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Death Takes a Policy: How a Lawyer Exploited the Fine Print and Found Himself Facing Federal Charges

The life insurance industry tried to make variable annuities irresistible to investors and was enraged when a Rhode Island lawyer exploited the fine print for his own profit.

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Judy Walter

Aug. 25, 2012, 8:53 p.m.

It seems to me Camamadre acted within the law and outwitted insurance companies at their own game, one they could have changed or written differently had they not been benefitting themselves. He was merely making a business out of his own cleverness. It seemes hard to prove any undue advantage taken ofnthe dying or their families. So now the taxpayer is having to foot the bill for the ‘investigation’ and court proceedings, without any liability themselves for their own mistakes. I hope justice is served, but I suspect insurance companies will come out as some innocent or wronged party, and the taxpayer gets screwed.

Jeff

Aug. 25, 2012, 9:08 p.m.

Other Jeff Very Good exam I do have a feeling that the Government will have a tough time with this when in fact the insurance companies did write the rules I have sent Jake Bernstein an email in an effort to contact Mr.Caramadre unfortunately as the article states the Government is prosecuting him on a 66 count Federal indictment which seems to be a “witch hunt” which is not him!

Bud

Aug. 25, 2012, 9:10 p.m.

I get a kick out of how fatalistic this piece is. Someone - not me - said the news is about who wins and who loses. I found my self caught at the end of this feeling complete indifference for those involved. Should any party: the insurance companies, the government or Mr. Caramadre succeed in their respective cases no one will have won.

Who wins? Who cares? We all go away in the end. If someone turns a buck on the death of another, shame on them for wasting what precious little time they have left on this lovely planet hoarding paper and credit in the vain hope it will save them from the vast, cold equalizer that is death.

“Lord, what fools these mortals be!”

Chris

Aug. 25, 2012, 10:57 p.m.

The Diagram has one error.  The figure of the Annuitant and the Investor (Beneficiary) are reverse labeled.  And it is very important to demonstrate that in the past, the insurance companies required the relationship between the investor and the Annuitant; later in the past 2 decades - the insurance companies became greedy, engaged in a “war” and in doing so, set aside or let go of their former requirement.

The article is thorough and very well written.  I like real life examples of fraud that involve set theory, and this one is good.  I believe that the Judge is correct - but I don’t know the contract laws of Rhode Island. 

That stated, I do know the Contract and Fraud laws of the State of California, and some of the Federal government.

My guess is that the FBI wants to focus on the intent side of fraud.  Fraud is any scienter or attempt to deceive wherein the victim was deprived of a right, and of that deprivation of a right, the victim suffers a quantifiable and tangible loss.  The first part is that from Black’s law book and the second is mine (meshing more that 5 types of fraud).

If the intended use of the Insurance contract or the offer was to provide the Beneficiaries a benefit from the death of the Annuitant the same amount of monies which are being transferred to the investor, but the contract failed to deliver such an arrangement then on a contract basis Mr. Caramadre is correct.  If the transaction to entice persons into the contract (which is a defective one and might be against public policy) involved deceit - then the FBI and the prosecutors are correct.

The question is can a person be convicted of a fraud based on their truth of the outcome of the contract, but a failure to explain that it is to investors’ gain.

Phyllis

Aug. 26, 2012, 6:53 a.m.

