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When Is It Acceptable to Profit From Death? Readers Weigh In

The story of Joseph Caramadre – a wealthy Rhode Island attorney and philanthropist – pushes the boundaries of how much we are willing to put a price on death.

Update, Nov. 19: In a plea agreement, Joseph Caramadre and Raymour Radhakrishnan each pleaded guilty to one count of wire fraud and one count of conspiracy.

Update, Aug. 29: Jake Bernstein has rounded up answers to some of your questions on the Caramadre story here.

Couples and families spend money in the aftermath of the death of a loved one every day. Wills are written, life insurance policies purchased, caskets chosen, hospice bills paid and funerals arranged – all transactions that help drive an industry around  end of life issues. But the story of Joseph Caramadre – a wealthy Rhode Island attorney and philanthropist -- raises an interesting question: Is it OK to make a profit off of somebody dying?

As ProPublica’s Jake Bernstein reports, Caramadre is facing federal charges after exploiting a loophole in variable annuities (check out this graphic or listen to this week's This American Life for details of the scheme). On the one hand, Caramadre points out that funeral homes, florists and many others make a profit around death. But at least some family members whose loved ones took money from Caramadre now say he went too far.

Take a look at these two perspectives, taken from depositions in the criminal case against Caramadre, and then let us know how you’d answer the question:

'I know that my wife had the best time of her life because of what they did'

 

'My body is going to be sold without my wife getting a dime'

I don’t quite understand the question.

What do insurance companies do if they don’t bet on the deaths of strangers? If that was illegal, every insurance company would be breaking the law.

The issue here is that an individual was cutting in on the profits of those who traditionally bet on the deaths of strangers. Yes, the individual made a lot of money, but so do insurance companies.

It’s all about transparency and honesty, and the fact ‘willing’ participants too often do not understand what they are getting into and are being taken advantage of. Look at the life settlement industry for another example of questionable practices. There’s enough moral hazard, agency issues and information asymmetry to ensure some of the most vulnerable will fall prey to unscrupulous sales tactics.

As mentioned in the story, profiting from death is everywhere. Funeral homes, florists, casket makers, all profit from death each day. The issue appears to be based on the question: Is it acceptable to profit without a direct service related to the decedent?

Perhaps we should look at the delivery of the signature as a ‘service’ and it would all be forgiven. Then the questions would not be of the moral implications but rather of the value provided. Is $2000 enough or should there be profit sharing? If all the contracts were setup with an initial fee and then profit sharing if the investment made money would everyone feel better about it?

Death is part of life and the moral implications of any action associated with someone’s passing is a mine field. However, removing personal emotion related to the loss of someone close to them makes the ethical implications of Caramadre’s plans far less hazardous.

Sarah Burtnor

Aug. 25, 2012, 1:37 p.m.

Short answer: no. I have no problem with ending the life insurance business.

And by extension, we should have a conversation about whether anyone should benefit from the ILLNESS of others? Caring for sick, dying, and dead people of any age should be public, non-profit services we agree as a civilized society to pay for with our taxes.  Like other social services, with appropriate oversight and administration, they can be provided much more cheaply, fairly, and efficiently without the built in profit margin required by private companies.

Taxpayers already pay for the research that improves health care and prevents illness, thus increasing healthy lifespans, so there is not much innovation that private entrepreneurs bring, and everyone is going to die eventually so why allow profit when life finally ends? The entrepreneurship illustrated by this story, and profiting from death in general, seems antithetical to all the health promotion activities that we agree to work to sustain and improve.

While I think the whole deal is shady, the annuity companies went along with it.  So they’re stuck with the bill and should just eat the loss. Stop with the lawsuits. It’s not like Caramadre was defrauding them—the companies designed the contracts, and were able to refuse them at any time.

Caramadre was greedy, but the annuity companies were greedier.  They invented this product, then added on a lot of incentives to buy the product, and went overboard.  The banks figured they’d reap big gains in the stock market, or in real estate, which were both booming at the time.

And it’s not just Caramadre in on these schemes.  I was jobbing at a fancy office once during the boom, and there was a salesman from some retirement planning company telling the people about an investment and a life insurance product that was hedged in a way to get a 10% annual gain.  It sounded shady, but it was legal, and everyone wanted in on it.  Hell, I wanted in on it, but since I was there just to do one task, I couldn’t, because I wasn’t on the payroll—and it was that steady flow of payroll cash that allowed the company to participate in this.

There weren’t what you’d call shady looking people.  If anything, some of them were snobs who’d look down on poor people.  Here, you had a bunch of middle class, nice people, basically being used to work some loophole in some financial products, and everyone was happy to be able to participate.  They were eager.

Caramadre’s only ethical lapse was the death angle—it’s morbid.  Everything else he did, including using poor terminally ill people as the annuitant, was okay.  It was no different than what was happening at this nice company above.  The only difference is that some working class people were involved, so, something kicks in where most people assume that the smart guy, Caramadre, was taking advantage of the poor people.  The implication is that the poor are stupid.

No, the poor are not that stupid.  They just don’t get opportunities to work loopholes.  This loophole required a lot of capital up-front, to buy the annuity.

If you watch the two videos in the other article, the first guy is happy about the deal he got.  The other guy was upset, but only because he didn’t get a bigger cut of the action.  He’s under the mistaken impression that this was a traditional insurance scam.  He didn’t understand that in order to buy an annuity, you needed a lot of cash, up front, which he didn’t have.  All he could provide was the dying person.  Caramadre provided the capital.

