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Funeral home fraud lawsuit: Former president, trustee ask court to dismiss Noble and Kelsey suit, file claims against each other

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By Mark Wineka

mwineka@salisburypost.com

Attorneys for Tommy Hairston and Kathy S. Hill have each filed motions

for the court to dismiss a civil suit brought against them by Noble and

Kelsey Funeral Home.

Hairston and Hill also have answered allegations in the suit, denying

that they committed fraud and combined over a five-year period to drain

the business of hundreds of thousands of dollars.

At the same time, the defendants have filed crossclaims against each

other, should judgments go against them.

Hairston is the former president and general manager of Noble and

Kelsey; Hill, a former trustee.

Employed at the funeral home since 1977 and its lead director for 22

years, Hairston left Noble and Kelsey in June 2007 and opened Hairston

Funeral Home Inc. on South Main Street.

After the 2002 death of her husband, Dr. George Hill, Kathy Hill became

sole trustee of the trust that holds 99 of 100 outstanding shares of

Noble and Kelsey Funeral Home.

But in December 2007, Clerk of Court Jeff Barger removed Hill as a

trustee. He found that Hill failed to carry out her duties as a trustee

and followed conduct "to improperly enrich herself at the expense of

the trust, the beneficiaries of the trust and the corporation of which

the trust held 99 percent ownership."

Noble and Kelsey Funeral Home's civil suit followed in May.

It alleges Kathy Hill received at least $179,750 in "loans" and

$167,200 for "consulting" between 2003 and 2007. The total cash she

received, including $10,000 she paid to herself in June 2007, was

$346,950, according to the original suit.

Hairston and Hill acknowledge that Hill received numerous payments as

loans, for consulting and bonuses.

But in his crossclaim against Hill, Hairston indicates that the trust

established by the will of A.R. Kelsey gave him complete power to

manage all the affairs of the corporation, including the authority to

establish compensation, bonus and incentive plans.

The trust expressed the intent that the funeral home be managed in the

same manner it had during Kelsey's life, Hairston says. In that

respect, he adds, Dr. George Hill was one of Kelsey's best friends and

confidants and, during his lifetime, Kelsey had loaned Hill at least

$25,000.

When George Hill died Sept. 14, 2002, he was the trust's sole trustee

and his own estate's liabilities "grossly exceeded the assets,"

according to Hairston's answer.

In July 2003, Kathy Hill sued Mercy Hospital in Charlotte and two

physicians for negligence in her husband's death. The suit alleged that

doctors gave Dr. Hill a penicillin-related product despite the

patient's warnings of his allergic reaction to penicillin.

Hairston claims that because of her husband's untimely death and the

dire financial straits of the late Hill's estate, Kathy Hill repeatedly

told him of "a substantial need for financial assistance" until her

lawsuit against Mercy Hospital was resolved.

Hill provided Hairston with a letter drafted by her attorney in the

wrongful death suit, "which verified that suit funds were forthcoming

and could be used to repay any funds provided to Hill."

Hairston says he authorized and provided significant funds to Hill

based on her need for assistance, her expressed intent to repay all

loans, her apparent future ability to do so "and the firm belief that

A.R. Kelsey himself would have similarly made loans to Hill."

Hill repeatedly assured him that all funds paid to her would be repaid,

Hairston's answer says.

He adds that it is his belief she has repaid $15,000.

In her defense, Hill asserts that a trustee may borrow money and that

since no terms were created for when she had to repay the loans, the

obligation is not yet due.

Hill says she "reasonably relied on and followed" Hairston's advice in

the administration of the trust.

As for receiving consulting money, she says in her answer that she

"provided consultation services to Mr. Hairston regarding the affairs

of Noble and Kelsey Funeral Home." Hill also admits to receiving

"bonuses" from Noble and Kelsey Funeral Home.

The Noble and Kelsey suit claims that Hairston purposely damaged the

business while pursuing the goal of opening his own funeral home on

South Main Street. He denies that allegation.

