'Death put' lawyer pleads guilty to fraud charge

Caramadre purchased bonds, VAs using identities fraudulently gleaned from the terminally ill

Nov 20, 2012 @ 3:57 pm

By Darla Mercado

A Rhode Island lawyer who used variable annuities to help investors profit off the deaths of gravely ill people pleaded guilty to federal fraud charges.

Joseph Caramadre, an estate planning lawyer based in Cranston, R.I., and his associate, Raymour Radhakrishnan, admitted Monday in the U.S. District Court in Rhode Island that they had committed wire fraud and conspiracy. The guilty pleas were entered as part of a packaged agreement.

In exchange for the pleas, the U.S. Attorney's Office will recommend that the court give the two men prison terms of no longer than 10 years. Each faced a maximum sentence of 25 years in prison and $500,000 in fines.

The plea deal is the latest development in a string of litigation against both men. From 1995 through 2010, Mr. Caramadre created a strategy for investors that involved using variable annuities and naming a terminally ill person as the annuitant. Once the annuitant died, the investor received the death benefits, as well as a guaranteed return of the principal and other enhancements.

“The insurance companies collectively lost millions of dollars from defendants' submission of variable annuities utilizing terminally-ill annuitants,” authorities noted in a court document stating the facts of the case. Some 20 carriers were involved, including Metropolitan Life Insurance Co., Western Reserve Life Insurance Co. and Transamerica Life Insurance Co.

The lawyer also offered “death put bond” strategies. Those involved assigning a sick person as a co-owner on the bond, along with an investor, who then profited when the co-owner died.

Federal authorities said that from July 2007 to August 2010, Mr. Caramadre and Mr. Radhakrishnan conspired to commit mail, wire and identity fraud.

The pair “concealed from the terminally-ill individuals and their family members that their identities would be used on annuities and bonds that were purchased by Caramadre and others,” authorities said.

The duo copped to wire fraud and conspiracy charges related to the transfer of $280,000 into a joint brokerage account that was held in the name of Mr. Caramadre and Edwin Rodriguez, who was terminally ill. Mr. Rodriguez was among a list of 23 people whose personal information was used by the men without their consent.

Authorities claimed that the men made material misrepresentations not only to the terminally ill and their families to obtain personal data but also to insurers and intermediaries, including broker-dealers and their reps — who processed the VA applications.

Specifically, Mr. Caramadre made misrepresentations to brokers at LifeMark Securities Corp. on how the annuitants and co-owners of brokerage accounts were identified and whether Mr. Caramadre was paying them, according to the statement of fact.

Anthony M. Traini, an attorney for Mr. Caramadre, did not immediately return calls for comment. Olin Thompson, an attorney for Mr. Radhakrishnan, had no comment.

Mr. Caramadre and Mr. Radhakrishnan are scheduled to be sentenced in February but still face a slew of civil litigation. Western Reserve Life, Transamerica, and the Securities and Exchange Commission have cases pending against the two. Moreover, counterclaims have been filed against the insurers by The Leaders Group Inc. and LifeMark, two broker-dealers involved in the case.


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