So you have “two sides” to this situation, and both sides want in on this scheme, and the only stupid person is the one who is unreasonably greedy, but feels like he was scammed, and acts sanctimonius.  Big LOLZ.

I am biased about this, too, because my family got scammed by Transamerica into buying life insurance.  The DOJ went after them, and found that they were selling lousy policies, and were forced to replace them with better ones.

Then I saw this whole scheme of putting poor people into “exploding” home equity loans and mortgages.  These banks are all about making money, and almost defrauding people if they can get away with it.  There was a time when I couldn’t talk to anyone in real estate without someone trying to get me into a big mortgage.  I was so disgusted that I just got out of the market (thank goodness!).

I’ve got no love, or even respect, for banks and insurance companies.  F them.

The loophole was legal, the scheme was pure greed.

Capitalism is legal, the scheme is pure greed.

Bagehot by-the-Bay

Aug. 27, 2012, 7 a.m.

While you’d got to admire the chutzpah of these rogues, when all is said and done the ancient legal concept of “insurable interest” is an important one to preserve. Without it we’re in a Wild West where someone can take out an insurance policy on his neighbor’s house, then burn it down. What’s to keep a group of “investors” from giving in to temptation and boosting returns by speeding recalcitrant or mis-diagnosed annuitants along? I once had a “key person” insurance policy written on me by a start-up that had started to fail. If I’d been hit by a bus, I’d have solved their cash-flow problems for a few months. It’s a creepy feeling indeed to know you’re worth more dead than alive.

I agree with Bruce and NurdyKurdy, but let’s take it a step further.  Funeral homes and cemetaries profit directly by the deaths of strangers, no matter how much they want you to think everything’s at cost and they care about you personally.  The beneficiaries of organ donation profit greatly—they survive when they otherwise might not—from the deaths of strangers.

Are organ recipients unethical?

Sarah’s also right in pointing out that doing well in medicine (or nearly ANY job in the current economic climate) puts you out of a job.  Doctors benefit most if you’re always sick.  Teachers benefit if you’re perpetually ignorant.  Reporters (not to drive the point too far home) benefit from corruption.  Programmers (like myself) benefit from buggy software.  If all of us did our jobs 100% perfectly, which of us would still be employed in six months?  The degree to which we exploit this flaw in the economy varies, and I’m not suggesting that any particular person exploits this (though I’ve known a few), but at the end of the day, nearly all of us profit from the suffering of others.

To me, the issue is in the relationship.  If you picked the name out of the newspaper, you’re gambling, and the ethics there can be treated somewhere else.  If you were given the information by the sick person with full disclosure as to the scheme, that’s as ethical as a photographer selling a picture of you, I would think; as to insurable interest, I think that qualifies as a “relationship.”

If sensitive information was appropriated through indirect means, though, like copying it from hospital records, tricking someone into filling out a form for a fake (or real) lottery, or anything else where the insured didn’t have the information to make a good decision, that’s a huge ethical lapse on top of the invasion of privacy.

But wait a few years.  When those “insurance exchanges” pop up, investors WILL—I guarantee—start putting money into insurance futures.  At that point, Bagehot’s premonition will become true, and for many, you will be worth far more dead.  But nobody will have a problem with that, because banks do no wrong.

I listened to this story on TAL. In my opinion Caramadre did nothing wrong… in fact I think his scheme is brilliant.

First, I have no sympathy for the insurance companies for suffering from this loophole. Insurance companies allow people to die every day because they weasel their way out of covering sick and dying people with legal mumbojumbo. I fought that system when my dad was dying of cancer, and let me tell you, it is not any moral or ethical violation that they’re upset about.

Secondly, although I do have sympathy to the families who have lost a loved one, “It’s wrong to profit from / put a price on from death” is a ridiculous statement. I have a family friend who runs a funeral home and he lives quite comfortably on a sizable income. His entire livelihood is profiting from death, yet no one thinks he is morally deficient.

What is going on here is that these terminally ill people sold something valuable—their identity as a terminally ill person—which Caramadre then used to make money for himself and others. If I’m a lumberjack and I sell my wood to the carpenter, and I find out he made a million dollar coffin with it and is now living on a yacht drinking top shelf tequila, do I get all outraged and demand reimbursement? NO! That wouldn’t make any sense.

I think that one of the most interesting parts of this story (I listened to it on This American Life and visited propublica to discuss) is that the insurance companies only became aware of this loophole when their mathematical models started to be inaccurate.

In order for them to formulate a mathematical model they had to make assumptions, or use censes data, to plan out their investment strategy. They bet that at whatever death rate and annuity enrollment rate they could sell variable annuity x under y terms and be profitable.

What Caramandre did was capitalize on their model by manipulating the variables in his favor. He did not change the death rate (that would be murder). He manipulated the enrollment rate. He enrolled more people who were terminally ill annuitants than they planned on. He took the time to do what they never considered anyone doing; he took the time to find people who were terminally ill. In accordance with their rules he became a more informed investor and beat them at their own game.

I think that this is completely ethical. The insurance companies brought civil suits because he beat them at their game under their rules and like spoiled children they accuse him of cheating.

Now if he misrepresented or did not explain the terms of their arrangement to the annuitants, then I think that he is a liar. Equally, if he forged official documents then he is a forger. These actions are unethical, no discussion required, and that is what the criminal investigation is exploring.

I think that most actors in the financial services industry, to include insurance companies, rely on the fact that the investor or insured is not as well informed as the investment company or insurer. They profit by being better informed than the investor or insured. If the investor or insured understood the market and options as well as the insurer or investment company then their services would not be unnecessary.