Noble and Kelsey's civil complaint also alleges that Hairston rang up

personal charges of $35,644 on the Noble and Kelsey American Express

credit card between June 2004 and June 2007.

The credit card charges included Direct TV monthly service, numerous

hotel stays, airline tickets, clothing, car repairs and other

merchandise, the suit alleges.

Hairston acknowledges the charges to the credit card but disputes the

total amount and nature of some of the charges.

In addition, the Noble and Kelsey lawsuit charges Hairston with

applying extensive salary and bonus proceeds paid to him toward the

establishment of his new funeral home and that he actively worked to

take clients away from Noble and Kelsey.

Hairston denies those allegations, including one that he paid himself

the high salaries and bonuses to deplete Noble and Kelsey's assets. The

Noble and Kelsey suit put Hairston's salary in 2006 at $210,121, up

from $81,472 in 2002.

Both Hill and Hairston acknowledge that Hill and her son were placed on

the Noble and Kelsey health insurance plan, even though Hill was not an

employee.

Hairston denies that he should have known it was improper to place Hill

on the funeral home's health insurance plan. Both he and Hill also deny

that the health insurance costs were substantial and not repaid to the

funeral home.

Hill denies that she breached her fiduciary duties as a trustee by

allowing the payment of excessive salaries and bonuses to Hairston and

failed to adequately supervise Hairston.

She acknowledges that she never obtained a tax identification number

for the trust, never filed trust tax returns with the Internal Revenue

Service, never secured a fidelity bond or made required annual reports

to the clerk of court on time.

Hairston claims in his answer that A.R. Kelsey intended to give him

Noble and Kelsey Funeral Home in his will. But under "suspicious

circumstances and as A.R. Kelsey was in very ill health," he changed

his will to create the trust, which would own the funeral home at his

death, Hairston says.

When Kelsey died, George Hill and Mrs. Winnell Short were designated as

trustees. Short stepped down, leaving George Hill as the only trustee

until his death and replacement by Kathy Hill.

Kathy Hill says that the trust, by its terms, was to terminate at the

death of Hairston if Kelsey's daughter, Kimberly, was living. All the

principal and undistributed income was then to be paid to her.

According to the Noble and Kelsey suit, Kimberly Kelsey continually

made inquiries into the profitability of the funeral home and

petitioned the court to have an additional trustee appointed to serve

with Hill. Barger, the clerk of court, eventually appointed Dennis

Issacson, a certified public accountant as a trustee and instructed him

to review the trust's operations, leading to Hill's removal.

Both Hill and Hairston claim that all or part of Noble and Kelsey's

claims should be barred because of the funeral home's contributory

negligence and that it failed to commence the civil action within the

applicable statute of limitations.





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Multi Million Dollar Business : Friday, August 22, 2008 3:21 PM

Running a funeral home is a multi million dollar business. It is not unusual for one to make $200,000 plus a year considering that the funeral business brings in millions in one year. It became a problem when Mr. Hairston left, started his own business, and Nobel and Kelsey was not meeting its quota. If Mr. Hairston would have let it be known that he was opening up his own funeral home Noble and Kelsey would have re-acted the same way, so Mr. Hairston chose to keep silent. I am not saying that Mr. Hairston did no wrong but I am sure some things mentioned in the law suit like the use of the credit card had been going on for years and as long as he was working there it was ok, check everyone elses record that work at Nobel and Kelsey, any major corporation has business credit cards for their VP employees use, it is a tax write off at the benefit of the company. Mr. Hairston worked at Nobel and Kelsey for many years and for anyone to accuse him of doing Mr. Kelsey wrong is not fair, everyone has seem to forgotten how he was treated when Mr. Kelsey first passed, Tommy became Nobel and Kelsey but was really never acknowledge as such. I believe that people should examine the true facts here and stop pointing the finger at all parties involved.
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OPEN YOUR EYES : Thursday, August 14, 2008 10:06 AM

