PROVIDENCE, R.I. — Joseph Caramadre believed he had found the Holy Grail for investors, a risk-free way to speculate in financial securities — all upside with little or no downside. All he needed to make it work were people who would soon be dead.
On Monday, in a federal courtroom in Rhode Island, the scheme ended with a six-year prison sentence for Caramadre.
"Joseph Caramadre saw death as a holiday, a cause for celebration, a way to make money," U.S. Attorney Peter Neronha declared on the courthouse steps downtown. "He stole the identities of people and used it to make money from companies who should have probably done more due diligence."
The sentencing came more than a year after Caramadre and an associate pleaded guilty to conspiracy and wire fraud charges. In part, the delay was caused by Caramadre’s failed effort to rescind that plea.
ProPublica wrote about Caramadre in August of 2012, describing how the Rhode Island attorney and accountant fashioned his strategy around variable annuities that carried death benefits, payable if the annuitant died.
Before the financial crisis, insurance companies were so eager to sell these annuity policies that they didn't check the health of policyholders. In exchange for a small amount of money, Caramadre, 53, and his associate, Raymour Radhakrishnan, 29, convinced terminally ill people to serve as "measuring lives" on the policies.
Caramadre then lined up investors who put in much greater sums. When the sick person died, his investors would either reap the death benefit — usually at least the initial amount invested — or any gain from the investment, whichever was greater.
Toward the end of the scheme, Caramadre branched out to so-called death put bonds. These also had death benefits that allowed the holder to reap the full price of the bond even if it had been purchased at a discount.
When prosecutors began investigating in 2009, they found family members who claimed that, while their loved ones took the money, they hadn't fully understood the scheme. There were also allegations that some terminally ill participants had been purposefully deceived about the nature of what they were signing and even in a few cases had their signatures forged. Most of the contact with the terminally ill was left to Radhakrishnan.
"While the nature of the victimization of the terminally ill was not monetary, it was a very real emotional and psychological victimization," U.S. District Judge William Smith said at the sentencing.
Smith remarked several times during the hearing, however, about how "difficult" and "complex" the case was, even suggesting that but for a few allegations it might have been a civil rather than a criminal case.
In court filings and publicly, Caramadre has denied the prosecution’s accusations, saying that he instructed employees to properly explain the program to the annuitants and would never countenance forgery by an employee.
Four days into a trial last year, Caramadre and Radhakrishnan pleaded guilty to two counts of a 66-count indictment. Shortly after that, Caramadre tried to take back the plea, blaming chronic depression and his wife's nervous breakdown.
Smith didn't buy the argument and sent Caramadre to jail, where he’s been for seven months. The judge said the attempted plea change was a factor in the sentence he handed down, calling it "an incredibly cynical effort to manipulate the court."
Smith also sentenced Radhakrishnan to a year and a day of prison time, plus six months of home detention.
In his heyday, Caramadre operated a successful estate planning business and gave millions to charities and politicians. Now few charities will acknowledge that he was a donor, Caramadre said at the hearing. And his contributions have become political kryptonite.
One investor in his scheme was Terry McAuliffe, now the Democratic governor-elect of Virginia. Caramadre briefly became a factor in the Virginia governor's race last October when The Associated Press incorrectly reported that McAuliffe had "lied to a federal official" during the Caramadre investigation.
The report erroneously assumed that a "T.M." mentioned in the Caramadre indictment was McAuliffe even though the person with those initials was identified in a prosecution document as having worked construction, an unlikely pursuit for McAuliffe.
McAuliffe subsequently donated $47,000, approximately what he had made as a passive investor in Caramadre's scheme, to the American Cancer Society. McAuliffe's campaign also donated another $27,000 that Caramadre had contributed to his candidacy.
Caramadre, a devout Catholic, placed ads in the newspaper of the Roman Catholic Diocese of Providence in an attempt to find terminally ill participants.
The ads promised $2,000 to all who responded, and Caramadre gave that amount to as many as 135 people without enlisting them in his scheme, he said in today's hearing. Those who did participate usually received between $3,000 and $10,000.
Judge Smith said he will call a separate hearing to determine a restitution amount to be assessed against the defendants in the criminal case.
India is reacting sharply after its deputy consul general Devyani Khobragade was arrested and handcuffed in public in New York on visa fraud charges last week
Escalating a diplomatic row, India on Tuesday asked the US to return IDs issued to all its consular officers posted in the country. This move may be a precursor to reviewing immunity and benefits enjoyed by US officials in India as a protest to the treatment meted out to the country’s deputy consul general in New York.