I think that the insurance and investment company’s profit by being better informed then the people would invest or insure with them. I think that Caramadre profited by being better informed than the companies selling the annuities. As long as there is no misrepresentation, then I think that their actions are equally ethical.

My only knowledge of this case is from the TAL podcast.  Assuming no actual proof of forged signatures, lying about what signatures represent, opening illegal accounts etc. took place, and all we are talking about is the ethics of this case, then I see no problem with what he did.  First, let’s take emotion out of it.  Saying “they’re insurance companies and we hate them so screw them” is not an argument.  However, listening to the argument of someone who lost their mother early to cancer is not fair either.  Of course she’s emotional, she wants someone to blame, so she looks to the guy profiting.  But objectively, death is something many profit off.  The insurance companies are responsible for their own contracts, and they know what’s in their contracts. They were overly risky in their assumptions and someone exploited it.  That’s not illegal.  It seems to be the government is assuming guilt, and s now creating the case against him.  Insurance companies lost billions in derivatives and other risks they took.  They were just stupid and they lost.

I too just finished listening to the TAL episode on loopholes and came here to see what the discussion was.

While nobody likes to think of someone profiting from the loss of a loved one, it is 100% accurate to say that someone will always profit from any life situation, death included.

And while this situation is morbid, I don’t believe the insurance companies claims that it is a problem of ethics.  If the investigators had better explained that Mr. Caramadre was placing his own money into an investment fund which was secured against loss by the signer’s life (or rather death), and in addition to that Mr. Caramadre was giving the potential signer monies for considering something, with extra monies if they decided to sign up.  This is no different than any other business that gives you something in return for considering their product (time shares comes to mind).

The insurance company, which has been pointed out both by the TAL story and other commentors above, knew that people will die (whether in a normal manner as they grew older, or in an accident) and in fact went to the effort of making models to calculate their risk of payout vs the reward of getting income from investors.  The fact that Mr. Caramadre did two trial runs (once putting someone else’s name down as the measure of life, and then by putting one person’s name down on multiple forms) and neither were rejected means that the company providing the service did not do their research or have due checks in place.

As a secondary consideration - why is there the assumption that profiting from death is ethically wrong, while profiting from life is not?  Insurance companies are set up to profit from our lives every day - car insurance, house insurance, health insurance, pet insurance, it goes on and on.  Each of us pays a lot of money to insure our daily lives, but a lot of us will never see the cash that went in come out in the same amount.  For example in the last 5 years I have paid in around $3000 to insure my vehicles for the road, in that time I had my car stolen once, and after paying my deductible, the insurance company paid the rest for a total of around $500, that means that the insurance company profited from my life over the last 5 years to the tune of $2500.

The insurance companies, in the meantime, as mentioned on TAL & by commentors above, use loopholes within their documents to restrict payments to people who thought they were insured.  Most of us know the usual exclusions (acts of God/nature/etc), but if anyone sat down to read their insurance, they would find many many loopholes that are only to the insurance companies benefits, and not to the clients.

Provided Mr. Caramadre explained to those signing as he said he did, then I don’t see how he can be held in the wrong “ethically”, and as far as I could tell, there were a lot more clients families coming forward saying they understood what Mr. Caramadre told them, and they in fact directly benefited from the money he gave to them in exchange for the services he required of them (signing as a ‘measure of life’ on an investment Mr. Caramadre was making).

The fault, if there is any, lies with the insurance companies.  What I would love to see from them is the projections of how much profit they made, regardless of Mr. Caramadre’s efforts, because in the end, they were trying to make profit.  They would not have ‘sweetened the pot’ if they didn’t think it would make them more money in the end.

Mr. Caramadre from what I understand, did not tell these people he was giving them free life insurance by paying into this program, he gave them money, and then used his own (or his clients) money to enter into an investment opportunity.

As far as “stealing” identities, these people signed papers, they were given money for thier assets (in this case their signatures), and the insurance companies were given their monies for investment (which I have no doubt would return them profit as well, otherwise they wouldn’t have done it).  This is not stealing, this is a business transaction, the business just happens to specialize, as many others do, with the end of life.

Something can be legal but unethical at the same time. Ethics refers to moral conduct. Mr. Caramadre ran an unethical businesss and was distinctly immoral in his conduct.

Putting what Bagehot by-the-Bay in a different fram: the moral hazard in the situation is the temptation to do real evil (hastening someone’s death) because of the awkward motivations.

But the world is full of situations with moral hazards. So far neither the This American Life story nor anything I read here suggest that Caramadre et al succumbed to any moral hazard. It seems that they candidly entered the minefield the insurance companies created. Their candidness seems like more evidence that they had no nefarious intent. As Laurel says, they just did their homework and became more sophisticated customers than the insurance companies anticipated.

I don’t believe that what Caramadre did was illegal and I have to say that I believe the ethics part of the question depends on which side you’re sitting on.

Caramadre put up the capital on the investments, he followed the contracts and requirements issued by the insurance companies selling the products, and he provided cash money to those people willing to provide their signatures. From the TAL podcast, it doesn’t appear that he did anything illegal. He worked the investment to his advantage and it only became in issue when it became to expensive for the insurance companies selling the products he was profiting from.

As for the ethics of profiting from the death of others - this is part of what we as humans do - there’s only one way out of this life for all of us. Certainly profits are made from the birth of life, why would profits not be made from the end of life? I think that the ethics may be questionable if one looks at it from the perspective of a loved one who is upset the death of their family member or friend didn’t reap more money or that the death of that loved one was somehow tainted by the selling of their signature. But I think the same could be said about the funeral industry, the healthcare industry, and all of the industries that profit as our bodies break down and we wind our way towards our inevitable end.

