By Matt Zapotosky
Washington Post Staff Writer
Sunday, June 15, 2008

For more than a decade, Larry Deffenbaugh took his customers' money and agreed to put a certain percentage in trust, to be used later to pay for burial services.

But prosecutors say the former Calvert County cemetery owner spent most of the money on car payments, fishing equipment and dinners in Florida.

Deffenbaugh, 57, was convicted Wednesday of a felony count of running a theft scheme. He entered an Alford plea, meaning that he did not admit guilt but acknowledged that the state had enough evidence to convict him.

Stacey Campbell, who was the treasurer at Deffenbaugh's Southern Memorial Gardens, also entered an Alford plea to a charge of conspiracy to run a theft scheme.

But the case is far from over.

Outside the courtroom Wednesday, Deffenbaugh and his defense attorney, Robert Harvey, declined to comment because Deffenbaugh has not been sentenced. Joseph Chazen, an attorney representing Deffenbaugh in civil litigation, said that Deffenbaugh stole no money from customers and agreed to the plea deal so that he could move on with his life.

The prosecution contends that Deffenbaugh, who lives in Florida, ran a variety of schemes, bilking at least 551 people out of hundreds of thousands of dollars. Prosecutors say that he did not put money into trust accounts as he was supposed to and that he reported living people as dead to prematurely collect money from trusts. He also told customers that he was waterproofing caskets when he was not, said Kathryn Marsh, an assistant state's attorney for Calvert County.

Marsh has agreed to ask for a five-year prison sentence in exchange for Deffenbaugh's guilty plea. It is likely that Deffenbaugh will be given only probation because he has no criminal record, she said. He also must pay restitution by the time of his sentencing in September, restitution that is likely to come from a $1 million loan he made at the time he sold the cemetery.

That $1 million loan, in the form of a promissory note from the purchasers of the cemetery, lies at the heart of the civil case against Deffenbaugh.

Danny Martin and his company, Badtec, purchased the cemetery from Deffenbaugh in 2006. Martin said he began to notice problems in how the trusts were funded at Southern Memorial Gardens within a few months of taking over the business. He sued and began paying back the $1 million loan from Deffenbaugh into a court fund.

That fund will now be used to compensate victims, Martin said, adding that Deffenbaugh took almost $2.5 million.

"It's been a huge, huge loss for us financially," he said. "In fact, it is on record that we have agreed to make the public whole with $100,000 of our money above the million for contracts we may not know about."

Chazen, Deffenbaugh's civil attorney, said that Martin did not exercise "due diligence" before purchasing Southern Memorial Gardens, and that he voluntarily assumed the responsibility to honor any existing contracts. He also said that Deffenbaugh told Martin at the time of the sale to call him if he noticed any accounting problems with the trusts, but that Martin called attorneys instead.

Now, Deffenbaugh is forfeiting the $1 million promissory note from Martin so the money can be given to victims, Chazen said. Martin has paid about $150,000 of that into a court fund, Chazen said, and the two parties have reached a tentative settlement. He declined to provide details on the settlement.

"Mr. Deffenbaugh and Ms. Campbell wanted to resolve the civil litigation and the criminal case so they can move on with their lives," Chazen said. "Sometimes you need closure, so you can move on and start the next phase."

Dozens of victims and other interested parties were in court to hear Deffenbaugh's plea Wednesday. For some, it brought closure. For others, it brought confusion.

Christa Lavendt, 78, of Owings said she suspects that her husband and daughter were among those buried without waterproof caskets.

She said that she is not sure what, if any, reimbursement she might receive, but that she thinks she should get something, and that Deffenbaugh should go to jail.

"If there's any money coming, I'd like to spend it on my other grandson's college. It may be just be $30 or something," she said. "I paid for something. I do not know exactly what I paid for, but I should get reimbursed."

Deffenbaugh also faces separate criminal and civil child support cases. According to court records, he owed $43,600 in support as of March.