protection training
Insurance agents who sell life insurance products to seniors must comply with state suitability and best-interest standards. New York's Regulation 187 requires a best interest standard for all life insurance recommendations, with explicit training requirements on protecting senior clients with diminished capacity or financial exploitation. It went into full effect February 1, 2020.
Most states also require dedicated long-term care insurance training for agents who sell those products: 8 hours initial, 4 hours ongoing per renewal cycle. This training covers Medicaid planning, suitability, and senior consumer protection.
Zero states require funeral directors to complete elder exploitation or senior protection training, despite funeral directors routinely meeting with elderly consumers to discuss preneed contracts worth thousands of dollars.
What funeral directors must learn: almost nothing
The American Board of Funeral Service Education tracks CE requirements for funeral directors. The data reveals a regulatory system with no minimum standard.
9 states require ZERO continuing education for funeral directors: Alaska, California, Colorado, Hawaii, Mississippi, Missouri, North Dakota, Oregon, and South Dakota. A licensed funeral director in these states can practice for 40 years without taking a single hour of refresher training on anything.
Among states that do require CE, the requirements are minimal. Most mandate 6 to 12 hours per renewal cycle, typically 2 years. Only Oklahoma requires 1 hour of ethics. Texas requires 2 hours of law and ethics per 2-year cycle.
No state requires funeral directors to complete training in:
- Fraud prevention or detection
- Consumer financial protection
- Cybersecurity or data security
- Elder financial exploitation
- Preneed contract management
- Conflicts of interest
Why this matters now
The cases documented on Obitley's fraud tracker paint the picture that mandatory training might have prevented.
Return to Nature, Penrose, Colorado: Jon and Carie Hallford stored 190 decomposing bodies in a building without refrigeration. They gave families concrete mix instead of ashes. The state of Colorado had not inspected a single funeral home in 2020 or 2021. There was no one to inspect them. Colorado had zero funeral home regulators on staff. The investigation fell to the Colorado Bureau of Investigation, then the FBI. Jon Hallford was sentenced to 40 years in state prison and 20 years in federal prison. Carie Hallford received 30 years state and 18 years federal. Federal restitution was set at $1.07 million. None of it would have brought back the 190 bodies. But an inspection regime, backed by mandatory training requirements, might have caught the Hallfords before 190 families received concrete dust instead of their loved ones.
Davis Mortuary, Pueblo, Colorado: Brian Cotter was the elected Pueblo County Coroner. He and his brother Christopher were arrested in June 2026 after Colorado's first-ever funeral home inspectors found 24 decomposing bodies behind a concealed door. Some had been there more than 15 years. Colorado had to pass an entirely new licensing law (HB 24-1335) and hire two inspectors to catch a man who was supposed to be investigating deaths and instead hid them. The Cotter brothers face 152 felony counts. The Colorado Bureau of Investigation led that case too.
Robert Bush, Hull, United Kingdom: Sentenced to 20 years on July 31, 2026 for 67 charges including preventing lawful burials and fraud. He operated Legacy Independent Funeral Directors for 14 years. 35 bodies were found abandoned at his premises. 226 people bought fake funeral plans. £562,117 was stolen through fraudulent plans. Bush transferred approximately £1.49 million to his personal accounts while bodies decomposed in his care. Some families received animal remains instead of human ashes.
Pietras Funeral Home, Connecticut: Charged criminally for misuse of prepaid funeral funds. Families who paid in advance for peace of mind received neither funerals nor refunds. The money was gone. Connecticut requires continuing education for funeral directors, but the curriculum includes no fraud prevention, no ethics hours, and no training on how to manage preneed trust accounts. After Philip Pietras embezzled funds from more than 120 people over a decade, Connecticut legislators created a $1 million victim compensation fund. Taxpayers covered the cost of a crime that mandatory fraud training might have prevented.
Terry Kaufman, Bad Axe, Michigan: A funeral director who embezzled $1.1 million from 204 preneed trust fund victims, including more than 50 wards of the state who could not make their own decisions. The Michigan Department of Insurance and Financial Services documented years of regulatory failures to detect the theft. Kaufman pleaded no contest in March 2026 and was sentenced to 7 to 20 years.
Jeffrey Phares, West Virginia: A cemetery operator convicted of fraud involving preneed burial contracts. Families paid for plots and vaults that were never delivered. He pleaded guilty to federal wire fraud and faces up to 20 years.
None of these operators were required to complete a single hour of fraud awareness training. None were required to learn how to recognize financial exploitation of elderly consumers. None were required to maintain data security programs protecting the Social Security numbers and financial information they collected from grieving families.
And the public paid for the aftermath. Every investigation by the Colorado Bureau of Investigation, every FBI wire fraud case, every state prosecution, every emergency identification of remains, every court-appointed receiver, every legislative session spent drafting new laws after the fact. Taxpayers absorbed those costs.
Davis Mortuary, Pueblo, Colorado: $762,000 and counting. The investigation into Brian Cotter's Davis Mortuary cost Pueblo County taxpayers $762,000 as of March 2026, according to County Commissioner Miles Lucero. The state capped its contribution at $300,000, leaving Pueblo County with a $462,000 bill. Roughly 25 DNA tests at $10,000 each accounted for $250,000 of that cost, as officials worked to identify decomposing bodies that had been hidden for up to 15 years. Governor Polis declared a disaster emergency to support the response. All of this because the state had zero inspectors and zero training requirements when Cotter was elected coroner and began hiding bodies.