Our lives, while we live them, are full of choices and as long as these annuities and the selling of signatures was explained, then who are any of us to question the ethics of presenting that choice, which provided benefit to the sellers of signatures? It does seem that some of those who participated in selling their signature may not have fully understood how the annuities worked and what they were actually getting, but I think that’s a question of business ethics and not one that can be tangled up into the ethics of profiting from the death of others.

It was a few years ago but I remember that some big companies were insuring their employees without their knowledge and collecting large sums and giving the families nothing! This was on several networks and I believe CNN was one! If it is OK for the plutarchs to insure their plebes,betting they will die and thus fatten the corporate pockets,why not everyone?

Good for Mr Caramadre! The measured lives, and the annuitants got rewarded by an insurance company financial instrument. Whats the beef?

John McGuinness

Aug. 27, 2012, 3:27 p.m.

I voted “No,” but feel I should explain myself.

I don’t think it’s ethical, but in my opinion it is not any less ethical than any number of financial instruments people have been using to enrich themselves while adding little or no value to society over the past number of years.

It’s not unethical because people “benefit from somebody else’s death.”  The program listed may ways that happens already, besides, by my understanding, the instruments only enabled people to break even in the event of the signer’s death.

My real problem is that it is one more example where people who were already rich were able to get richer at everyone’s expense.

Who benefitted from this?  People in country clubs.  People in Carmadre’s social circle. The dentist and his employees.  The only people in the above who were likely not already well-off were the pensioners.  In general, poor and middle class people had no access to   this solution, and taking advantage required a sizable investment.

And who lost?  Well, insurance companies.  Not exactly a sympathetic group.  But do you suppose they simply ate their losses?  Or did they pass it on by raising rates and laying people off,  Maybe their stock price went down, hurting their stockholders; i.e. lots of people with 401(k)‘s.

Then there is the manner of the distortions to the market these “investments” may have represented.  Money flowed to risky vehicles instead of more solid options, which is a perverse incentive.

Would it not be better if Caramadre applied his cleverness to things that might benefit society as a whole or put people to work, rather than giving other rich people a safe way to “invest”?

So, no, I don’t think it was ethical.  Not because of the linkage with death, but unethical in the same manner as a lot of things in our financial system in recent years—rewarding cleverness and connections rather than actually creating value.

The failure of the insurance companies to specify the degree of relationship of the annuitant was malpractice on the part of their lawyers.  Compounding that failure by asking no health questions?  More and bigger malpractice. 

Ethics and morals play no part in this.  Each of these terminally ill people was at least $2000 better off than he or she would have been had Mr. Caramadre not happened along.  All insurance is based entirely in risk analysis, and Mr. Caramadre read the fine print and took the risks.  It was his money (or that of his investors) which he used—he didn’t steal from his annuitants.  Nobody, not a single person, was unhappy until the FBI decided he should be. 

The annuitants could have purchased annuities on their own lives as well; nothing precluded them from doing so, even if they were annuitants for Mr. Caramadre.

As a lawyer, I am very interested in how the Justice Department intends to win a criminal case on essentially the same facts which failed in the civil courts.  The burden of proof is much higher in the former.  If the older gentleman who was interviewed (and who was so clearly confused about his body being “sold”) is the best witness Justice has got, they are screwed.  The alleged forgery sounds weak.  Mr. Caramadre is obviously a very, very bright man, who made a fortune by being more informed as to the rules than the insurance companies.  Being smart doesn’t make you immoral.  Liking money, even lots of it, doesn’t make you immoral, either.  No one was harmed here.

It is presumptuous and arrogant to suggest that because someone is terminal that he is also mentally impaired in some fashion.  No one rushed a pen into the hands of anyone; there appears to be no dispute that anyone who wished to be an annuitant received a second, later visit and had time to think over what they were doing.  It’s obvious that Mr. Caramadre’s actions bettered the remaining days of these people.

The lady who was upset because there was a “price” on the life of her mother is certainly grief-stricken.  Repugnance on everybody else’s part is disingenuous; juries make decisions every day as to what a life was worth.

I suspect I could draft a flow chart from an insurance lobbyist to a senator/congressperson to an ambitious prosecutor in this case, but perhaps I am just cynical.

People who are cheering Mr. C are merely thinking he took back money that would have gone to insurance companies which have been known to make getting a payout that is due, difficult. Isn’t the entire process disgusting? Is he not as morally bankrupt as those he accuses of taking advantage of people? Cheerleading this professional is inappropriate. It might have been helpful to warn people publicly about variable annuities taking advantage of elderly people. 

It is time for a regulatory sweep through life, health, and annuity insurance practices. Insurers try to avoid paying big policies. I have experienced it myself. It’s dishonest, but few widows or families in grief have the strength to challenge them. This is not unlike white collar crime on Wall Street, corrupt lobbyists or political favors pledged to hometown supporters. Workarounds, manipulating the system to take advantage of a cutthroat industry is not a professional response. The behavior described (and the cheers) indicate the level of societal anger toward corporations taking advantage of people.

I think Carmadre found a loophole and pursued it to his full advantage.  At least the insurance companies decided to change their contracts unlike in the Credit Default Swap market, where they issued the insurance to parties who didn’t even own the securities being insured.  Very similar things happened in subprime mortgages.  Everyone knew they were loaded with bad mortgages, but still they got a AAA rating.  The investors took their risks and needed to check under the hood of the investments they bought. 

