PROVIDENCE (CN) – A Rhode Island attorney used a loophole in life insurance policies to enrich himself and associates through a stranger-originated “Program for the Terminally Ill,” Western Reserve Life Assurance Co. of Ohio claims in Federal Court.
The insurer says it investigated after a woman left $250,000 to a Rhode Island business with which she had no affiliation. Western Reserve claims attorney Joseph Caramadre devised and operated the stranger-initiated annuity scheme.
“Such transactions are referred to as Stranger Initiated Annuity Transactions, or ‘STAT,'” according to the complaint. “Stranger investors may be lured to STAT’s for reasons ranging from the opportunity to receive enhanced death benefits to money laundering.”
Caramadre is “a self-proclaimed expert in annuities and life insurance products,” according to the complaint. He allegedly circulated flyers through hospice programs and churches, offering terminally ill people lump sum payments of $2,000 to $5,000 to induce them to purchase a Western Reserve variable annuity policy.
“Caramadre has devoted a portion of his law practice and business to identifying perceived ‘loopholes’ in insurance and investment products that, in his opinion, allow individuals to make money or reduce investment risks based, in part, on the shortened life expectancy of terminally ill people,” the complaint states. “Caramadre and [codefendant] Estate Planning Resources make money by advising clients to purchase insurance or investment products that have what Caramadre perceives to be financially beneficial ‘loopholes.’
“One investment scheme that Caramadre has orchestrated and/or participated in involves the purchase of variable annuities. Rather than recommending the purchase of variable annuities for their intended and appropriate use as long-term retirement investment vehicles, Caramadre and/or his associates induced investors to apply for annuities using terminally ill annuitants with whom they have had no prior relationship.”
The insurer claims Caramadre sent his agent, codefendant Raymour Radhakrishnan, to the home of an elderly couple who were both terminally ill, to pay them each $5,000 for a “double enhanced death benefit.”
Such policies provide death benefits worth the policy value or the cash value of the policy at the time of death of the annuant, whichever is greater, and name an unknown investor as beneficiary.
Western Reserve seeks damages for conspiracy, “civil liability for crimes and offenses,” and other complaints. It also sued Estate Planning Resources Inc., Natco Products Corp., Edward Hanrahan, and The Leaders Group.
It is represented by Brooks Magratten with Pierce Atwood.