PNC Financial Services Group in Pittsburgh may have to pay $390 million, including $35.5 million in punitive damages, for the role an acquisition had allegedly played in a major fraud scheme.
A U.S. District Court jury in St. Louis ruled against the $345 billion-asset company Tuesday because of its connection to a funeral insurance company called National Prearranged Services, which regulators shut down in 2008. NPS employees, several of whom have been found guilty of fraud, allegedly raided company funds that consumers and funeral homes believed to have been in a trust fund managed by Allegiant Bank until 2004. PNC bought Allegiant in 2010, meaning PNC assumed its liabilities in the case.
Guaranty associations from 28 different states covered costs for funerals and were represented by the National Organization of Life & Health Insurance Guaranty Associations in the suit, which was led by the designated receiver for NPS and a law firm representing the Texas Department of Insurance.
Multiple reports indicated that PNC would appeal the jury's decision.