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WOLF POPPER CLASS ACTION AGAINST
LOEWEN GROUP INC.
The Florida Department of Banking and Finance (DBF) announced on Thursday, January 15, 1999 that it had issued an order suspending the license of two wholly-owned subsidiaries of Loewen Group Inc. (NYSE, TSE: LWN) (Loewen) and restricted them from taking on any new pre-need funeral business in Florida. The DBF stated in a press release accompanying the order that "[i]rregularities were first reported by state examiners during routine examinations in 1996" and that the suspension "was issued following expensive investigations." The DBF further stated that in February 1997, Loewen's subsidiaries "had been placed on probation and [were] required to bring their books and records into compliance." The DBF's order asserts that the books and records were not brought into compliance, and that the businesses were operated incompetently, negligently, and in violation of numerous provisions of the Florida Funeral and Cemetary Services Act.
Among the violations cited in the order are failure to keep complete and accurate books and records, failure to provide supporting documentation, amending signed contracts without the approval of consumers, making improper and/or unsupported withdrawals from trust funds, failing to remit or remitting insufficient amounts to trust funds resulting in significant trust fund deficits, failure to properly describe merchandise in contracts, using unregistered agents in sales of pre-need funeral contracts, failure to disclose pricing in advance, and being as much as one year late in filing reports with DBF. State examiners said that some trusts lacked necessary documentation to allow them to be examined. The DBF order also asserts that aggressive growth, distant management, and insufficient financial controls contributed to the companies' regulatory problems.
Related allegations have been made in a class action complaint filed against Loewen on behalf of investors who purchased Loewen common stock during the period March 5, 1997 through October 6, 1998 (the "Class Period"). That action was brought on behalf of defrauded investors by Wolf Popper LLP.
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