Derek Washington, 38, of Oakland, and Donald Rollins, 56, of Fairfield, allegedly accepted advance payments for funeral services by their company, Funerals by Washington, and then used the money inappropriately, Gascon said.
"This is a very despicable crime" that involved "taking advantage of some of our most vulnerable" community members, Gascon said. Washington surrendered to authorities on Wednesday, but Rollins is still at large. There is a warrant for his arrest with bail set at $30,000.
The funeral home, located at 1641 La Salle Ave., shut down in January 2009, and never repaid or rendered services to any of the seven victims who are included in the case, Assistant District Attorney Evan Ackiron said.
The victims paid in advance for a funeral for themselves, an elderly family member, or a child, which is a standard practice in the funeral business known as "pre-need" arrangements, Ackiron said.
The law requires that "pre-need" payments be put into trust accounts and not be used for a funeral home's operating expenses, according to the district attorney's office.
One of the victims died in 2008, and the family was told by the company that the paperwork had been lost and that they had to hold the funeral elsewhere, Ackiron said.
The family "put a lot of time and money aside...and now were back at square one," he said.
The family of the deceased victim was the first to complain, triggering an audit by the state's Cemetery and Funeral Bureau.
Authorities found that at least seven victims entered into the "pre-need" contracts between March 2004 and when the funeral home closed in 2009. The victims lost a total of about $30,000, according to the district attorney's office.
Bank records show the men spent some of the money on the business while spending some on other items, Ackiron said.
Ackiron said there might be additional victims. Anyone who believes they have been victimized by Funerals by Washington should contact the district attorney's special investigations unit at (415) 551-9564.
Washington posted $60,000 bail and is out of custody today, but is due back in San Francisco Superior Court to be arraigned Wednesday afternoon.
Washington and Rollin have each been charged with seven counts of grand theft and 16 counts of violating the laws regulating "pre-need" agreements. If convicted of the charges, all felonies, they would each face a maximum sentence of 17 years and eight months in prison.