The insurers involved embraced the current amoral atmosphere in the speculative investment side of finance. If we can get away with it, it’s ok, haha, let the winner take all.  Read a few articles about investment banks, and the scorn they privately heap on the “muppets”, (clients) they scam and the rule is clear. If I am smart enough to get your money, it’s your fault for letting me do it. 
Caramadre has the misfortune of being a little guy who is scamming the scammers, in a way.  Oh, yes, the companies would give the annutity buyers some amazing benefits, but the large fees they collected in the process often were way out of proportion to the benefits received.  I recoiled in horror at my friend being hit up by her commercial bank “account advisers”, salespeople who befriended her, then wouldn’t reveal the commissions they were paid for the annuities they sold her.  I finally spoke up when they started inviting her to talk to their young investment specialist who would help her with stock market put and call investments, a wildly inappropriate suggestion for her situation.  Not content with big annuity commissions, now they wanted to churn the account for stock market sale commissions. 
There is still a core of common sense out there, and perhaps it will one day become the dominating force if greater ruin prevails, and at last all are forced to examine their greedy behavior.  Small regional banks who only have savings and loans come to mind. I must say, however, that it was a small regional bank’s sales department who pressured my friend to buy highly profitable financial products packaged by the “big guys” in the industry. 
I worked for an insurance company for 15 years. They were committed to having conservatively invested money in their reserve funds against losses. They refused to “bet the house” on risky investments, as some other insurers did, charging lower premiums which were backed by the hoped for gains in upward trending markets, also called cash flow underwriting—not based on always being 100% certain to keep proper amounts on reserve.  Losses?  No problem for those companies, they would then make massive increases in the premiums charged to their customers. My company did not agree with that way of doing business.  I watched as customers who had hooted at our (properly calculated for expected property and liability losses) rates a few years before, ran with abandon to us as the other companies raised their rates far above ours.  I can’t blame the customers for seeking financial advantage in lower rates. 
What it taught me is that “the fundamental rules apply”.  Reserve rules were changed as a result of that debacle in the 80’s/90’s, but we need more. We should absolutely replace the separation of consumer finance and speculative investments.  The best law for that was Glass-Steagall, the protective wall between banking and speculation that was removed during the Clinton administration. The process was begun during Reagan’s term, but both parties were obviously swayed by campaign contributions. This inexorable path has worsened with the court decision that corporations are people who can contribute to campaigns. 
Now that elections are swayed by gargantuan money interests, as someone else pointed out, both Dems and Repubs are tainted by the favors they must grant to their money sources. 
But it’s legal, is the cry of Wall Street, as they condescendingly brush off the criticisms of those who would question their amoral dealings.
Matt Taibbi at Rolling Stone has written article after article revealing the depth of the problem, and how Wall Street has in fact taken criminal actions that our government won’t prosecute.
I don’t excuse the actions of this small time scammer, but I understand how others can, due to the fervor with which he is being hunted, while our elected officials let the sins of the large financial institutions go again and again.
One final comment on profiting from death. In a recent family death, I was impressed by the subtle pressure to “just let us” take a look at your furniture by the salesperson (funeral director) who came by the house after the funeral to “make sure we were ok”. Yes, the funeral home owner is also an antique buyer.  Wow.  They also accept donations of furniture and art for the funeral home in appreciation for their services.  The emotion at the time of death is exploited, in my opinion.  There is nothing illegal about what they do.  It’s just the veneer of concern over the constant seeking of profit that I found a bit off putting.

Phyllis

Aug. 26, 2012, 7:49 a.m.

The original reason we have insurable interest laws is that life contracts became hit contracts in England before the first insurable interest law was passed in 1745.
Speculation on death is the result historically if there are no laws requiring death benefits to be paid directly to those who stand to lose money if the insured dies.
It appears that history swings back and forth between loose laws around speculation and tighter ones when speculation causes markets to fail. 
Greed is at the heart of this story on both sides.  Financial companies won’t “police themselves” as they have claimed they would in their bids to reduce or eliminate financial regulation. 
Going for profits from what I can do or get away with, rather than what is morally correct is at the core.
If we now are to adhere to the cult of self, as the Republican Rand followers allege, woe be to us all. 
Let’s hope we never see mysterious or suspicious deaths of people who have sold their life insurance policies in Viatical or life settlement contracts. 
Reinstate Glass-Steagall!  Enact strict campaign finance laws so public officials will stop enabling corporate stealing.

Steve Law

Aug. 26, 2012, 10:03 a.m.

Years ago, the Wall Street Journal ran a front page story on Taco Bell which took out life insurance policies on all of its thousands of employees. The concept was that from an actuarial standpoint, some of these mostly 20-somethings would die in the course of year. The beneficiary of the policy was Taco Bell - not the family of the deceased. They made money - net of the cost of the policies - from the deaths of their employees. When it came to light, TB was forced by public opinion to stop the practice.

Elizabeth

Aug. 26, 2012, 10:47 a.m.

I am rebuilding my retirement funds and would like Mr Caramadre to manage them.  Anyone know his contact information? 
He’s the type of fund manager I know will have my back should wall street and the banking industry attempt another raping of the middle class.

clarence swinney

Aug. 26, 2012, 12:04 p.m.