Return to Nature, Penrose, Colorado: $950 million civil judgment. A judge ordered Jon and Carie Hallford to pay $950 million to the families of 190 victims in August 2024. The judgment is largely symbolic. The Hallfords were broke. But the investigation that brought them to justice required the Colorado Bureau of Investigation, the FBI, the EPA, and the Fremont County Sheriff's Office. The couple took $130,000 from families for cremation services that were never performed. They gave them concrete mix instead of ashes. The state's response was to pass an entirely new licensing law and appropriate $339,196 to hire 2.8 full-time employees to inspect 330 facilities. That is the entire regulatory budget. Less than half the cost of investigating a single case.
Pietras Family Funeral Home, Connecticut: $1 million state compensation fund. After Philip Pietras embezzled prepaid funeral funds from more than 120 people over a decade, Connecticut legislators passed the "Act Concerning Unlawful Funeral Service Practices" and created a $1 million victim compensation fund. Families can claim up to $10,000 per stolen contract. The state also funded a working group to study funeral home oversight. Taxpayers covered the cost of a crime that mandatory fraud training for funeral directors might have prevented.
Terry Kaufman, Bad Axe, Michigan: $1.1 million in stolen preneed funds. Kaufman was ordered to pay $1,111,165.77 in restitution. The Michigan Attorney General's office said there are no state compensation funds available for victims of this type of financial crime.
The math is simple. Colorado's entire funeral home inspection budget is $339,196 per year. The Davis Mortuary investigation alone cost $762,000. The Return to Nature civil judgment was $950 million. Connecticut appropriated $1 million just to compensate Pietras victims. Mandatory fraud training for funeral directors, modeled on what 48 states already require of insurance agents, would cost a fraction of what a single case costs taxpayers after the fact.
The cases listed above are not isolated incidents. They are the predictable result of a system that requires the insurance agent to learn about fraud every two years and requires the funeral director to learn nothing.
The four-layer insurance model vs the funeral director system
Insurance agents operate under a four-layer mandatory education regime:
- Biennial CE with mandatory ethics hours - 48 of 50 states require 3 hours of ethics every renewal cycle. Failure to complete means license revocation.
- Fraud awareness training - Either embedded in ethics CE or mandated through insurer anti-fraud plans that must train all agents and claims personnel.
- Cybersecurity data security programs - NAIC Model #668 (28 states adopted) requires written information security programs, cybersecurity awareness training, and breach notification.
- Senior and elder protection training - States require training on protecting elderly consumers from financial exploitation, particularly for life insurance and long-term care product sales.
Funeral directors operate under zero of these layers. No mandatory ethics hours. No fraud training. No cybersecurity requirements. No elder exploitation training. Every layer of protection that insurance agents face is missing from funeral director regulation.
What would need to change
The comparison points to specific, actionable reforms that mirror what the insurance industry already requires of its licensees:
Mandatory ethics CE for funeral directors. Every state should require at least 3 hours of ethics per renewal cycle, matching the insurance agent standard. The curriculum should cover preneed contract management, conflicts of interest, and consumer financial protection.
Fraud awareness training. Every state should require at least 1 hour of fraud prevention training, modeled on California's SB 1242 requirement for insurance agents. Funeral directors handle consumer funds, trust accounts, and insurance assignments. They should learn to recognize fraud patterns.
Trust-funded preneed oversight reform. State funeral boards should require unannounced on-site audits of preneed trust records, rather than relying solely on desk reviews of self-reported paperwork. The "drawer policy" fraud pattern proves that self-reporting fails when the fraud is the thing being reported.
Data security requirements. The FTC should extend data security rules to funeral providers, or states should adopt requirements modeled on NAIC Model #668. Funeral homes collect Social Security numbers, dates of birth, financial account information, and insurance policy details. That data requires protection.
Elder exploitation training. Funeral directors meet with elderly consumers during emotionally vulnerable moments. Training to recognize signs of undue influence, diminished capacity, or financial exploitation should be mandatory, as it is for insurance agents selling annuities.
None of these reforms would prevent families from choosing preneed arrangements. They would bring funeral director education requirements closer to what every other profession handling consumer money already faces.
The insurance agent who sells the policy gets trained. The funeral director who controls the trust does not. And the cases on Obitley's fraud tracker show what that choice costs.
*Sources: NAIC Producer Education Chart PR-20 (April 2024); NAIC Insurance Data Security Model Law #668 (October 2017); NAIC Annuity Suitability Best Interest Model Regulation #275 (revised 2020); NICB State Mandated Training Guide (2018); CA Insurance Code §1749.3 and CDI Ethics Training Guidelines (SB 1242, 2023); NJ Administrative Code 11:17-3.2; NY DFS Regulation 187 (11 NYCRR 224); American Board of Funeral Service Education CE requirements; Obitley.com fraud tracker (obitley.com/tracker). Preneed trust mechanism: NY State Department of Health Publication 0703; UMB Institutional Banking preneed trust analysis; deathcarelaw.com preneed fraud statute of limitations analysis. Robert Bush sentencing: BBC News, The Guardian, Reuters, AP, July 31, 2026. Davis Mortuary investigation cost: KRDO News, March 3, 2026. Return to Nature $950M civil judgment: TIME, August 6, 2024. Colorado HB 24-1335 fiscal note: Colorado General Assembly, $339,196 appropriation, FY 2024-25. Pietras compensation fund: NBC Connecticut, May 7, 2026. Kaufman sentencing: Michigan Attorney General press release, May 11, 2026.*
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