Memory Gardens manager sought $3.2M, awarded $175,000

The former manager of Memory Gardens Management Corp. who had sought $3.2 million from the company instead received $175,000 in a settlement approved Wednesday.

Debora Johnson claimed she was owed the money as a result of a severance agreement she had entered into with then-husband Robert Nelms before a Johnson County judge placed Memory Gardens under the control of a court-appointed receiver.

The receiver, attorney Lynn Gray in Franklin, objected to Johnson’s original claim.

“We agreed there was some money owed for expenses,” she said. “As a result, we entered into a mediated settlement.”

Indianapolis-based Memory Gardens, a cemetery and funeral home business, fell into receivership after Nelms pleaded guilty to theft and securities fraud in July.

Marion County prosecutors filed charges against the couple in January 2008, but the charges against Johnson later were dropped.

In the meantime, Johnson filed for divorce from Nelms in Marion Superior Court and also attempted to collect money through the dissolution, claiming half the assets of their businesses belonged to her.

Oddly, Nelms maintained the two were never married despite a Jamaican ceremony because a U.S. marriage certificate does not exist. The court agreed, and the case was dismissed on April 20.

“For that matter, the court has ruled that the proffered Jamaica document (bearing no signature from either party) will not be admitted into evidence that a marriage ceremony was conducted involving the parties,” Judge S.K. Reid wrote.

Johnson’s amended complaint that Nelms profited more from the businesses than her also was dismissed.
 
The couple bought Memory Gardens from Fred Meyer Jr. and his family for $27 million in December 2004. Within days, prosecutors said, the couple drained all $24 million from their newly acquired company’s trust fund, which was supposed to be used to maintain grave sites in numerous cemeteries.

Most of the money, about $13.7 million, was transferred to repay a $13.5 million loan that Nelms used as a down payment to buy the business.

Nelms’ plea agreement allowed him to avoid prison and instead serve an eight-year sentence through community corrections programs and two years of probation.

The Meyer family filed suit in early 2008, asking the court to appoint a receiver to oversee the business amid questions about the status of the trust fund.
Johnson Circuit Court Judge Mark Loyd ordered the company sold as part of a civil lawsuit transferred to his court and consolidated with the receivership proceedings.

All claims submitted against Memory Gardens, which included Johnson’s, need to be addressed before its sale to Pennsylvania-based StoneMor Properties can proceed.  

StoneMor, a publicly traded company that operates 235 cemeteries and 59 funeral homes in 25 states and Puerto Rico, has agreed to buy the embattled Memory Gardens.

Loyd earlier this month approved the sale, pending settlement of all claims. The sale could close next month, said Gray, the receiver.  

Memory Gardens’ properties include Forest Lawn Memory Gardens & Funeral Home in Greenwood and Lincoln Memory Gardens in Boone County.

As part of a court order, the buyer of Memory Gardens would have to refund at least some of the millions of dollars missing from the trust funds. The remainder could come from a judgment in the civil suit, if successful.

Richard Shevitz of the Indianapolis-based Cohen & Malad LLP law firm filed the civil suit in January 2008 on behalf of the Meyer family. Loyd rejected Shevitz’s request for class-action certification to include everyone who paid into the trust funds—a number Shevitz estimated to be “in the thousands.” Shevitz is appealing the judge’s decision.