Funeral home owner pleads guilty to money laundering
Updated On: May 13 2014 10:19:43 PM CDT
A Wichita funeral home owner has agreed to a federal plea deal in a money laundering case. Doug Watson owns Watson Funeral Home and was indicted by a grand jury in 2013. This week, he pleaded guilty as part of a plea agreement. The plea agreement is sealed so there's little detail until sentencing in July.
The original charges are four counts of money laundering. The counts say Watson knowingly and willing conducted financial transactions affecting interstate commerce which involved the proceeds of a specified unlawful activity. The four counts involve transactions totaling around $20,000.
In 2011, Watson was the focus on a year-long Factfinder 12 investigation. At that time, we questioned Watson about unethical practices - removing a body from a casket and reusing the casket, forging a signature on a funeral contract and overcharging customers. We also found the Kansas State Board of Mortuary Arts, the agency that licenses funeral homes, didn't do a thorough investigation. KSBMA did reopen the investigation after our report and ordered Watson to refund a family money, fined Watson $500, publicly censured him and required him to complete ten hours of continuing education in funeral home ethics.
After we did our 2011 investigation, other families with connections to Watson started contacting us. They said he was not only unethical, but was befriending older women and stealing their money.
When 91-year-old Wava Gruver died, she had less than $1,000 to her name. Gruver's niece, Judy Lienemann, said Gruver met Watson years before through church. Watson helped Gruver pre-arrange her funeral in 1996.
"She came to a family get together during the holidays and said she named Doug Watson, who owns a mortuary business, as executor of her estate," Lienemann said. "Nobody questioned it because she made her own decisions. She ran her own life."
Most of Gruver's family lived out of state. She never married and Lienemann said Gruver worked hard to save money throughout her lifetime. She also received two large family inheritances.
Watson became Gruver's power of attorney in February 2007. This allowed him to write checks from her account. After our investigation aired in 2011, the family started looking into Gruver's finances and discovered most of her $300,000 was gone. Lienemann found checks Watson had written to himself for $75,000. He also wrote checks to his business, Family Centered Services, for $75,000, $40,000, $15,000 and $12,000. Lienemann only had access to about two dozen checks, but saw enough to revoke Watson's power of attorney. To this day, she has no idea what the money was used for.
"We were really surprised and upset about what we found," Lienemann said. "Her tax records were the first indication that all of her CD's had been cashed out with penalties. Annuities she had were also cashed. There was no reason for it."
The family could do little because Watson was the legal power of attorney. Lienemann brought her information to the FBI and U.S. Attorney's office.
Gruver's situation isn't the only time Watson befriended an elderly woman and took money. In May 2012, Watson reached a settlement to pay back $533,213 to the estate of Nadine Brotemarkle. In this case, Watson was not the power of attorney but had written six promissory notes, according to Larry Toomey, executor of the estate. As part of the settlement, Watson agreed to pay back $2500 per month.
Judy Lienemann said the worst part was that Watson's job as a funeral director is built on trust.
"He doesn't belong in that business," Lienemann said. She urged people to carefully research power of attorney privileges.
"We hope your story may alert people to be careful who they give power of attorney to," she said.
The Kansas Attorney General's office provides information about power of attorney. Click here for power of attorney questions.
We contacted the Kansas State Board of Mortuary Arts to find out the status of Watson's funeral license. Mack Smith, executive secretary, said the board will look over the information and decide what happens next. Watson could be fined, privately or publicly censured, have his license suspended or revoked. Smith said he stands by KSBMA's previous investigations.
Watson will be sentenced in July.