By the Numbers
Terry Alvin Kaufman operated Kaufman and Co. Funeral Home in Bad Axe, Michigan, a town of roughly 3,000 people in the state's Thumb region. For a decade, he collected prepaid funeral funds from families and from the Huron County Public Guardian, which manages financial affairs for adults deemed unable to manage their own.
He did not escrow the money. No portion of it was placed in the protected accounts Michigan law requires for prepaid funeral contracts.
Instead, Kaufman used the prepaid funds to pay his own salary. For ten years.
The scheme involved some of the most vulnerable residents in Huron County. The Public Guardian office refers vulnerable adults to local funeral homes to arrange prepaid services. These are adults who rely on the county guardian to manage their affairs. Kaufman was supposed to receive those funds, deposit them in a regulated trust or escrow account, and hold them until the family needed the funeral.
He took the money instead.
Michigan Attorney General Dana Nessel prosecuted the case. Kaufman pleaded no contest in March 2026 to 39 total counts: 31 counts of conversion of funeral contracts, 7 counts of embezzlement by an agent, and 1 count of conducting a criminal enterprise. A no-contest plea is not an admission of guilt but accepts conviction and sentencing. The Huron County Circuit Court sentenced him on May 11, 2026, to 7 to 20 years in prison and ordered $1,111,165.77 in restitution to 204 victims.
"I am proud of the prosecutors in my office who were able to secure this conviction and an order for more than $1 million in restitution for the hundreds of victims in this case," Nessel said in a statement announcing the plea.
The statement noted that Kaufman "collected funds through the Huron County Public Guardian" and "didn't properly escrow any of the funds."
How the System Failed
Michigan's prepaid funeral law requires directors to place consumer funds in a trust account, purchase an insurance policy funding the contract, or deposit them in a financial institution with specific consumer protections. The requirement exists on paper. What does not exist is a routine, proactive mechanism to verify that funeral homes are actually doing it.
The Michigan Department of Licensing and Regulatory Affairs (LARA) licenses funeral directors and investigates complaints. But complaint-driven enforcement means regulators only learn about a problem after someone reports one. Kaufman's scheme lasted a decade because nobody checked the escrow accounts until after the money was gone.
This is the same enforcement gap that enabled Joel Pietras in Connecticut to steal $790,000 from 120 families over 15 years. Obitley reported on that case in June 2026. Pietras took prepaid funds from families who believed they were purchasing future funeral services. He never placed the money in trust. The Connecticut Department of Consumer Protection investigated only after a whistleblower came forward.
Two states, two funeral directors, 324 victims combined, and more than $1.9 million stolen. Both schemes ran for over a decade. Neither was caught by a routine audit or inspection. Both were detected only after enough damage had accumulated that someone outside the system noticed.
The Public Guardian Problem
The Kaufman case has a dimension the Pietras case did not. Kaufman's victims included vulnerable adults whose financial affairs had been placed under the control of the Huron County Public Guardian. AG Nessel's statement said Kaufman collected funds through the Public Guardian's office for adults who were counting on that office to protect them.
The Public Guardian's office exists to be the safeguard. When vulnerable adults need someone to manage their financial affairs, the guardian assumes the responsibility to act in that person's best interest. The guardian contracted with Kaufman's funeral home for prepaid arrangements on behalf of those adults.
No one at the Public Guardian's office verified that the prepaid funds Kaufman received were actually deposited in trust. The same blind spot existed at the state level. The licensing board verified that Kaufman held a valid funeral director license. It did not verify that the prepaid funds sitting in his care matched the contracts he had sold.
The failure ran through three layers of oversight that each assumed another was doing the work. The county placed vulnerable adults under the Public Guardian's care, the guardian selected the funeral home, and the state licensed the director. Nobody verified that the prepaid funds were actually sitting in trust.
What Verification Would Look Like
After the Kaufman sentencing, the Michigan Funeral Directors Association told WJRT that prepaid funeral funds should come with independent verification. The association's position is that consumers should be able to confirm their prepaid funds are held in trust independently of the funeral director.
This is a reform that costs almost nothing to implement. A state database where funeral homes file annual proof of trust deposits. A postcard mailed to every prepaid contract holder confirming the balance. A requirement that escrow account statements be sent directly to the consumer rather than routed through the funeral home.
None of these existed in Michigan when Kaufman was stealing. None exist in most states today.
The Math on Who Gets Hurt
The average prepaid funeral contract in Michigan runs between $5,000 and $12,000. Kaufman's 204 victims lost an average of $5,447 each. For families in Bad Axe, where the median household income is below the state average, that money represented years of savings set aside to avoid burdening relatives after death.
