August 2006. The dark gray sedan turned onto Fairgrounds Road off Highway 75, the main artery through Okmulgee, Oklahoma, a flyspeck south of Tulsa. Inside, Trey King, an investigator with the Tennessee attorney general’s office, readied himself for his ambush interview with Erma Huckstep, president of Quest Minerals & Exploration, reportedly a multimillion-dollar company. He hoped she could provide the answers he needed.

Suddenly, things seemed off—the car rumbled over railroad tracks to the poorer part of Okmulgee. Construction equipment littered the side of the road; cars and rusted junk were strewn across some yards. The sedan took a left at North Morton Avenue and pulled to a stop at Huckstep’s residence. King glanced at the place. This was no lavish estate built from the proceeds of an energy empire; it was an aging, yellowish mobile home.

He knocked on the door. Hinges creaked as it opened, and an elderly woman dressed in jeans and a button-up shirt, looking all of her 78 years, stared back at him. King identified himself and asked for Erma Huckstep.

“That’s me,” she replied.

That was all he needed to hear. At that moment, King knew that the state of Tennessee—and worse, many of its citizens—had been swindled.

His discovery of the truth about Erma Huckstep—a near-penniless former Sunday school teacher who maintains she was tricked into serving as a front for the man who controlled Quest—was a key to unraveling a bizarre scandal that is still confounding investigators in at least four states and that has cheated tens of thousands of the elderly and frail out of as much as $80 million.

This was no typical scam, like a penny-stock swindle or telemarketing fraud; rather, these audacious hucksters found their booty in the staid business of burials. ­Indeed, this multilayered fraud may prove to be history’s first large-scale white-collar grave robbery.

“These people literally cheated the dead,’’ said Mike Cox, the Michigan state attorney general whose office is among those investigating the case. “It’s absolutely despicable.’’

At the center of the scheme, investigators say, was Clayton Smart, a portly, volatile, churchgoing 67-year-old who was barely able to finagle a living in the Oklahoma oil business before realizing in 2003 that his future might be in burial plots. Law enforcement officials say he was aided in his truly grand larceny by financiers, including an executive at Deutsche Bank and, later, Citigroup, and unknowingly by regulators who were apparently captivated by the rumors (spread by Smart and his cohorts) that he had a personal fortune of millions. But it was all an illusion; in August, Smart, who declined a request for an interview, sat in a Tennessee jail, held without bail.

The hows of the scheme sound more akin to the Enron scandal than something you’d find in the burial business: There were off-the-books entities, hidden ownerships, Cayman Islands investment funds, and scores of improper wire transfers. But the actual crime, as alleged in court documents, was simplicity itself. Cemeteries are often flush with millions of dollars collected from customers who prepay for their burials. The money from these pre-needs contracts, along with cash for the maintenance of grave sites, is supposed to be held in trust, protected from mismanagement and pilfering. But in this case, law enforcement officials say, Smart and his partners looted the trusts for dozens of cemeteries, laundering cash with such skill that some investigators are concerned they’ll never find all the money.