Insurance companies and investors still do this.  It’s called a viatical settlement.  An elderly person sells a life insurance policy on their life to a group of investors for an upfront cash payment (which is a discounted value).  When the person dies the investors file the death benefit claim and make a return on investment.  OK.  The policy holder got what they wanted, the investor got what they wanted.  The insurance company makes good on its promise.

I think we get bent out shape since death is involved especially when somebody profits from it.  I think we want a worldview where death has dignity and if someone profits from my death it seems cheap.  As a buyer of life insurance policies I know my life expectancy is a statistic in an insurance company financial model.  So what.  It’s when the insurance company pays the death benefits to my survivors that’s what concerns me. It’s incumbent upon the insurance company to come up with realistic product at a reasonable price and not to make erroneous assumptions in their financial models when forecasting payouts and investment returns.  They should not sacrifice good underwriting (which they clearly did) in order to gain market share.

People who are cheering Mr. C are merely thinking he took back money that would have gone to insurance companies which have been known to make getting a payout that is due, difficult. Isn’t the entire process disgusting? Isn’t he as morally bankrupt as those he accuses? Cheerleading a professional who reacts this way seems counterproductive. It would have been more helpful if he had warned people publicly about the way variable annuities take advantage of elderly people. 

We really need a regulatory sweep through life, health, and annuity insurance practices. Insurers try to avoid paying big policies. I have experienced it myself. It’s dishonest, but few widows or families in grief have the strength to challenge them. This is not unlike white collar crime on Wall Street, corrupt lobbyists or political favors pledged to hometown supporters. Workarounds, manipulating the system to take advantage of a cutthroat industry is not how professionals in any field should act when they encounter something unfair. The behavior described indicates the level of societal anger toward corporations who inappropriately manipulate others (sometimes with very small print or legalese) for their own enrichment.

He didn’t accuse anyone of taking advantage of people.  In contrast, the insurance companies in this instance set up a situation which was of tremendous benefit to people—one’s investment was guaranteed no matter what happened to the market.  Mr. Caramadre was able to benefit his investors (and his annuitants) because of the completely inadvertent kindness of the insurance companies, who were too short-sighted to believe a) that their actuarial models weren’t brilliant and b) that the market would ever tank.  It wasn’t a “workaround”; it was brilliant.

I agree with Lynn, but as long as the plutarchs take adventage of these and many other LEGAL loopholes then why not the little guy? Look at the legal corporate personhood and the insuring of employees without their knowledge to fatten the corporate pockets and the destruction of our economy by sending jobs to 3rd world countries to fatten profit’s at the cost to our nation and the insurance companies not covering claims and bragging about it and the list goes on! If the little guy gets a piece of the action at the disadvantage of the fat cats,until we see a leval playing field go for it!

Remember,“The meek shall inherit the earth,when they organize like the Mafia”!

John McGuinness

Aug. 27, 2012, 4:01 p.m.

In essence, it comes down to what kind of world do we want to live in.

Do we want to live in a world where we must meticulously audit all our agreements ensuing that every i is dotted and t is crossed, so as to guard against someone like Mr. Caramadre catching us in a mistake and cleaning us out for himself or his friends?

Do we want to live in a world where Mr. Caramadre devotes his considerable talents to catching other people writing agreements that are less than bulletproof so he and his friends can profit, or to working on something of value for the world?

Yes, I know big companies do the same thing, and he’s only turning the tables.  But the long term result is an arms race between these companies and people like Mr. Caramadre, where they devote more resources to making sure there are no loopholes in their agreements, and less time to things that are actually valuable.

And we’re the ones who will pay for it.

@Lynn also raises a good point—who do you think the insurance company pays first—the lawyer or the widow?

Mary L. Grabski

Aug. 27, 2012, 4:11 p.m.

Republicans make enorm,ous profits on deaths all the time.  Profiteering on the lucrative war costs is a normal investment in most wealthby Republicans’ portfolios.  They LOVE wars~~from the buying of the weapons, ammunition, vehicles, planes, machinery, uniforms, to the building of the encampments, to the feeding and housing, fueling, and then all the rebuilding of their destruction, there aren’t too many who don’t profit off the entire business of killing innocent people!  Remember too, this is the party that PRETENDS to be “PRO-LIFE”!  Very FEW of any of their OWN children are the ones getting killed and maimed, besides!  So, who cares?? And, as if wars, and trying to incite MORE wars, isn’t enough, now the Republicans also intend to cut the programs for the food and healthcare of children, the poor, and the elderly, so they will have enough money to continue THEIR OWN “welfare” programs, including their insane tax loopholes!  Then, they also have their “subsidies, their grants, their bail-outs, etc.~~ALL Republican WELFARE, BILLIONS of dollars FREE for doing absolutely NOTHING!  And, without a word of stigma, like the comparatively small amount of welfare given to the poor, which they intend to take away from them.  All “VERY” Christian??  NOT!!  They are a bunch of phonies cuz they believe voters are stupid!

When corporate America is reined in with it’s heartless practices and we all operate under an equal standard,then I agree we will have a better world but let me ask this;when you sign any type of contract for anything over a few dollars do you have it reviewed by one of those evil attorneys? I bet you do and as my grandmother told me many years ago;“What’s good for the goose is good for the gander”! As to who got paid first;in the case of companies insuring their employees without their knowledge ;the widow got zero! The person in question was smart enough to take advantage of the LEGAL loopholes just as a candidate for President has claimed regarding his income tax! Does it make it moral? Of course not but please tell me where there are morals in corporate America!