How can?
A Senior vote against Social Security—Medicare—Medicaid
A Veteran vote against Veterans Administration
A Teacher vote against smaller classroom size
A Worker vote against the minimum wage
Democrats create all of those
Conservatives desire to destroy all of them

Will

Aug. 26, 2012, 12:04 p.m.

What Caramadre did was absolutely wrong and unethical though perhaps not illegal.  Full stop.  Are insurance companies perfect?  Of course not.  Are variable annuities an unfortunately tax-preferred vehicle that the insurance industry used to bring in funds and make profits, to the detriment of other taxpayers?  Absolutely.  But when people like Caramadre game a system that’s supposed to provide genuine insurance benefits, then those of us who use insurance as it was supposed to be used lose.  Society loses.  Everyone but Caramadre and the few dying families that he helped (a little bit) loses.  The article was far too kind to Caramadre.

Marvin

Aug. 26, 2012, 12:27 p.m.

To Will: Sorry, but your own words condemn your opinion. You say that variable annuities are a “tax deferred vehicle” designed for nefarious purposes that you describe. Then you say that Caramadre “game[d] a system that’s supposed to provide genuine insurance benefits.” People looking for ‘genuine insurance benefits’ buy life insurance. People looking for an investment stop loss buy an annuity that has a minimum guarantee of some sort. Caramadre gamed an investment vehicle doing something it should not have been doing. As I pointed out in my comment earlier, the gaming could have been nipped in the bud by the insurance companies with a very simple language change in their contracts, but they chose not to make the change as long as the system was working to their benefit.

Will C

Aug. 26, 2012, 12:41 p.m.

To Marvin:  We’ll have to agree to disagree.  The insurance companies are not heroes in this story, but the answer to poor corporate ethics is not to encourage and celebrate poor consumer even worse consumer ethics.

Marvin

Aug. 26, 2012, 2:01 p.m.

I concur. We agree that poor ethics are a bad thing, whether corporate or consumer. We disagree on whether his scheme was unethical. I must say, however, that it is a pleasure to have a cogent discussion with someone willing to think through and articulate a position without resorting to stridency, poor grammar, poor punctuation, etc., as is so common in internet discussions today. Thank you for that.

ibsteve2u

Aug. 26, 2012, 2:54 p.m.

Maybe we should just follow Corporate America’s example, and buy enough politicians to pass “deregulation” legislation - but, this time, deregulation intended to benefit the individual rather than the larger corporate entity - that permits Caramadre and all other Americans to exploit the insurance, banking, and investing industries in any manner that they see fit?

Level the playing field, as it were?

Nina Pratt

Aug. 26, 2012, 3:13 p.m.

What if the lawyer had offered the dying person (and/or family) 1/2 of the payout on the investment?  Would any of the family or dying be complaining? 

I doubt it.

Which shows, I believe, that it isn’t that people feel offended by someone “profiting from death” but that they feel cheated.  They feel cheated because they didn’t read the fine print themselves, didn’t understand how much money was involved.

What’s weird is, most of us NEVER know how much money is involved in ANY transaction.  How much profit is my doctor making off my surgery?  The first man to step on the moon died “from complications” of surgery.  Is anyone taking his heart surgeon to court—not because the patient died, but because he made money off of the surgery?  Did the dead patient or his family know how much profit the surgeon, the hospital, everyone involved made?  No.  And everyone would have been shocked and horrified if they’d asked.

There is a difference between feeling ripped off and being ripped off.

From what I’ve heard and read, no laws were broken.

Jonpaul Barrabee

Aug. 26, 2012, 3:38 p.m.

The big question I was left with is: Why did the insurance companies write in this loophole in the first place?  It seems to me it would not be an accident but something intentionally added because it makes sense that the annuitant would be the investor.  This loophole must have served them in some fashion or it would not have been created. 

I understand all the anger of the other commenters regarding how our government has not done a good job of protecting us from the biggest crooks around yet fine time to go after this guy.

Joel Goodman

Aug. 26, 2012, 4:30 p.m.

Hello,

All I know about this particular scheme is what I heard on “This American Life.”

That having been said, over the past ten years I have seen banks ruin the lives of not dying but living people, because a particular investment, a singular mortgage, while more than just theoretically salvageable, did not fit into a bank’s’ particular investment syndrome; which takes into account the tax and insurance benefits of losses against profits as a means of judging investment policy. The banks’ goal is not profit, but more profit - maximizing profits by doing business without consideration for the individuals who have placed their life’s dreams in their hands.

