State May Probe 40 More Cemeteries : Scandal: Operators filed ‘questionable’ or no financial statements, state official says.

Forty more California cemeteries might come under investigation for filing “questionable” financial statements or failing to file any financial statements at all in the last year, the director of the Department of Consumer Affairs announced Thursday.

The state requires cemeteries to set aside money for endowment funds--totaling $550 million statewide--to keep cemeteries open and maintained. The missing or inconsistent reports mean “that some or all of the endowment care trust funds may have been inappropriately used by the owners of the cemeteries,” agency director Marjorie Berte said.

Berte’s comments came at a hearing called by Assemblyman Willard H. Murray Jr. (D-Paramount) to investigate what has become one of the state’s leading consumer scandals--the embezzlement of endowment funds and sometimes gruesome mishandling of bodies at several cemeteries.

According to Consumer Affairs, the state now exercises financial control over 11 cemeteries, including four in Los Angeles County and two in Orange County. But that number will grow, most observers predict.

“I believe that we will have a number of additional major cases,” Berte said.

If all 40 of the cemeteries newly in question are found to have committed misdeeds, the total number of troubled cemeteries--51--represents more than a fourth of the state’s 193 cemeteries. While most of the cemeteries are coming under review over financial issues, Berte said financial irregularities often indicate other problems.

Punctuated by sometimes heart-wrenching or grisly testimony by people who had learned that their loved ones’ remains were buried in mass graves, misplaced or the subject of other morbid misdeeds, the hearing served to strengthen a growing public concern that the state’s burial industry has gone largely unregulated and unchecked for decades.

It also highlighted long-term problems of under-funding and under-staffing of the state Cemetery Board, whose four staff members were in charge of overseeing all 193 private cemeteries statewide until the much larger Department of Consumer Affairs assumed its duties Oct. 2.

Consumer Affairs already has 20 people assigned to the task seven days a week, officials said. The Cemetery Board technically still exists but has been largely inactive since Consumer Affairs took over.

“They’re in there talking about a $5-million budget” to deal with the growing crisis, said Bob Dail, formerly a complaint technician with the Cemetery Board, outside the meeting. Dail declined to stay with the Department of Consumer Affairs when it assumed the board’s duties. “Why didn’t they fund us 20 years ago and avoid this whole mess?”

Evidence of trouble in the industry first emerged in June when, under new director Ray Giunta, Cemetery Board investigators began searching Paradise Memorial Park in Santa Fe Springs.

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“We were on the cemetery grounds less than an hour and I found a finger bone and a femur,” Cemetery Board investigator Dan Rolling testified Thursday.

Officials would go on to allege that $40,000 was missing from the trust fund at Paradise, graves had been dug up and resold numerous times, and bone fragments and deteriorating coffins had been tossed behind a toolshed.

A month later, Cemetery Board investigators entered Lincoln Memorial Park in Carson. About $800,000 was missing from the funds at Lincoln, Hollywood Cemetery and Gold Cross Mortuary, all of which are owned by Hollywood Memorial Assn., officials said. Also at Lincoln, investigators said, headstones were piled in trash bins and used as curbs, and some graves were buried just two or three inches in the ground.

With the Cemetery Board staff overwhelmed by its existing investigations and a deluge of complaints about other cemeteries, Giunta suggested that the Department of Consumer Affairs step in to help. Under a recently passed law, the department would have taken over the Cemetery Board’s duties on Jan. 1, anyway.

But when the department took over on Oct. 2, officials seized 183 boxes of documents from the Cemetery Board’s offices, as well as several filing cabinets, Consumer Affairs officials acknowledged. That seizure left a rift between the two agencies, with Giunta staying away from work on a stress leave and threatening to quit.

Although Giunta was out of the country and could not attend Thursday’s hearing, Berte said that she had spoken with him last Friday and that Giunta had indicated that he would join the department’s cemetery task force.

Although the Cemetery Board is slated to become powerless in January and cease to exist in July, Murray said after the hearing that he planned to draft legislation to save the board. The Cemetery Board, he said, should have some policy-making powers, with the much larger Consumer Affairs providing enforcement.