IN REGARDS TO THE ARTICLE CONCERNING “NOBLE AND KELSEY” AND THE LAWSUIT AGAINST MR. HAIRSTON AND MRS. HILL… I BELIEVE THAT THIS IS NOT AN ACT OF JEALOUSY, BUT SIMPLY THE ACTIONS OF A BUSINESS THAT IS SLOWLY ATTEMPTING TO BRING THEIR HEAD BACK ABOVE WATER. TRUE INDEED, EVERYONE KNOWS TOMMY HAIRSTON AND HE MAY BE A GREAT PEOPLE PERSON, BUT THE FACT STILL REMAINS THAT RIGHT IS RIGHT AND WRONG IS WRONG. IT DOES NOT MATTER IF YOUR PERSONALITY IS THE BEST OF THE BEST OR THE WORST OF THE WORST; IF YOU DO WRONG THEN JUSTICE FOR THE “VICTIM” SHOULD BE SERVED. I BELIEVE THAT THE STAFF OF NOBLE AND KELSEY TRUSTED MR. HAIRSTON AND WOULD NEVER BELIEVE WITHIN A MILLION YEARS THAT HE WOULD BETRAY THEM. BUT COINCIDENTLY HE OPENED HIS OWN BUSINESS WITHIN DAYS OF LEAVING HIS POSITION AT NOBLE AND KELSEY AND THIS MOVE WOULD THROW UP A RED FLAG AT HIS ACTIONS. AFTER AN INVESTIGATION, THE ACTIONS OF BOTH MR. HAIRSTON AND MRS. HILL WOULD BE BROUGHT FORTH AND THE CHOICE WOULD BE OF NOBLE AND KELSEY TO FILE A LAWSUIT TO REGAIN WHAT WAS RIGHTFULLY THEIRS. SO THE FACT REMAINS THAT BEFORE YOU TAKE THE SIDE OF A FRIEND, AN ACT OF BETRAYAL HAS BEEN COMMITTED AND THE PROOF SHOULD BE ENOUGH. I SAY OPEN YOUR EYES AND STOP ALWAYS THINKING IT IS ABOUT JEALOUSY B/C THAT IS TRULY NOT THE CASE. PLEASE SWITCH ROLES FOR A MINUTE AND THINK THAT IF SOMEONE BREAKS IN YOUR HOME AND STEALS ALL OF THE THINGS THAT YOU AND YOUR FAMILY HAVE WORKED SO HARD FOR, WOULD YOU NOT WANT JUSTICE SERVED? THERE IS NO DIFFERENCE IN THE SITUATION, MR. KELSEY ESTABLISHED A BUSINESS AND A PROMISED FUTURE FOR HIS HEIRS AND THEN A “TRUSTED” INDIVIDUAL CAME IN AND BETRAYED MR. KELSEY AND HIS BUSINESS. DO YOU REALIZE HOW HARD IT WAS FOR A BLACK OWNED BUSINESS TO SUSTAIN IN THIS COMMUNITY OVER 100 YEARS AGO? IT IS HARD NOW I CAN ONLY IMAGINE THE STRUGGLES AND DIFFICULTY HE WOULD HAVE FACED AT HIS BUSINESS’ START-UP. I’M NOT ON ONE SIDE OR THE OTHER, B/C I WOULD PERSONALLY CHOOSE A FUNERAL HOME FOR THE QUALITY OF WORK THAT THEY PERFORM AND NOT JUST BECAUSE THEY ARE A FRIEND. JUST B/C MY FRIEND OPENS A BUSINESS DOES NOT MAKE THEM THE BEST AT WHAT THEY DO. RESEARCH AND OPEN YOUR MIND AND STOP POINTING FINGERS AND PRE-JUDGING. MY PRAYERS ARE WITH ALL PARTIES INVOLVED.
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Change Names : Thursday, August 14, 2008 1:23 AM

Rename ""Kelsey"" ----drop the N O B L E
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Betrayal : Wednesday, August 13, 2008 11:01 PM