So, some guy making money on an investment scheme “loophole’ that the insurance companies could have closed at any time had they not been as greedy as they were - gives me no concern.

And, of more concern than all of the above - a larger issue, the elephant in the living room, is the invisible war profits being made at the expense of life and limb - many lives and many limbs. I don’t hear the country’s outcry about the mega bucks that defense contractors garner when 800 one million dollars each Cruise Missiles are launched against “soft targets” in a couple of nights.

Morality is relative. I have no moral imperatives. There are none. But, as a conscionable American, I have lots of moral outrage. So, while trying to mitigate the rightness or wrongness of one action by comparing it to another action may seem cheap, in an immoral world who am I to cast the first stone. And, who are you?

In fact who we are as individuals is really the only question - who is each and every one of us? If a singular immorality is no greater than another accepted widespread immorality, why the concern? And, of course, the question that begs asking is, are you profiting by sensationalizing a particular event?

Linda

Aug. 26, 2012, 4:44 p.m.

to Joel Goodman,
Good points.  What do you think about my comments about stirring up negative family feelings, re-framing memories, etc. in my comment (Yesterday, 2:55pm)?  Weren’t these moral choices made by investigators, harming the families and loved ones?

Joe

Aug. 26, 2012, 5:03 p.m.

At first I was disturbed by this article, Then, as I read, you can clearly tell that all parties were pretty aware of what they were doing and what the could expect. I find it laughable that, when insurance companies repeatedly deny care to clients who have paid for that care, opts to persecute a guy making them meet their obligations and who is doing nothing more than what he promises his clients what he is going to do.

Actually, by the end of that article, the people who disturb me are the ones who signed on for the program and now express outrage at what they agreed to. I am curious, did any of these people or their families return the money they received?

Martin

Aug. 26, 2012, 9:37 p.m.

I am 70 and have a $75,000 - ING annuity. I was sold, by a Raymond James Broker, with the understanding (8 years ago) that it was guaranteed a 6% return (in 10 years) on investment. With a different broker, I found out that that was not true. What recourse have I ?

Carel

Aug. 26, 2012, 10:31 p.m.

People with terminal illnesses are far more sympathetic than insurance companies. Still, I’m surprised at how the focus has been on the morality of Caramadre’s behavior toward the ill anuitants and not the insurors. As I understand it, he never took anything from the anuitants and he appears to have been fairly forthright with them regarding his scam, assuming he’s innocent of the forgery charges. On the other hand, poorly drafted contracts don’t excuse his behavior toward the insurance companies, and it seems clear that his “creation” involved nothing more than stealing from them, whether it was prosecutable or not. I’m a careless fool if I leave town with my front door wide open, but it’s still unethical for you to walk in and take my stuff. I have no love for insurance companies, but ethics don’t apply just to people you like or respect, they apply to everyone.

Jeff

Aug. 26, 2012, 11:19 p.m.

Wow who would have thought this article could have brought forth this type of response Martin i would check the internet for a link such as this one
only for your state   http://insurance.mo.gov/

it will have information and more links to find a resolve to your issue

Sara

Aug. 27, 2012, 2:08 a.m.

Seems that most everyone is aligned in their feelings that this is a Robin Hood story.

I don’t quite understand what was in it for the insurance companies?  Why did they ever institute this policy to begin with?  Wouldn’t they always lose in the long run?  Or is this a complicated two-curve market vs. time-to-death situation—did their odds change when the market tanked, else on the whole the market was going up faster than people were conking out? 

Anyway, the stated issue at the end of ThisAmericanLife regarding the question of profiting from someone else’s death just doesn’t seem the issue here.  It is a bigger issue of insurance and betting.  There have been societies historically that frown upon betting of any sort.  Indeed in my youth it was considered far more sinful than it is today.  People even leave the funding of schools to betting in the form of lotteries in some places.  Personally, I find all of it repugnant.  A bet is a fixed-margin situation; if someone wins, someone else loses, inherently.  But there is moral ambiguity in spreading risk and compensating for extreme events (e.g., catastrophic health insurance that makes it possible to treat a young person who might otherwise die).  If you believe it is legitimate to commoditize sharing risk, then perhaps you have some sympathy for these schemes of the Big Banks.  I’d rather work out a picture of how society should be functioning and supporting its members and figure out how to fund this fairly, rather than support justifications for winners and losers.

