GONZALES — A former Baton Rouge developer who started an Ascension Parish cemetery now under investigation over missing funds was convicted of bank fraud in the 1980s but was granted a license in 2008 to run the graveyard after a state board deemed him rehabilitated.
The Louisiana Cemetery Board started the probe into the financially troubled records of Oak Lane Memorial Park cemetery six years after it allowed owner George M. Bonfanti to be a part of the perpetual care cemetery in Prairieville, despite his being a felon.
The recent investigation began after the board discovered the cemetery collected $76,000 for planned grave construction and perpetual care but the money was never deposited into required trust accounts.
Bonfanti, who was one of the owners and also developed and operated the cemetery, was convicted in 1989 of bank fraud over $19.1 million in fraudulent loans with the now-defunct Sun Belt Federal Bank and was sent to prison by a federal judge.
The Cemetery Board, by unanimous vote in 2008, authorized Bonfanti to develop and run the Prairieville cemetery, having determined he was rehabilitated, board minutes show.
Lucy McCann, Cemetery Board director, declined recently to say whether the board’s investigation into Oak Lane could result in a criminal probe.
“This is an ongoing investigation. We have no comment,” McCann said in an email.
The Cemetery Board regulates Louisiana cemeteries, their marketing tactics and grave site sales, which can involve large sums of money set aside for years. Payment into perpetual care trust funds is monitored closely by state regulators to ensure enough money is reserved to keep up cemeteries, as promised, once the graves are sold.
Earlier this year, the board halted Oak Lane from selling “pre-need” cemetery plots in light of the money discovered missing from the trust funds. The cemetery is appealing that ruling.
The board inquiry follows a late 2011 settlement between the board and the cemetery that required Oak Lane to make $35,000 in additional payments to the perpetual care trust fund over six years. The cemetery and board had a dispute over how much Oak Lane should pay into the trust fund on discounted grave sites.
Last month, United Community Bank also took back 29 acres of the cemetery’s undeveloped land that lies along La. 73 during a sheriff’s sale after the cemetery’s $3.3 million loan was foreclosed.
McCann said the board has received calls from concerned Oak Lane grave owners, but she said the money deposited in trust accounts for long-term care of graves is safe and can’t be tapped by Oak Lane for anything else.
Bonfanti, who no longer owns Oak Lane but still manages it, would not answer questions about the cemetery and his financial affairs, but he said in a statement that the perpetual care trust account holds about $400,000 and is in solid shape.
After running into financial difficulties the past few years when grave sales slackened, he is contributing money monthly to catch up on trust account arrears, he has said.
“While managing Oak Lane, I helped establish the cemetery into a beautiful and meaningful part of our community that will last,” Bonfanti said in an email.
McCann said she believes “even today, that the board acted appropriately under the law in the issuance of the Oak Lane license.”
McCann said the board made the decision knowing the wife of Bonfanti’s co-defendant in the 1980s bank fraud case, Gerald E. “Jerry” Fackrell Jr., also is an owner of the cemetery.
Katherine Kaye Fackrell is a physical education and seventh-grade science teacher who lives in Tyler, Texas, with her husband. Bonfanti told the board in 2008 that she was one of two Oak Lane cemetery partners who had cemetery experience in Texas.
Kaye Fackrell, according to business records, also is a partner in other Bonfanti companies.
The Fackrells have not returned repeated calls for comment, but the Texas cemetery that Kaye and Jerry Fackrell ran together with the other Oak Lane partner, Joseph P. Arisco, filed for bankruptcy in 2011 and is now owned by other investors, federal bankruptcy and Texas cemetery records show.
In April 1989, a federal jury found Bonfanti and Jerry Fackrell guilty of submitting falsified loan documents to Sun Belt that inflated construction costs and architectural fees for the Essen Centre office building and Jefferson Lakes apartment complex.
The men diverted the extra cash for other purposes, including to buy a trucking company.
The Advocate news accounts, available public records and documents obtained from the Cemetery Board establish Bonfanti’s and Fackrell’s criminal past, their ties and some of Bonfanti’s history since his release from prison in December 1991.
Now-deceased U.S. District Judge Frank Polozola sentenced Bonfanti to five years in prison and Jerry Fackrell to six years. They were ordered to jointly pay $12.9 million in restitution.
Bonfanti served a little more than two years and returned to the Baton Rouge area and the real estate business, renewing his expired real estate license in 1992.
Under state law and Cemetery Board rules, the board must determine whether cemetery applicants and their companies, officers and managers are “financially responsible, trustworthy and have good personal and business reputations.”
The rules do not bar convicted felons from running cemeteries, but say those applicants must show “complete rehabilitation.”
In 2007 and 2008, Bonfanti began making his case, submitting records of his conviction as well as letters of recommendation.
Extensive minutes from a Nov. 9, 2007, board meeting show Bonfanti opened discussion by saying “I made a mistake” and detailed one of the four bank fraud counts against him, but board records also show others attempted to downplay the criminality of his conviction.
Eric Kracht, one of Bonfanti’s lawyers in the late 1980s, wrote to the board that he was not aware of any conduct by Bonfanti that had a criminal intent and claimed his prosecution was due largely to the political climate of the day.
“That is, because the federal government wound up paying billions of dollars to bail out the S&Ls, it was necessary for some blood to be shed and some heads to roll. In my view, Mr. Bonfanti was one of the unfortunate victims of that phenomenon,” Kracht wrote.
Bonfanti also told the Cemetery Board in November 2007 that his attorney had said that using loan funds for another purpose was done all the time, but Bonfanti said that he found out later it amounted to a false statement to bank regulators.
However, at Bonfanti’s trial, Polozola called the case “flagrant fraud” and said that those involved “knew what they were doing at the time they did it.”
Former U.S. Attorney P. Raymond Lamonica, whose office prosecuted Bonfanti and Fackrell, said a unanimous jury found them guilty.
“The notion that somehow that (case) was political is absurd,” Lamonica, an LSU law professor, said recently.
The board would not agree that Bonfanti was rehabilitated at its November meeting. Instead, members wanted more proof that he was a good financial risk.
Cordell H. White, then executive vice president and chief operating officer of First Community Bank in Hammond, gave the board a Dec. 5, 2007, letter saying Bonfanti had been a reputable borrower.
But White, now a regional president for Investar Bank, also said he did not know the full extent of Bonfanti’s problems in the 1980s.
“I was never aware of the fact that he was convicted of bank fraud,” White said.
First Community Bank also ended up making one of the initial loans for the cemetery project, which White said was paid in full.
Bonfanti told the board that partner Joseph P. Arisco would also bring with him management experience in the cemetery business because he along with Kay Fackrell already ran one in Texas. A third partner in the Texas cemetery was Jerry Fackrell, who was Bonfanti’s bank fraud co-defendant.
At that time, Texas regulators, by law, could not conduct criminal or credit background checks on applicants for perpetual care cemeteries. Today, a convicted felon would not be given a license to run one, said Russell Reese, director of the Texas Department of Banking Special Audits Division.
As part of the Louisiana Cemetery Board’s Oak Lane decision in 2008, the board required yearly audits for the first five years of operations, semiannual reports on perpetual care trust funds and review of all sales material.
McCann said the problems with the trust accounts were found last year during a regular on-site review.
“The board has done everything that the law allows it to do to keep Oak Lane in line with the cemetery laws of this state and has always done so with the protection of the public as its main goal,” McCann said.
Follow David J. Mitchell on Twitter, @NewsieDave.