2 RI men plead not guilty to $25M investment fraud
Thursday, December 1, 2011
PROVIDENCE, R.I. (AP) — A Rhode Island estate planner and one of his former employees pleaded not guilty on Wednesday to charges they orchestrated a $25 million swindle of insurance companies and brokerage houses by stealing the identities of terminally ill and elderly people, including some they met by advertising offers for a $2,000 charitable gift in a Catholic newspaper.
Attorney and certified public accountant Joseph A. Caramadre, 49, and his former staffer, Raymour Radhakrishnan, 27, were released on $250,000 unsecured bond after pleading not guilty in U.S. District Court in Providence.
Caramadre called the allegations against him “baseless and unfounded.”
“Nothing was taken from the terminally ill. There were no forgeries. There was no deception. Everyone benefited, especially those in need,” said Caramadre, who attended his first court appearance with his family and a public relations aide.
Radhakrishnan, a law student in Massachusetts, declined to comment. Defense attorney Olin Thompson said Radhakrishnan is “greatly eager” to start the court process.
Federal prosecutors say the patients, their families and caregivers targeted for identity theft never knew Caramadre and Radhakrishnan stood to cash in on the deaths of their loved ones. They face a 66-count indictment charging them with conspiracy, multiple counts of mail fraud, wire fraud, identity theft, aggravated identity theft and money laundering. Caramadre is also accused of witness tampering. If convicted, they could be imprisoned for about 15 years, said Assistant U.S. Attorney John P. McAdams.
Caramadre is the president and CEO of Estate Planning Resources in Cranston, where he is a lifelong resident. Prosecutors allege he launched the scheme in 1995 and roped in Radhakrishnan when he was hired in 2007. In the mid-1990s, Caramadre targeted AIDS patients at Rhode Island compassion centers to carry out the scheme, the indictment said.
Prosecutors allege the men lied to terminally-ill patients and their families to access personal information so they could open joint investment accounts. They are also accused of forging signatures of the terminally-ill or obtaining them under false pretenses to open the accounts. When the person died, prosecutors allege Caramadre and others used their co-ownership position to exercise their options on the investments and turn a profit.
Federal officials investigated the fraud for two years. Caramadre’s attorney Michael J. Lepizzera said he expects prosecutors to turn over 200,000 pages of evidence. Seven lawsuits have also been filed by insurance companies, Lepizzera said.
The indictment says the men regularly advertised an offer promising a $2,000 charitable gift to people with terminal illness in the newspaper Rhode Island Catholic. Radhakrishnan met with people who responded to the ad and provided them with money from Caramadre, prosecutors said. He told the families he worked for a philanthropist, the indictment said.
During these meetings, Radhakrishnan assessed whether he was meeting with someone who was close to death. If that was the case, authorities say, Radhakrishnan claimed Caramadre had more money waiting for them.
Radhakrishnan and Caramadre forged the signatures of the patients or lied to them about why their signatures were needed to get them to sign documents that opened variable annuities and brokerage accounts that purchased “death put” bonds in the victims’ name, prosecutors said. A death put allows the beneficiary of a deceased person’s estate to sell the bond back to the issuer if the beneficiary dies or becomes legally incapacitated.
Authorities allege Caramadre and others turned a profit by exercising the death benefits. More than 200 variable annuities and more than 75 brokerage accounts were purchased this way, authorities said.
In some cases, victims were told signatures were required to document Caramadre’s charitable gift. Others were promised an account would be opened to benefit the survivors of the terminally ill person or other families grappling with terminal disease, prosecutors said.
Caramadre and Radhakrishnan are also accused of lying to insurance companies, brokerage houses and other corporations they did business with by claiming the patients were clients of Caramadre’s law practice. Prosecutors claim the men also concealed the compensation patients received for opening annuities. The men lied about the victims’ financial assets and investment experience and claimed the investment proceeds would go to the terminally ill, the indictment says.
Authorities also claim the financial institutions were told Caramadre had no ownership interest in the investments and that Caramadre paid for burial expenses at the request of the Catholic Church. That was false, authorities said.
Authorities say Caramadre told his investors he discovered a “loophole” that allowed patients to open variable annuities and co-own joint brokerage accounts used to purchase death put bonds. They accuse him of entering profit-sharing agreements with some outside investors but say Caramadre still received a significant percentage of the profits.
Prosecutors are also seeking forfeiture orders to seize property and luxury cars from Caramadre, including a 2005 Rolls-Royce Phantom, the indictment said