While I voted that I thought Mr.Caramadre’s practice was not illegal or immoral on the latter point, Mr. McGuinness raises some excellent points that give me pause. At the end of the day, society as a whole is clearly not benefited because the already well-off who are connected to clever folks like Mr. Caramadre become more well off by exploiting loop holes. Robin Hood did not rob from the rich to give to other rich.

Mary L. Grabski

Aug. 27, 2012, 4:27 p.m.

No Pat, I never have hired an attorney to review any contract.  I usually trust my own thinking and research.  The outrageous loopholes of the Republican tax deductions is far out of hand though.  Deducting $770,000 for a HORSE, when the deduction for a human CHILD is only about $3500, is highway robbery, as is the fact that WE have to pick up and pay the needed taxes of the super-wealthy, making over $250,000 EACH ($500,000 per couple) per year because the Republicans no longer have to pay their fair share!  Maybe they DO need a Ronald Reagan back!  At least the poor didn’t have to pay the bills of the super-wealthy, under his administration.  THE weallthy had to pay their OWN share of our country’s bills!  We definitely need more Democrats in there to get rid of the loopholes for the super-wealthy!  There are many low & middle income “r"epublicans, who continue to vote AGAINST themselves and their own families, because they don’t understand politics at all, and they fall for the lies!

Since the Dept. of Justice filed a criminal lawsuit, ethical and moral are not relevant. The only question is: Did he violate a federal law? But annuities are regulated by state insurance statutes. The federal gov’t does not have a leg to stand on. The McCarran-Ferguson Act should force the feds to back off. And under Rhode Island insurance law, Caramadre did nothing illegal.

Oh, but wait, the feds did not charge him with any crime related to annuities or insurance. They threw the standard bag of mud at him, the charges that could apply to anyone, anytime, anywhere—mail fraud for using the mail, conspiracy, etc. Never mind that there is no underlying violation of law, this is the way of too many prosecutions. Justice be damned, Truth be damned. That is why Don Siegleman is in prison. A different set of law for different people—as Glenn Greenwald wrote in “With Liberty and Justice for Some.”

Please do not misunderstand: I do not support Caramadre. I think he could have given these people more than $2 thousand. But I greatly dislike prosecutors who decide they must win if it takes fabricating evidence, coercing or bribing witnesses, etc. This is the theme of my new novel, “Accidental Felon,” prosecutorial misconduct and the targeted company profits from the deaths of insureds.

Those who argue the insurers were not doing their job are absolutely right. That is why there are so many STOLI lawsuits—insurers who failed to underwrite and now want courts to allow them to void the policies and also keep the premiums. Not all insurers but, oddly, among those who filed suit against Caramadre are some who did involve themselves in viatical and life settlements.

This, too is in my novel because more people read fiction than nonfiction, and I hope through it to educate while entertaining.

If any acts of Caramadre were unethical or immoral it does not matter. Criminal charges should be brought only when there is violation of a law; no federal statute applies to annuities, and state law of Rhode Island does not prohibit his acts. But the prosecutors will squeeze the square peg into the round hole and probably make it fit.

Because, only in a rare case like that of former Senator Ted Stevens, do prosecutors lose. If they do, they still have cost the defendant time, stress, tons of money. And when prosecutors lose , they keep their jobs, their salaries, their homes, their pensions, their health benefits—all paid by you and me, the little people.

Mr. Caramadre and his wife give a quarter of a million dollars to United Way every year.  That is just one of his charities.  I think he has done something of value for the world.

No, it’s not ethical, But there is nothing stoping the carrier from requiring Insurable Interest, so it’s really poor underwriting on their part. Someone tell me the difference between this and A viatical however.

@ Lynn, regarding cheerleading Mr. Caramadre…

While my post may have on the face appeared to be quite pro-Caramadre, I personally wouldn’t myself have taken advantage of such a loophole and wouldn’t have felt it to be morally correct.  However, there is a large difference between what is moral (distinction of right vs wrong) and what is ethical (acting in accordance with rules and standards) in business.

Morally speaking, I don’t believe it was right to take so much money.  Ethically speaking, Mr. Caramadre did not violate the rules or standards, as laid out in the contracts he signed which were designed by the insurance companies, so he cannot therefore be held ethically responsible for exploiting a loophole that he discovered.  Morally would also be hard to prove.

As far as the lady and gentleman who were talking about how much their death or the death of a loved one was worth… Mr. Caramadre did not go to the hospital and forcibly threaten or harm these people, in fact he gave them money to just talk about something, he did not take that money back when the people did not want to become signatory “measures of life”, and he didn’t force them to immediately say yes/no on the first meeting, as far as what I’ve heard so far.

If a university (or health research place etc) invited anyone who had medical condition “x” to an open house and promised (and delivered) $20 for their attendance, and then extended an offer for people to try a new experimental drug and recieve additional monetary benefits - is this not also ethically repugnant as Mr Caramadre?  I would wager most would say not, but there is still a transaction occuring, the person is being paid for their time, they are being told that if they sign some papers (and in this case either take a placebo or a drug to determine effectiveness), then there will be additional monetary benefits.  This happens all the time with terminal illness, and also happens when people hear about possible new drugs and seek out the medical establishments to try to get them for people they love.  If the drug succeeds (which almost never happens at first, and thus deaths are common - think of all the ‘serious side effects’ listed up to and including death - someone had to be the one who got all those and even dying to get those added to the drug consequences), the researchers & drug companies then stand to make a fortune off the suffering and death of others, cancer treatments for example are very very expensive and in the end most people still die from the disease.

