Depending on your point of view, Joseph Caramadre of Cranston, R.I. is either an opportunist who scammed the terminally ill, or a great philanthropist who found a win-win loophole and made last few months of the dying easier and more comfortable. The federal prosecutors who charged him with wire and mail fraud leaned toward the former.
Back in August, the investigative reporters of ProPublica and the public radio program “This American Life” teamed up to tell his story and explain the scheme. A basic summary is that he took an investment product that life insurance companies offered in the ’90s and ’00s, the variable annuity, and exploited a loophole. Variable annuities have what’s called a guaranteed death benefit. No matter how risky the investment, the listed beneficiary would always receive at least the original principal they put in back after the person listed as the “annuitant” died. Caramadre did something that none of the life insurance companies offering variable annuities had anticipated: he paid dying people a few thousand people to sign up as annuitants for wealthy strangers.
Caramadre’s trial began last Tuesday, November 13th, and the local Providence Journal expected it to last as long as four months. It ended abruptly this morning, with Caramadre and his employee who recruited “annuitants” pleading guilty to federal wire and mail fraud charges. They face up to ten years in prison, and will be sentenced in February.