A federal judge in Rhode Island this week ordered that two men must pay $46 million in restitution for the losses they caused in an insurance fraud scheme that involved, among other things, stranger-originated annuities, according to a news report in the Providence Journal-Bulletin.
United States District Court Judge William E. Smith, of the District of Rhode Island, ruled that estate planner Joseph A. Caramadre and his former employee, Raymour Radhakrishnan, must pay more than $46 million to insurance companies and bond issuers that had been defrauded as a result of their scheme, according to the news story.
The Providence Journal-Bulletin story, by reporter Katie Mulvaney, said that Judge Smith upheld the recommendation of Magistrate Patricia A. Sullivan. “In accepting Sullivan’s recommendations, Smith found that Caramadre and Radhakrishnan were not equally culpable for the $46 million in losses the companies sustained from the inception of the criminal conspiracy in 1995.”
Judge Smith “in December sentenced Caramadre . . . to six years in prison for his role as mastermind of the investment strategy in which he used the identities of dying people to purchase investments for his clients.”
In November, Magistrate Sullivan had made recommendations concerning the restitution that should be awarded, finding that the actual losses totaled more than $46 million, but concluding that the government failed to show losses stemming from three variable annuity transactions.
Magistrate Sullivan introduced her opinion concerning the recommended restitution with a short summary of the scheme:
Defendant Joseph Caramadre is convicted of devising an investment scheme that depended on the use of the identities of terminally-ill people gained through misrepresentations, layered over by a web of lies to prevent discovery, and of conspiring with Defendant Raymour Radhakrishnan regarding the scheme. Radhakrishnan is also convicted, based on having joined the scheme when he was hired by Caramadre on July 1, 2007. Caramadre and Radhakrishnan pled guilty to . . . an indictment . . . which alleged that they used the fraudulently-procured identities and repeatedly deceived insurance companies, brokerage houses, broker-dealers, bond issuers, municipal clerks (to procure death certificates) and others to arrange investments in variable annuities and corporate death-put bonds, with the object and goal of causing significant financial loss to the insurance companies and bond issuers.
Magistrate Sullivan’s November 6, 2013 opinion is available here; Judge Smith’s ruling accepting the recommendations is here; the Providence Journal-Bulletin story (“Judge orders Caramadre, employee to pay $46 million in restitution”) is available here.