Indian government sources said, “Government has asked the US to return the ID cards given to their consular officers posted in India”.
It is understood that the government intends to review the immunity and benefits enjoyed by US diplomats.
Significantly, the review comes after India reacted sharply to deputy consul general Devyani Khobragade being arrested and handcuffed in public in New York on visa fraud charges last week by summoning US Ambassador Nancy Powell and issuing a demarche in this regard.
The displeasure was also evident among leaders and officials of Indian government. Home Minister Sushilkumar Shinde today cancelled his meeting with a senior US Congressional delegation ostensibly as a mark of protest against the treatment meted out to Khobragade.
Yesterday, Lok Sabha Speaker Meira Kumar had cancelled her meeting with a senior US Congressional delegation due to the same reason.
National Security Advisor Shiv Shankar Menon, who also had a scheduled meeting with the five-member US team, did not meet them, apparently for the same reason.
The delegation comprised Congressmen George Holding (Republican – North Carolina), Pete Olson (Republican – Texas), David Schweikert (Republican – Arizona), Robert Woodall (Republican – Georgia), Madeleine Bordallo (Democrat – Guam).
39-year-old Khobragade, a 1999-batch IFS officer, was taken into custody last week on a street in New York as she was dropping her daughter to school and handcuffed in public on visa fraud charges before being released on a $250,000 bond after pleading not guilty in court.
The "aam aadmi" of India and Pakistan is not really interested in the politics, but wants to carry on with life on a day-to-day basis
Pakistani foreign office spokesperson, Aizaz Ahmed Chaudhury said, India and Pakistan need to address the mistrust that exists between them, responding to prime minister Dr Manmohan Singh's statement that Pakistan cannot win a war against India in his life time!
Every two years, the Pakistani army's general headquarters at Rawalpindi publishes the "green book" which provides a rare insight into the organisation’s internal debates. In this, it is reported, that Pakistani Major General Shaukat Iqbal has stated that the deepening Indo-USA relationship could pose a serious threat to the integrity of Pakistan.
The man on the street, now popularly known as the "aam aadmi", on both sides of the border, is not really interested in the politics played but wants to carry on his life on a day-to-day basis. Truly, he is a pawn whose moves are decided by the politicans in power.
In the meanwhile, Shabhaz Sharif, who is actually the brother of Pakistan prime minister Nawaz Sharif, chief minister of Punjab province, has called for early resumption of peace talks between India and Pakistan.
Talks on normalisation procedure between India and Pakistan, between Anand Sharma, Indian Commerce and Industry Minister with Khurram Dastgir Khan, Minister of State for Commerce began with a view to cover trade of more items through Wagah border, opening of bank branches, commencement of electricity supplies, and so on, continued, in the presence of Shabhaz Sharif. This is expected to continue during the ensuing meeting when the South Asian Association for Regional Cooperation (SAARC) group gathers soon.
On his part, Anand Sharma has shown his keen desire to give enhanced preferential treatment to Pakistani products by bringing down its sensitive list under South Asia Free Trade Agreement. This will bring down the import tariff for all items for Pakistan, except for about 100 items.
Although India and Pakistan have reiterated the urgent and imperative need to work seriously on the Iran-Pakistan-India pipeline that would bring in the much needed gas from Iran, and also supply at competitive rates to Pakistan, work has not been satisfactory. Iran has completed almost 900 km of the pipeline under its control, while hardly any progress has been made on the Pakistani side.
In a similar fashion, the proposed Turkmenistan-Afghanistan-Pakistan-India
(TAPI) pipeline has also not made much progress, despite the keen interest and support that USA has given. Yet, with the recent developments that have taken place as a sequel to the nuclear deal with Iran, USA may soften its stand, but one never knows until the mandatory six month period is over and Iran keeps its bargain.
All said and done, it is time that both the prime ministers of India and
Pakistan sit together to at least have preliminary discussions on what is to be done. Indian prime minister Dr Manmohan Singh must reiterate that cross-border ISI-sponsored terror outfits must stop intrusions into the country; no longer should India tolerate these so-called "jehadi" outfits or freedom fighters attacking civilians. Any new attempts at intrusion should be dealt with firmly by the armed forces.
So far, in all these discussions that have been going on for years now, there are no reports, ever, that the question of counterfeit currency (manufactured with Pakistani support and smuggled into the country) has been raised at any level. If this is to be considered as the "Most Favoured Nation" status for India in printing this fake currency, this must stop forthwith, and the Pakistani counterpart must ensure this does not recur.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)