MONTROSE, Colo — Two former Montrose funeral home directors who sold body parts illegally will get new sentences for their convictions, according to court documents obtained by 9NEWS Investigates on Tuesday.
The U.S. Court of Appeals for the 10th Circuit ruled Tuesday that Megan Hess and her mother, Shirley Koch, should be resentenced, saying the district court made an error in its loss calculations that incorrectly enhanced the women's sentences.
Instead of cremating the bodies of people's loved ones at Sunset Mesa Funeral Home, Hess and Koch were accused of harvesting body parts and selling them.
They both pleaded guilty to mail fraud in 2022 for "fraudulently obtaining, selling, and shipping dead bodies and body parts to medical research, plastination, and body-broker companies." The case involved hundreds of victims between 2010 and 2018.
Both women reached plea deals with the federal government. In early 2023, Hess was sentenced to 20 years and Koch to 15. However, court documents say the district court followed sentencing guidelines incorrectly. It applied sentence enhancers that raised Hess and Koch's sentences above the plea agreement to the maximum sentence a judge could impose.
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In their appeal of the sentencing, both women argue the district made an error in its loss calculations that resulted in the higher sentences. The appeals court agreed with some of their arguments, remanding the women back to the district courts for resentencing.
According to the ruling, the district court adopted a government presentence report at the time of sentencing that calculated losses of over $1 million.
Those financial losses included money paid to Hess and Koch by both families for funeral home services and body-brokers that purchased stolen parts.
The appeals court ruled that loss calculation was incorrect.
Court documents argue the initial calculation didn't factor in legitimate services provided by the funeral home.
Hess' attorney argued in the appeal that the court didn't consider what services she actually did provide, like urns, headstones, memorial services and death certificates.
The appeals court concluded "that the district court erred by categorically refusing to offset the value of goods and services the next of kin received at the time of the fraud."
Hess' attorney also argued that body-parts purchasers didn't suffer financial loss – they received their purchases and did not request restitution for them as they "profited from the instant offense."
The appeals court agreed that the money paid by body-parts purchasers shouldn't have been included in the calculation, because there was no evidence the purchasers would not have bought the body parts if they knew the parts were stolen, not donated.
According to 9NEWS legal analyst Scott Robinson, when a court assesses high monetary losses in a case, it bumps up sentencing recommendations.
The 10th Circuit Court of Appeals ruled that because the errors were "not harmless," the case must be remanded back to the district court for resentencing.
Robinson told 9NEWS it's likely that Hess and Koch's sentences will be shortened, but not done away with entirely.
A date has not yet been set for the resentencing.
Typically, Robinson said, people who have been convicted of a crime remain in custody until they are resentenced.
The Sunset Mesa case is one of several cases involving Colorado funeral directors that led to Gov. Jared Polis signing legislation in May that will require funeral directors, cremationists, mortuary science professionals and embalmers to pass background checks and have certain educational requirements and time spent on the job.
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