Death Takes a Policy: How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges
There have been at least eight lawsuits filed in Rhode Island's federal district court relating to Caramadre's scheme. Insurance companies Nationwide, Transamerica and Western Reserve have all sued. The companies have not fared well in civil court. United States District Court Judge William Smith keeps knocking out claims. The companies then re-file new ones. As of this writing, Western Reserve has filed five successive complaints against Caramadre in the same case. When he dismissed Nationwide's complaint, Judge Smith questioned whether the company ignored its own contracts. In the Western Reserve case, Judge Smith wrote, "It is a bit ironic for Plaintiffs [the insurance companies] to suggest that they did not know the true nature of contracts that they themselves drafted."
The lawyer who represents both Transamerica and Western Reserve declined to comment.
The more serious charges are the criminal ones. Caramadre usually paid dying people between $3,000 and $10,000 for agreeing to serve as annuitants. He characterizes the arrangement as a win-win for everybody but the insurance companies. Prosecutors charge that he instructed participants in the scheme to lie, to steal identity information and to forge the signatures of annuitants in an effort to defraud insurance and bond companies.
The story as told by prosecutors goes like this: In an effort to get rich, Caramadre and his associates enticed the dying to give up their vital information by offering them $2,000 as a charitable donation. More than 150 people received the $2,000. Of those, at least 44 went on to play a role in number 18.
The government alleges that Caramadre directed his associates to lie to both the annuitants and the insurance companies. Sometimes, prosecutors assert, the dying people had no idea someone else stood to profit. In other instances, the indictment says, dying people were told that their signatures were just for the receipt of the charitable donation. A Caramadre employee allegedly told other family members they would be the beneficiaries. In five cases, the government says, signatures were forged.
Caramadre denies the accusations. He says that he instructed his employees to properly explain the program to the annuitants and that he would never permit forgeries.
Youthful looking with a round expressive face etched with deep lines across his brow, Caramadre appears more like an eager-to-please bulldog than a criminal mastermind. During the arms race, he says, companies did not complain when Caramadre paid their hefty fees and later filed claims seeking death benefits. Family members didn't object either. Everything changed in 2009 with the financial crisis. Companies started to feel the consequences of the arms race, the insurance companies sued and the FBI began visiting relatives and surviving annuitants. Today, some of those family members are the strongest witnesses for the prosecution.
"I lose my mom, who is my best friend, my world, and in me, losing my mother forever at the age of 64, you, in turn, profit and get X amount of dollars," says Stephanie Porter, whose mother received $2,000 from Caramadre before she died of cancer. "It's slimy what the man did."
* * *
Caramadre learned to hustle early. He graduated from the University of Rhode Island in three years with an accounting and finance degree, supporting himself through odd jobs that included running his church's weekly bingo game. After graduation, he took a job at a bank preparing documents for trusts. A friend convinced him that his fastest track to becoming a millionaire would be to sell life insurance, so he took a job as an agent with the Penn Mutual Life Insurance Company.
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