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The money will be used to help offset potential losses that funeral homes face in providing services to consumers who pre-paid for their funerals. More than 40,000 Illinois consumers own so-called pre-need contracts. But the trust fund that is supposed to pay for their funerals had a shortfall of more than $50 million last year.
State regulators have focused on Merrill Lynch's role in the fund's losses. Edward Schainker, a Merrill Lynch broker in Springfield, was the assocoation's investment adviser starting in 1980, when the trade group created the trust to manage consumer deposits.
The insurance division on Wednesday also said it will seek to revoke Schainker's insurance license and fine him $100,000, the maximum penalty allowed under Illinois law. The secretary of state's office also has suspended his broker's license.
Schainker allegedly advised the association to buy more than 300 life-insurance policies that offered investment returns that would be tax exempt, according to a complaint filed by the secretary of state's office. A life-insurance division of Merrill Lynch issued 129 policies and has received more than $32 million in premiums, the complaint said.
Those premiums were invested in stocks and bonds that have suffered losses in recent years, putting the solvency of the trust at risk, regulators have said.
asachdev@tribune.com
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