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Members of the FBI, along with Montrose law enforcement investigate the Sunset Mesa Funeral Directors and Donor Services building Tuesday morning, February 6, 2018. (William Woody, Special to the Colorado Sun)
Members of the FBI, along with Montrose law enforcement investigate the Sunset Mesa Funeral Directors and Donor Services building on, Feb. 6, 2018. (William Woody, Special to the Colorado Sun)

Megan Hess, the former Montrose funeral home owner under federal investigation for allegedly selling the body parts of people whose families wanted them cremated, had her state license as an insurance agent revoked this summer.

But the reason had nothing to do with the federal investigation, according to disciplinary documents. Instead, state regulators accused Hess of running an entirely different scam out of now-defunct Sunset Mesa Funeral Directors.

The accusations relate to the sale of “preneed” funeral plans — basically funeral packages that are paid in advance. A suspension order filed in February accused Hess of taking money from people for preneed funeral plans as part of broader life insurance policies. But, according to the suspension order, Hess then pocketed the money instead of setting up the insurance policies.

The final revocation order, issued in late August, also orders Hess to pay $37,950 in fines and $2,385 in restitution.

The Colorado Division of Insurance’s order was just the latest trouble for Hess, from an FBI raid to the revocation of her funeral home and crematory licenses to traffic charges related to a car chase to multiple lawsuits filed against her and a nearly $500,000 civil judgment. And there is a new sign the trouble hasn’t yet ended.

Reached Wednesday, a spokeswoman for the FBI told The Colorado Sun that agents there had completed their work and handed the investigation over to the U.S. Attorney’s office in Denver for a decision on prosecution. A spokesman for that office did not respond to a call or email for comment.

The Sun could not find a working phone number for Hess on Wednesday.

Preneed plans are common in the funeral industry. A funeral package is typically paid for all at once up front or in installments and is sometimes sold in connection with a life insurance policy.

“The key,” said Vince Plymell, a spokesman for the Colorado Division of Insurance, “is that the money is to be kept in trust, so that it is there when the time comes.”

Hess worked as an agent for the United Heritage Life Insurance Company beginning in 2008. State regulators accused her of, in at least three instances between 2014 and 2018, keeping the money for herself, according to the disciplinary documents.

For instance, a man purchased a life insurance policy from Hess with a preneed plan attached, according to the state’s February suspension order. The man paid $895 up front. But Hess, according to the document, did not submit the man’s contract to the insurance company. The man “never received the policy or contract for preneed funeral services that he paid for,” the order stated. Hess, according to the document, “took for herself the $895.”

The FBI began investigating Hess in late 2017 or early 2018, shortly before a story by the Reuters news agency revealed that Sunset Mesa was unlike any other funeral home in the country. In addition to providing funeral and cremation services, Hess also ran a company out of the building that sold human body parts to research labs and others across the world.

Accusations soon mounted from families who said they had requested Sunset Mesa cremate their loved ones, but they received strange-looking cremains in return. Some families said they had received tests showing the cremains were not human. Others said FBI agents told them their loved ones’ bodies had been sold, including one woman who was informed her father’s body had been sold to a company in Saudi Arabia.

The number of families possibly affected grew so large that the FBI set up a special phone line. And potential victims created their own support group. Late last month, the group gathered in Montrose for a memorial service for their loved ones, the second year they have done so, according to the Montrose Daily Press.

John Ingold is a co-founder of The Colorado Sun and a reporter currently specializing in health care coverage.

Born and raised in Colorado Springs, John spent 18 years working at The Denver Post. Prior to that, he held internships at the Rocky Ford Daily Gazette, the Colorado Springs Gazette and the Rocky Mountain News, among other publications. He also interned one summer in the public relations office at the Cheyenne Mountain Zoo, where he got to sit on an elephant's knee and get his photo taken.

John was part of The Denver Post's 2013 Pulitzer Prize-winning breaking news team for its coverage of a shooting at an Aurora movie theater, and, in 2015, he was a Pulitzer finalist for a series he wrote on parents whose children suffer from a rare form of epilepsy and the help they hoped to find through Colorado's medical marijuana system.

Email: Twitter: @johningold