Back to the insurance money that Mr. Caramadre has taken from the companies and whether or not we will pay for it.  Of course the costs will be passed down, however the nature of insurance is that the cost is (almost) always on the rise.

While it may not have been that palatable that Mr. Caramadre possibly took advantage of both the insurance company and had some of the people feel their loved ones passing being taken advantage of… at the end of the day, a little common sense when providing anything based on life/death would be to have at least a bare minimum of health-related questions, or to specify that this was to be a personal life insurance product in which case the investor & the annuitor are a singular entity, not two separate persons.  Or at least specify that the person had to have some basic relationship (spouse/family) between the person investing & the annuitor.

Ms.Grabski,whenever we bought a home we had an atty.review the contracts and title searches,and found in each of 5 cases at least 2 errors and a high of 16! We once were going to buy some property but,on advice of council,we requested a environmental survey upon which the seller pulled the property and we found that it was an industrial site in the 1890’s and if we invest in anything over a certain amt.an atty looks at it! Indeed,these loopholes are rediculous and in my opinion immoral and for those who claim to be Christian hardly a good example of that belief but they are LEGAL and it only proves that what may be legal may not be moral!

Donald First asked the difference between this and a viatical. The biggest difference is that, when legitimate, a viatical is cash given to a terminally ill insured who sells his/her life insurance. Caramadre dealt in annuities, and different law applies in Rhode Island.

With a viatical, the insured originally applied for life insurance to protect family or business, the policy was in force for a number of years, and when it is sold the price paid to the terminally ill insured is a percentage of the death benefit—far more than $2 thousand.

Under the ANNUITY section of state insurance law in Rhode Island, insurable interest does not matter. A stranger can do exactly as Caramadre dId—and you or I can do it until the legislature changes that portion of the law. Although that loophole does not exist in all states,  it does in Rhode Island, which is why what he did is not illegal.

actually this issue is not about Death it is about life and Living in it!

Gloria, A viatical does not require an Insurable interest.  $2,000, 25,000, $100,000. We are just quibbling about
PRICE

Haven’t corporations been taking out “Dead Peasant” policies for a long time?

Donald—when a policy is sold for a viatical settlement, the buyer does not have to have an insurable interest. The insurable interest must exist when a person applies for life insurance and when the policy is issued. 

Dean—Yes, and Walmart is the most notorious for doing this, using their employees the way Caramadre used these ill people. Here, again, we have two levels of law, one that exempts powerhouse Walmart from criminal charges, another that indicts Caramadre. Or you or me, if we did this in Rhode Island, where it is legal with annuities—not life insurance.

First we had the mortgage crises.  Now we have another scandalous financial crises in the works.  How much money is enough for these money bloated corporations?  How much money is enough for the individual money schemers to take from the average citizen?  When are we ever going to learn not to be taken in by schemes that seem to be too good to be true? 

The world is going at warp speeds into financial gloom-&-doom practices that only a select devious few profit from.  If financial dealings were kept ethical and simple there is profit to be had the honest way.  Is that asking too much in today’s cyber-world?  Wouldn’t be it be nice if the “Fourth Estate” could catch these financial maladies before the general public gets totally fleeced by them? Think about that.

If by “Fourth Estate” you mean the media, ProPublica is (sadly) unique. Here is an example of how the NY Times does it job (from OpEdnews) and, oddly enough, this has to do with profiting from the deaths of strangers:

http://tinyurl.com/94vly9u

Here’s the thing, first Mr Ferrel, don’t worry Rhode Island is a Small State. It’s the carrier who is stupid, and know better. Is it unethical for an Agent to do it.  In My View yes, did he break the law, well if he lied he did, yes that’s fraud, but as I stated before Viaticals are legal and advertise big returns, The only difference here is that when the policy was issued it had an insurable interest.
Mr C may be able to do this now, but then what Carrier will write business with him in the future.

What I think is most interesting about this story is that in several cases the families of the people who died talk about how much good the money that Caramadre gave them did in their lives.  The only woman who seemed to have a problem with it was someone whose mother did not get to enjoy that luxury.  It is expensive to get sick, something that I know all too much about.  No matter how much you have saved, no matter how good your health insurance may be, it is costly in ways that someone on a fixed income can not cope with.  Unfortunately, most people who have to deal with this kind of illness are retired and on a very fixed income.  It makes me consider what could be done to ease the financial burden on these people to make their last few months on earth more pleasant.  It is something that, whether or not it was legal, Caramadre did do.

It will be better to re-arrange the North-American Judicial structure with a re-written or heavily amended new set of basic rules and laws to be the main guide in the improved law books -fit for digital new world, because there are too many loopholes in the old books to fix.

Life Insurance for certain gurantees profits for many and some hidden crimes. It’s not too difficult to understand that big bosses of those Insurance companies and big shot law makers and professionals in the field of law are guys of a same group. The processing of big claims and the profits are revolving around the same circle with a very small number of showy exceptions in regard to payments of claims (although mostly false but bolstered by the involvment of opportunist injury lawfirms with sure links for ‘profit-wise satisfactory to all party’ -settlements).

Twin tower fell in NY, USA at the beginning of this century and at a distance, Home & Auto Insurance premiums started increasing to be more than 200% right away (Upto 500% this year regardless of claim history) in Ontario, Canada.
(For my personal Automobile it was between C$25 & C$50 monthly a decade ago. My driving record proves that I am still one of the best drivers as of today; I never had any fault or claim since and in 2012 it’s between C$150 & C$450 monthly as per RBC Insurance company personnel or system generated quotations.
And a middle class person like me -who do not receive social assistance of financial support from government or other sources for years in a row, how squeezed may feel in the reality of impacts of other facts (created by calculated human greed, not real demand) such as:
Cdn 30 cent per litre gas price before 9/11 has increased to $ 1.30 today in 2012.)