Anyway, a serious discussion on the matter of profiting from death was requested.  I don’t, personally, like profiting from anyone’s misfortune, inevitable or otherwise.  In this case it happens to be unclear who/what precisely is the “unfortunate”.

Greg

Aug. 27, 2012, 8:36 a.m.

America is fast becoming an ethics-free society, where Power & Profit tale Precedence over People.

Jordan

Aug. 27, 2012, 11:10 a.m.

The gut reaction might be that it is wrong to profit from peoples deaths, but the insurance companies he out maneuvered were trying to do the same thing.  He just find a way to beat their mathmatical models.  If he lied to the people for signatures he may have some criminal liability.

Wal-mart was taking out life insurance policies on employees.  They didn’t even pay the families for the policy.  While they did settle civil cases out of court, wal-mart was never held criminally liable and never did a day of jail time.

I disagree with John’s explanation of insurance.  The idea is not to give someone your money to hold until you need it.  The idea is to get a group of people together to pool money.  As a whole most of the people will not get back what they paid in, however if you need it you can get more money than you ever paid in.  An event that could permenantly put you in a hole you would spend most of your life getting out of, is instead a survivable inconveniance.  For example if you have home owner’s insurance that costs $75 a month, on a $250,000 home (these are realistic numbers) it would take 277 years to save money equal to the value of the home by sticking it in the matress.  Most people paying in to the insurance pool will never get back the ammount they put in.  However, if your home is burnt to the ground, instead of owing money on a non-existant home, being homeless, and needing to buy a new home, you get a check to rebuild the house.  This is insurance at its most altruistic.
Granted the insurance company is going to make sure they get thier profit and try not to pay out at times.  The model for insurance is not based on giving some one money to hold until you need it.  It is basically making a bet that something bad will happen to you, and you will get the payout when it does.

Liz

Aug. 27, 2012, 11:43 a.m.

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.

Jon

Aug. 27, 2012, 12:03 p.m.

There are some more complicated issues involved that may make Caramdre less sympathetic and the government’s case more sound. This appears less a case of a “Robin Hood” and more a case of one shark biting another.

First—if Caramdre was acting as a representative of the insurance companies (a broker or independent agent), he would have a duty of fair-dealing to both parties. Getting paid commissions implies a fiduciary duty to the insurance company.  Not revealing material information to the insurance company would be violating this duty. This would at least be grounds for a civil suit. Furthermore, in the decision below a judge notes that the law generally provides that one cannot hide clearly material information just because a question is not asked.

Second—The indictment alleges a readily provable fact that Caramadre listed a number of the annuitants as “friends”, “clients”, or “acquaintances”. If it is verified that his first encounter with them was through the annuity program, then this is pretty blatant fraud.

Thirdly—there are more difficult to prove allegations that he used verbal deception to get people to sign up for the annuities.

Schemes like this don’t take money out of the hands of the executives—they just take it out of policy holders through higher fees and fewer offerings.


People interested in this should also read one of the civil court decisions:
http://www.gpo.gov/fdsys/pkg/USCOURTS-rid-1_09-cv-00564/pdf/USCOURTS-rid-1_09-cv-00564-1.pdf
and the DOJ’s indictment.

and

http://www.propublica.org/documents/item/413342-indictment-against-joseph-caramadre

Eileen

Aug. 27, 2012, 12:12 p.m.

What’s worse, this guy from your neighborhood getting some money or the insurance company keeping it?  At least he gives you some, whereas they’ll forget you ever existed and laugh in some Vegas penthouse at the annual “retreat” about how many families to whom they didn’t have to pay out.  Sure, it’s not the most warm-fuzzy way to die, but I don’t see anything illegal about it.  The only reason the FBI and the DA got involved is ‘cause their friends the lobbyists were raising a stink.

And as for the woman at the end, whose mother couldn’t sign her name….before, everyone was saying stuff like, “Oh, it was so great what that money meant for them in the last days.  Dignity and independence and respect.”  When the family members realized that they could have profited more than $2000, that’s when they got upset.  It wasn’t that someone profited of the death of their loved one, IT WAS THAT THEY THEMSELVES DIDN’T PROFIT MORE.

Chris

Aug. 27, 2012, 12:31 p.m.