The restitution order requires Kaufman to repay the full $1,111,165.77. He is 72 years old and serving a 7-to-20-year sentence. The funeral home is closed. Whether the victims recover any meaningful portion of their money depends on assets Kaufman may still hold, insurance bonds, and whatever the state can seize.
In the Pietras case in Connecticut, the state legislature created a $1 million victim compensation fund in June 2026. No equivalent fund exists in Michigan. Michigan's Crime Victim Rights Act provides compensation for physical injury crimes, but financial fraud victims are typically limited to the restitution order itself.
A Pattern, Not an Isolated Case
Kaufman is not the first Michigan funeral director prosecuted for prepaid fund theft. In 2019, the owner of a closed Flint funeral home was sentenced in an escrow case. In 2019, Royal Funeral Home was ordered to pay fines and reimburse consumers for prepaid funeral funds. The Michigan Department of Attorney General has a dedicated unit for health care fraud that has prosecuted multiple funeral directors over the past decade.
Every prosecution came after the money was already gone. Every case involved a funeral director who failed to escrow prepaid funds over a period of years. And every one was detected through a complaint or audit triggered by a specific report rather than through routine verification of trust account balances.
The cases keep repeating because the enforcement model is reactive. State regulators wait for a complaint. By the time a complaint surfaces, the money has been spent, the funeral home may be closing, and the victims are left with a restitution order that may never be fully paid.
The Regulator's Admission
In July 2026, Obitley sent a Freedom of Information Act request to the Michigan Department of Insurance and Financial Services (DIFS), the state agency that regulates insurance products including preneed funeral policies. We asked five basic questions: How many preneed policies are in force? How many complaints have been filed? What enforcement actions has DIFS taken? What is the market size? Has the agency ever studied this segment?
DIFS denied every item.
The agency stated it has no records of policy counts, premium volume, or market size for preneed funeral insurance. It claimed zero enforcement actions against funeral homes, directors, agents, or insurers related to preneed funeral products. Complaint data was withheld under MCL 500.1246(1), a state statute that makes insurance complaint investigation records confidential.
This means the same state where Terry Kaufman stole $1.1 million from 204 families over 10 years cannot produce a single record showing it actively polices the preneed insurance market. No tracking of how many policies exist. No record of enforcement. No studies. No market data.
Kaufman's decade of theft was not detected by DIFS. It was detected when families and the Public Guardian's office noticed the money was gone. By then, $1.1 million had been spent.
Obitley has appealed the DIFS response. We have also filed identical requests with insurance regulators in Illinois, Iowa, and Connecticut, the latter being the state where Joel Pietras defrauded 120 families over 15 years. We will report the results as they arrive.
What Families Can Do
Consumers who have purchased prepaid funeral contracts can take specific steps to ve*. Michigan Department of Insurance and Financial Services, FOIA Response #20804, July 28, 2026 (on file with Obitley).fy their funds are protected:
Ask the funeral home for written proof of where your prepaid funds are held. This should include the name of the financial institution, the account or policy number, and the current balance.
Request that trust account statements be sent directly to you annually rather than through the funeral home. If the funeral home refuses, that is a warning sign.
If you purchased a prepaid contract funded through an insurance policy, contact the insurance carrier directly to confirm the policy exists, is active, and lists the correct beneficiary.
Report any discrepancy to the Michigan Department of Licensing and Regulatory Affairs. Complaints can be filed online through the LARA complaint portal.
For families of vulnerable adults or those under guardianship, ask the guardian's office for documentation showing where prepaid funeral funds are deposited. The guardian has a legal obligation to provide an accounting of funds under its control.
What This Means for You
*Sources: ClickOnDetroit / WDIV, "Ex-Michigan funeral home director ordered to pay over $1M in restitution to 204 victims," March 18, 2026 (citing Michigan Attorney General Dana Nessel press release); WJRT ABC12, "Bad Axe funeral director sent to prison for stealing $1.1 million," May 11, 2026; Huron Daily Tribune, "Bad Axe funeral home founder gets 7-20 years in prison in $1M embezzlement case," May 11, 2026; WJRT ABC12, "Prepaid funeral funds should come with verification, association says," May 15, 2026; MLive.com, "How a trusted funeral director stole $1.1 million from Michigan's most vulnerable residents," July 23, 2026; Michigan Department of Attorney General press release on Terry Alvin Kaufman sentencing; Obitley.com, "Connecticut Pietras prepaid funeral fraud," June 2026.*
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