Should it be morally wrong to profit from the death of a stranger? What about criminally wrong? What if they’re terminally ill? What if you give them money in order to use their death to reap a profit? These were the core questions in the trial of Joseph Caramadre, who has been sentenced to six years in federal prison more than a year after pleading guilty in the scheme.
Yes, he and his associate pleaded guilty more than a year ago, and were supposed to be sentenced in the spring. It’s because of Caramadre’s attempts to get a new trial after pleading guilty four days into his first one.
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 dollars to sign up as annuitants for wealthy strangers. They had the wacky idea that customers would use the product to protect large nest eggs for their heirs, not to profiteer from others’ deaths. Wacky.