When corporations find loopholes out of their obligations, taxes, etc. etc., nobody raises an eyebrow of concern.  We just accept it.  Here is a guy who did the due diligence by doing his homework and reading the contracts.  Whether you agree with him, or not, what he did was legal.  The corporations are upset because they got beat at their own game by somebody who was paying attention.

Power to this man.  He did nothing wrong, immoral, even questionable (as far as I am concerned)

Tom Gee

Aug. 27, 2012, 1:29 p.m.

It’s good to see that the DOJ was to busy to prosecute not a single financial executive but could work as the pro-bono representation on whitch hunts for the upstanding pillars of ethics - insurance companies.

Don’t beat the system kids, your uncle Sam won’t take it kindly.

Matt G.

Aug. 27, 2012, 1:38 p.m.

If he is a criminal so are the insurance companies.

Sam

Aug. 27, 2012, 3:30 p.m.

I must say this is one of the best, most worthwhile pieces of objective journalism I’ve ever heard anywhere.  The key insight it raises for me is the exclusivity of law and morality, and the supremacy of the former.  Ideally we want both to coincide consistently so that our legal system gives rise to a society based on non-violence, dignity, decency, etc.  But for better or for worse, this piece brings to light the reality that moral arguments by themselves have no bearing whatsoever in the absence of law; they are merely feelings, opinions. Law on the other hand is the only tool we have for establishing legitimacy in decision making and providing a basis for determining “right and wrong” in any particular scenario.  The DoJ personnel in this case appear to acting primarily on their feelings rather than legal arguments.  I find myself truly appreciating the character of Mr. Caramadre.  He seems to display, somewhat uncannily, both innate understanding of the law and a deep seated sense of morality and humility, which when taken together seems to produce outcomes that can only be considered economically beneficial for all.

Steve Newman

Aug. 27, 2012, 3:53 p.m.

As a retired insurance agent and stockbroker, I LOVE this guy!  What a great idea.  He beat the insurance companies at their own game.  And that’s why they’re coming after him.  Hopefully, no fraud was committed.  That is, no one signed anyone elses’ name to documents.  No reason to do that from what I can see.  Everything he did was legal and aboveboard.  Maybe he can sue for false prosecution when this is over.

Mike L

Aug. 27, 2012, 4:37 p.m.

With this guy the people had $2000 more in their pocket.  Yes he bennifited from their death but never harmed them in doing so.  Who on here would be dumb enough to not sign that paper for him?  It was a win win (except fOr the insurance company’s).  If I could get $2000 dollars right now and some guy makes much more money off of it when I die then great.  Should u get sued if my grandparents die and leave me money… Oh it must make it much worse if I come over their house and let them pinch my cheeks too.  Not to mention this guy isn’t a super greedy guy, he pumps a ton of money back into the community.

Steve

Aug. 27, 2012, 5:19 p.m.

Joseph Caramadre, you’re a friggen G E N I U S !!

Hopefully your cohorts didn’t put you at risk by crossing the lines, but power to you for your ingenious plan.

KeninSD

Aug. 27, 2012, 6:06 p.m.

Who’s contracts is he reading now? And, how do I get on his mailing list?

Steve

Aug. 27, 2012, 6:13 p.m.

> KeninSD:

Right?

Listen, I worked on behalf of insureds working to recover total losses in a California wildfire and let me tell you… insurers, most of them, are as crooked and evil as they can be. Believe you me, if the tables were turned, and they were for YEARS, they would eat your young for a buck.

Power to the people of have figured out legal ways to beat them at their own game!!

Tutt

Aug. 27, 2012, 6:33 p.m.

Regardless of whether or not the insurance companies may or may not have been “asking for it” the fact remains Caramadre is greedy slime who used dying people to enrich himself and his “investors” - and you can’t sink any lower than that. The “but for” rule says this man’s use of innocent dying people to scheme insurance companies - whom he paid pennies to although many of were poor - makes him satan’s very vomit. Why didn’t he target the wealthy? Because they didn’t need the paltry sums he paid out - said sums probably being used more often than not used to pay burial expenses.

This scam stinks of greed most foul - mostly because it targets the same class other arrogantly greed-obsessed scum justify as exploitable - the poor. I’m hoping the prosecutor’s “threat” comes to fruitition - every dollar scammed is eaten up by attorney fees - to the last dime. And Caramadre spends his years in prison earning $.35 an hour pressing license plates.