It looks like in Canada (similar is the condition in USA), there is either no government control at all or it is too powerless to act against unscrupulously profiteering big bosses in Insurance business in our entire North-American territories. If this continues this way, then, just imagine: how imbalanced will be the situation at the end of this century. (99% poor guys? - You may like visit 78 page Crown document in my website: http://WWW.SHAHISLAM.COM)

In business and financial matters, Canada and USA are inseparable. It’s upto us to discuss and act to peacefully do something now about this serious North-American issue or wait to see social riotings and bloodshed become commonplace (not necessailry racially motivated but pre & pre-preplanningly arranged in order to slowly give that kind of look by some super wealthy businessmen and group of so called noble men).

Donald—viaticals are legal if the company complies with a number of rules. It is not legal to buy a policy from someone who committed fraud in order to acquire it. That fraud may be not disclosing a serious health condition, or applying for life insurance with the intent of selling it to strangers (STOLI), lying about assets so as to qualify for millions when your net worth is negligeable, etc.

However often these companies advertise “big returns” for investors—do not believe it. Tens of thousands of investors have lost their life savings, and more will lose in the future. I wrote two books to warn investors about the risks. The first, published in 1998, was for ordinary folks who trust the sales agent and do not know much about insurance. The 2005 book was intended for more sophisticated investors who, I later learned, also do not know much about insurance and too often do not get professional, outside advice before putting their savings (or IRAs) at risk.

How peculiar it is to me to find when I recommend hiring an attorney to look review the documents, the investor who is about to risk tens of thousands does not want to spend, perhaps, $5 thousand to make sure he or she will not lose everything.

Gloria, I never said Viaticals were illegal, However, I myself would not choose to profit from one. Despite the big return promised. I will not profit off the misery of others, that’s my choice. I have enough troble sleeping at night as it is.  It’s still exploiting someones illness,either way.

I think it’s OK to profit from death if you didn’t cause the death.

By that standard, what Joe Caramadre did was OK.  He didn’t kill anyone, he just he just found a way to make lots and lots of money off of terminal illnesses that would have killed them one way or another.

A side benefit of that was that these terminally ill folks also made some money—of their own deaths, ironically enough—because if they hadn’t been terminally ill, Joe Caramadre would have had no reason to give them $2,000 for every policy they signed onto.  Which I also think is fine, because again, they didn’t cause anybody’s death, they just made the best of a bad situation that nobody but God or nature had already caused.

Not all insurance companies are entirely cynical and uncaring in their business conduct, although many have been seduced by the crazy amoral world of high finance. There are many laws in place to keep insurance what is intended to be: not wagering, but spreading risks that, if both sides tell the truth, can be calculated and properly charged for. The insurable interest principle will be brought to annuities in more states, as it should be, if the states are wise. Insurance in the purest form must have safeguards in place to make it risk sharing, not speculative investment.  It’s a fundamental principle that over time is proved again and agian.
The companies who made the overly optimistic annuity contracts are back pedaling as fast as possible to stop their losses, even from those who didn’t buy them while terminally ill.  Yes, they were greedy and short sighted.  They also didn’t anticipate terminally ill people being paid to take out contracts that would only last a short while. Pot, meet kettle.
I grew up in the Midwest during the 50’s, where the social contract was to do the right thing morally, even if profit would be less.  People helped out others because they cared, and could count on that same help back when they were in need.
I noticed a sea change when I moved to a coastal city, where the attitude Mr. Caramadre has was/is the “smart” way to be. “If I can do it within the law, then it’s OK, never mind the morality.”  Law school is often about being clever for profit rather than keeping everyone honest.
So now, we have large financial interests essentially buying the legal system so that they can exploit any angle to make money. 
This is what is wrong with our financial system.  Even when big money interests cover up their wrong doing they get away with it, because we have revolving doors between regulatory agencies, lobby groups and the regulated businesses themselves. It’s winner take all, and let’s follow Ayn Rand, the “morality” of self first.
Like the boys on the island in Lord of the Flies, when it all crumbles, like the financial world did in the Great Depression, we may do some actual soul searching. 
We know that Goldman Sachs and other companies lied and did illegal activities, but they won’t be prosecuted.  There’s no public outrage, either, because there’s enough money being paid to “news” organizations for their wrongdoing to be justified and hidden in the financial news. When they are fined, it’s not in proportion to the cost to society of their wrongdoing. They get wrist slaps. Read Matt Taibbi of Rolling Stone.  Take a look at the website for Better Markets, an organization lobbying for better regulation of the financial industry.
Read up on how financial indsutry rating companies who were supposed to give objective opinions about the financial strength of corporations were hired by the same companies they were rating to give AAA ratings they didn’t deserve. 
It’s a pretty deep rabbit hole, once you start looking down there.
Conflicts of interest in the FDA, the SEC, the list goes on.  Jeanine Wedel has written a book called “The Shadow Elite” about the problem of careerists in government/industry who put themselves first, above the public they are supposed to serve. 
Informed people can make a difference.  We need campaign finance reform so voters have at least a fair shot at getting elected officials who have public interest at heart.
Our press likes to talk about corrupt government officials outside the USA.  We need to be more demanding of our own.

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