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Kern's prepaid customers organize

A committee has formed to represent the 3,600 customers who prepaid for funerals and burials through financially troubled Kern Family Services.

And while customers worry whether they'll get the services they've paid for, David Kern -- who's been accused by state officials of misusing millions that people paid to cover those services -- remains on the company payroll.

A motion by the state to end compensation for Kern and his wife, Ingrid, goes before the U.S. Bankruptcy Court this morning.

Dan Isard, president of a management company hired by Kern Family Services, said David Kern has continued to draw pay because he still works for the company.

Kern Family Services runs the Perl group of funeral and burial businesses in Medford and Grants Pass.

Though the court required him to have no involvement with the day-to-day operations, David Kern has been doing what Isard called ``yeoman's work on the pending sales of the company's Medford and Grants Pass businesses -- sales intended to cover the missing funds.

He is the keeper of records that are needed for the due diligence on the sales, Isard said. He hasn't been near the checkbook since we took over. We wanted to stop any issues of suspicion.

Between $4 and $5 million is missing from the prepaid needs trust fund, according to reports from an outside mediator.

Questions about where the missing money went and whether David Kern spent it on himself, his wife and business expenses -- of which state officials accuse him -- remain unresolved. The Oregon attorney general's office is still investigating.

Isard said he got the mediator's full report on Tuesday, information that filled 12 Microsoft Excel spreadsheets. He is reviewing them for accuracy and working with the mediator to settle discrepancies.

To repay the fund, Kern Family Services has agreed to sell its Rogue Valley companies: Perl Funeral Services, Perl with Siskiyou Funeral Home and Siskiyou Memorial Park in Medford; and Hull & Hull Funeral Home, Hawthorne Memorial Gardens and Southern Oregon Cremation Services in Grants Pass.

Buyers for the businesses have been found, though the sales must be approved by the court.

A hearing on Kern's Chapter 11 reorganization plan is slated for Jan. 13.

The plan was not mailed to prepaid customers, as was reported in Tuesday's Mail Tribune. Isard said a copy was mailed to Eugene attorney Douglas Schultz, who will likely represent them as a group.

Schultz said Tuesday that concerned customers have formed a committee and asked him to represent them. He is waiting for the court to accept his appointment, which he hopes will occur later this week.

Schultz would not reveal his clients' names and, through him, they declined to comment.

Schultz said the length of the plan may not make it feasible for each customer to get a copy but that customers would be notified that the committee has been formed to represent them.

While the bankruptcy issues are being resolved, prepaid customers who die continue to get the service they paid for. Isard said an average of 20 prepaid customers have died each month since the controversy surfaced and all have received services.

Families are being served all the time, he said. Not one family has been turned away or told the contract was no good.