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Judge accepts settlement in Kern case Pact closes just the civil side of funeral home bankruptcy From staff reports A federal judge has accepted a settlement in the case of $5.3 million of missing funeral trust funds from the parent company of the Perl group of Southern Oregon funeral homes. The settlement guarantees that 3,500 local Kern Family Services customers will get the pre-arranged funeral services they paid for, which range from a few hundred dollars to $5,000. The 97-page agreement was approved Friday by U.S. Bankruptcy Judge Frank Alley, who praised the parties for avoiding a "prolonged, expensive and ruinous" series of lawsuits. "Folks are covered, no matter what happens in this,�� said Jan Margosian, a spokeswoman for the state attorney general�s office, which helped negotiate the deal. The settlement closes the civil side of the 1998 Kern bankruptcy. In a corollary agreement with the state, three other companies will pay $200,000 to cover the state�s costs of investigating alleged violations of the Oregon Unlawful Trade Practices Act and other laws. Under the agreement, the companies � Uniservice Corp., which sold Kern the Perl properties; SCI-Oregon, Uniservice�s parent company; and U.S. Bank, which held the trust funds � admit no violation of law. "The civil settlement ensures that the inappropriate and unlawful transfer of funeral and cemetery contract trust funds by David Kern, operator of the Kern Family facilities, will not harm consumers,�� said Attorney General Hardy Myers. The criminal investigation continues into the missing trust funds and the actions of David Kern, Margosian said. The Jackson County District Attorney�s Office is handling the investigation, with assistance from the Department of Justice. Investigators with the state Mortuary and Cemetery Board say that Kern, who ran Perl Funeral Home, Perl with Siskiyou and Siskiyou Memorial Park after the family company purchased Perl in 1996, may have diverted $5.3 million from funds held in trust for its thousands of customers. In addition to the Perl businesses in Medford, Kern Family Services ran Hull & Hull Funeral Home, Hawthorne Memorial Gardens and Southern Oregon Cremation in Grants Pass. An Arizona management firm has been running Kern Family Services� Medford businesses since the 1998 bankruptcy. A spokesman for the firm said that all prepaid customers have continued to receive the goods and services they bought. Under the agreement, much of the money to pay the missing trust funds will come from the sale of the Medford and Grants Pass businesses and the sale of Kern family assets. Those include homes, condos and other business assets in Medford, California and Hawaii. A $3.5 million deal for the Medford funeral businesses is pending; a buyer has yet to be found for the Grants Pass businesses. The deal also includes agreements from Uniservice to pay nearly $1 million, and for SCI and U.S. Bank to cover a shortfall should the asset sales not repay the trust funds. Consumers who want information about the pre-arranged funeral plans can call the attorney general�s toll-free hotline at 877-977-9392. They can also contact the Federal Trade Commission at 877-382-4357 or www.ftc.gov. Obituaries | Sports | Business | Classifieds | Tempo | Prime Times | So Oregon Sites | Outdoor Journal | Subscribe | Contact | Movies | Advertise | Real Estate Showcase | Archive | Editorials | Letters to the editor | Religion | Wake-up Call | NIE | Cyber Chef | Job Network | So Oregon Weather | WSJ Northwest | Forums | AP Wire | AP Money | F.A.Q. | Awards Ottaway Newspapers, Inc. The Community Newspaper Subsidiary of Dow Jones & Co, Inc Copyright �The Mail Tribune 2000, Medford, Oregon USA