Mr Kelsey enjoyed a reputation for helping so many young people especially during the 40's, 50's, 60's when their options for opportunity was vastly limited. What a shame that Mr Hairston appears to have betrayed his trust and help. How sad is his behavior in hurting a business with over 106 years of good service.
Report Abuse

Misplaced Trust : Wednesday, August 13, 2008 10:35 PM

Mr. Kelsey was all about helping young people advance. He encourage and counseled many young people. It is sad that his greatest trust tendered to Mr. Hairston was greatly misplaced.
Report Abuse

Blessings : Wednesday, August 13, 2008 10:22 PM

This entire situation is sad. My family has been served by both funeral homes in the past, and they both did an outstanding job. Wrong is wrong...only if it can be proven. Isn't that what the judical system is suppose to do? Stop pointing fingers and accept this situation for what it is...worthless...until someone is proven guilty. My prayers are with both Mrs. Hill and Mr. Hairston. May God bless you in this time of need, and if a wrong has been done, admit it and move on. Until something is proven otherwise I will support both parties.
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: Wednesday, August 13, 2008 9:11 PM

If cathy can ride in a lexus and her son rides in a very expensive Hummer they should be able to pay their own Insurance. for the person who wrote how great tomy is please learn to spell before you use this site again. val aren't you happy you got he divorced you, you still have your pride. Poor George does not have to see it.s
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RE; TELL ME DIFFERENT : Wednesday, August 13, 2008 7:40 PM

You working at family dollar and taking a few dollars and Tommy working at the funeral home and being accused of taking thousands of dollars is a big difference. what were you taking from family dollars $2.00 dollars
Report Abuse

Tell Me The Different : Wednesday, August 13, 2008 6:18 PM

I work at Family Dollar and need gas to get home,so I take a few dollars now and then to cover this.One day I get caught and is charge with embezzlement,so what is the different if I work at a funeral home? NONE,wrong is wrong!!!!
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EVERYONE KNOWS TOMMY HAIRSTON : Wednesday, August 13, 2008 12:23 PM

EVERYONE IN THE BLACK COMMUNITY THAT HAS HAD A DEATH KNOWS TOMMY HAIRSTON. HE IS A WELL KNOWN MAN. WHO CAN BLAME HIM FOR STARTING HIS OWN BUSINESS. THEY ARE SUITING HIM .CAUSE HE HAS TOOK AWAY MOST OF THEIR CUSTOMERS. JEALOUSY IS WHAT THIS IS ABOUT.THEY WAIT UNTIL HE START HIS OWN BUSINESS. NOW THEY WANT TO SUE HIM. WHY NOW?
Report Abuse

: Wednesday, August 13, 2008 11:57 AM

I think everything should be dropped and everyone should do their best to serve the public. I think it's sick for people to suit over little things in life.
Report Abuse

LILLIAN
THIS IS JUST SAD : Wednesday, August 13, 2008 11:47 AM

NOBLE AND KELSEY HAVE BEEN IN THE COMMUNITY FOREVER AND THIS IS SO SAD, THE KELSEY'S DID NOT ESTABLISH THEIR FUNERAL HOME SO IT COULD END UP IN THIS MESS. HAIRSTON AND HILL NEED TO PAY BACK THE MONEY, THEY KNOW THEY DID WRONG. KIM KELSEY YOU FIGHT TO THE END, DON'T LET THEM GET AWAY WITH THIS WRONG DOING.
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Closed Casket : Wednesday, August 13, 2008 5:29 AM

Funeral directors love money like everyone else...Family members are fools not to appoint someone in the family to close the casket. Ever wonder how much jewelry is stolen from the deceased, especially diamond rings. Not saying these two did something like that....there's an old saying......you would take the nickles from a dead mans eyes. Been years ago, but graveyard thieves actually dug up Mike Todd and stole valuable rings and watches. He was the Hollywood producer once married to Liz Taylor. Solution::: This day and age...none...
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