Iowa City funeral home director admits wrongdoing

IOWA CITY - An Iowa City funeral home director said serious cash flow issues prompted him to divert proceeds from funeral insurance applications to run his business.

Daniel Ciha, director of Gay & Ciha Funeral and Cremation Services, misused $180,000 from 26 transactions for 'pre-need” insurance between 2008 and 2014, including eight after his license suspended in October, according to an administrative order from the Iowa Insurance Division.

Clients would pay money for insurance policies to help cover funeral arrangements at the time of death, but rather than purchasing the insurance policies through Homesteaders Life Co., Ciha deposited the money into business accounts, according to the March 4 administrative order.

Ciha said he kept records of the transactions and intended to put all the money back in its place but never could get caught up. When two clients passed away, he provided the contracted services at no charge, he said.

'I knew this was wrong, that is why I kept records of it all so no one would ever think I was trying to hide it, and it always went into the funeral home account, never personal,” Ciha said.

Ciha has since paid Homesteaders, which has issued the policies, according to the administrative order. Iowa Insurance Division spokesman Tom Alger said the discrepancies are resolved.

Ciha and Colette Ciha Soults were named in the order. Ciha Soults did not participate actively, but because she is an officer of the company she also was held liable, according to the administrative order.

Among the violations cited in the administrative order, they 'used fraudulent, coercive or dishonest practices and demonstrated incompetence, untrustworthiness or financial irresponsibility.”

The case began during a routine audit in October. During a site visit, Ciha turned over his documentation of the diverted funds to the auditors.

Ciha lost his license at that time, but a follow-up on the case in February found the additional faulty transactions.

Ciha and the funeral home have lost a license to sell insurance indefinitely, according to the administrative order. The funeral home also was fined $5,000.

Ciha said the funeral home can and will continue providing other funeral services.

Alger said cases involving funeral home insurance irregularities are not commonplace, but this is not the first in Iowa.