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Financial Fraud Law

After Targeting the Terminally Ill and the Elderly, Estate Planning CEO and Employee Head to Prison

 He saw “death as a holiday.” He targeted the terminally ill and the elderly. He stole millions of dollars.  Federal prosecutors say that Joseph A. Caramadre, the president, chief executive officer, and majority owner of Estate Planning Resources in Cranston, R.I., did all this – and more. Now, he is going to prison for a long time.

Caramadre has been sentenced to 72 months in federal prison for conspiring to steal and use the identities of terminally-ill patients to obtain millions of dollars in illicit profits from insurance companies and bond issuers. In addition, Caramadre was ordered by U.S. District Court Chief Judge William E. Smith to serve three years of supervised release upon completion of his prison term, during which time he is required to perform 3,000 hours of community service to the elderly and terminally-ill individuals.

Raymour Radhakrishnan, a former employee of Estate Planning Resources, also is going to prison: He has been sentenced to 12 months and one day in federal prison for his participation in the scheme. In addition, Radhakrishnan was ordered by Judge Smith to serve three years of supervised release upon completion of his prison term, during which time he is required to perform 3,000 hours of community service to the elderly and terminally-ill individuals.

Judge Smith said that he would determine restitution at a later date. U.S. District Court Magistrate Judge Patricia A. Sullivan previously recommended to Judge Smith that Caramadre pay approximately $46 million in restitution to insurance companies and bond issuers, and that Radhakrishnan pay approximately $33 million in restitution. Caramadre and Radhakrishnan previously pleaded guilty, prior to the start of testimony in the second week of their trial, to conspiracy to commit identity theft and wire fraud.
“Both men are going to prison for what they did, as they should,” commented U.S. Attorney Peter F. Neronha. “The reality is that Joseph Caramadre saw death as a holiday. He saw it as a cause for celebration. He saw it as an opportunity to make money. Both defendants, particularly Mr. Caramadre, wrapped themselves in morality. Having sat through a week of trial and knowing as much about this case as I do, it is at best ironic. At its worst it is reprehensible.”

According to information presented to the court, in the mid-1990s, Caramadre developed investment strategies that depended on, among other things, the identity of terminally-ill individuals. On his own behalf, and on behalf of investors, friends and family members, Caramadre purchased variable annuities from insurance companies. The annuities offered death benefits upon the death of the person identified as the annuitant. These benefits included a guaranteed return of all monies invested plus, in many instances, a guaranteed profit and various other bonuses and enhancements.

According to information presented to the court, Caramadre and Radhakrishnan made misrepresentations to terminally-ill and elderly patients and their family members to obtain their personal identifying information. They used the information, including names, dates of birth, and Social Security numbers, to obtain more than 200 variable annuities and to open more than 75 brokerage accounts in order to purchase “death-put” bonds in the victims’ names without their knowledge and consent. Caramadre and Radhakrishnan either forged the signatures of terminally-ill people on account documents or obtained the signatures by means of misrepresentations. When the terminally-ill person died, Caramadre and others reaped substantial profits by exercising death benefits associated with the investments. Under the terms of these bonds, the owner of the bond is able to redeem the bond years or decades prior to the maturity date upon the death of the bond’s co-owner.

According to information presented to the court, Caramadre located terminally-ill individuals in various ways, including visits to AIDS patients at a House of Compassion, through family members and associates of the terminally-ill, and by soliciting individuals who were terminally ill to purchase life insurance policies. Caramadre also placed advertisements in a local Catholic newspaper that provided that there was a compassionate organization that would immediately give $2000 in cash to terminally-ill individuals. Dozens of terminally-ill individuals or family members responded to the ad. Caramadre gave Radhakrishnan, who began working for Caramadre in July 2007, the job of meeting with the people who responded to the ad for the purpose of obtaining their identity information and using that information on annuities and brokerage accounts.

“From Bernie Madoff to Mr. Caramadre and Mr. Radhakrishnan, devious schemes concocted for greedy purposes always end the same way,” said Vincent Lisi, Special Agent in Charge of the FBI.  “Others who think they can victimize people for personal gain without ending up in the same company as them should think twice because our team of agents, investigators and prosecutors who specialize in white collar crime can’t be outmatched.”

“What makes these defendants’ conduct particularly disturbing is that they targeted individuals who were terminally ill,” said Kevin M. Niland, Inspector in Charge of the U.S. Postal Inspection Service, Boston Division. “It’s difficult enough when a family member loses a loved one; to have to endure the additional financial strain brought about by this type of scam artist is just not right.”

John Collins, Acting Special Agent in Charge, IRS Criminal Investigation stated that the sentencing of Caramadre and Radhakrishnan “brings to justice two individuals who have committed despicable crimes against our society.  Not only have they defrauded insurance companies and financial institutions but they have taken advantage of a community of our most vulnerable citizens.  Caramadre and Radhakrishnan benefitted from a sophisticated scheme that preyed on terminally ill individuals and allowed them to line their pockets with the fruits of their crime.  Individuals who commit identity theft and fraud of this magnitude and with this degree of trickery, dishonesty and deceit, deserve to be punished to the fullest extent of the law.

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