Tutt

Aug. 27, 2012, 6:43 p.m.

Judging by most of these comments - we have become a nation of mindless - eagerly lining up to stir the cyanide into our own Kool-aid.

Mike L

Aug. 27, 2012, 8:23 p.m.

@ttut you are ignorante.. Yes he targeted poorer people and they ended up with an extra $2000.00 in their pockets which really helped ease their last few months.  You should try and see what it’s like to be poor and see what a couple thousand could do for you.  Punk..

Clyde Schechter

Aug. 27, 2012, 11:09 p.m.

It is tempting to cheer on Caramadre for sticking it to the thieving insurance companies, as many commenters have done.  I share in those feelings.

But really this is just one scammer out-scamming another.  At bottom, both the insurance companies’ business model for variable annuities and Caramadre’s business model for his loophole boil down to parting fools from their money.  The insurers are outraged because they turned out to be the bigger fools.

But both of these are just ripping off people taking advantage of their inability to understand what they are getting themselves into.  Sure, the insurance companies are not sympathetic victims here: they were lured by their own insatiable greed for fees to not think carefully about what they were doing.  But these are not victimless crimes.  The losses accrued by the insurers will, at the least, be passed on to shareholders who probably had no role in the chicanery.  And beyond that, if an insurance company becomes insolvent, customers who bought and paid for legitimate insurance from them my find themselves left high and dry when it comes time for them to collect.

Nothing of social value, or at least nothing proportionate to the profits made, is created by the variable annuities.  And nothing of social value was created by Caramadre either.  These are both emblematic of the rotten-to-the-core finance sector and their schemes.  They all need to be taken down.

Ben Gardella

Aug. 28, 2012, 12:22 a.m.

Money is amoral.  Not immoral.  Money doesn’t care.  Business doesn’t care.  The only question is, was there fraud?  If not, game on.  This is why we have lawyers.  To argue the fine print.  When prosecutors play the moral card, that just means they are in trouble.

Harue

Aug. 28, 2012, 12:36 a.m.

There was nothing morally, legally, or ethically unsavory about what Caramadre did. In fact quite the opposite, I think he should be heralded (as some people reluctantly admit) as a positive force in every one of the terminally ill people’s life he impacted. He brought only good things to those terminally ill people. Those few that are now angry about the situation seem not to understand the situation (Robert Mizzoni) or have an illogically squeamish attitude because of the way the “creation 18 scheme” was described to them after the fact (Stephanie Porter from TAL’s interview.) Not one person was hurt in any way, AND he gave tons of money to charities. The perceived hurt by the two parties represented is not justified, and certainly should not count against him in court. Those two parties were obviously only upset and protested after the fact because they felt that they personally (or their spouse in the case of ) did not benefit enough (they did get an initial amount from Caramadre’s company)  from the annuity. Plus this guy is a philanthropist on top of it all! He is giving the money back to charities. He is a legally defensible Robin Hood, and critics say “yes, but profit from death is icky.” Welcome to reality folks, feelings are not a good basis for morality, because they are personal and subjective. I wish there were more Caramadre’s in the world, to do good on the dime of those corporations who should be the real target of those people’s anger. I wish my death could create revenue for a good cause in that way. Mr. Caramadre, if I was terminally ill, I would have taken your $2000 in a heartbeat, and would have tried to find you some investors from among my friends and family too.

Lani Tal

Aug. 28, 2012, 1:31 a.m.

I will utterly lose faith in the legal and political system if the insurance companies can wrangle a win out of this. The fact of who is on the law’s side appears to be such indisputable fact that to spend anyone’s money on disputing it seems ridiculous. Although I should be used to it, considering what we discuss daily in the circus of politics…

Wouldn’t it be cool if when you were 3 months from certain death tens of thousands of dollars magically appeared in your bank account?

Rick

Aug. 28, 2012, 2:29 a.m.

There is no crime here except for the greed of the insurance companies and their sales reps to earn fees and commissions.
Don’t prosecute this guy-give him a medal.

johneurope

Aug. 28, 2012, 3:57 a.m.

” Transamerica is trying to buy back some of the variable annuities it sold to policyholders. The French insurer Axa is offering its variable annuity holders money if they surrender their death benefit guarantees.”

I need to find some policy holders. What the guy did is not ilegal. He is making them pay for loop holes they left in the policy out of greed..
Now the shoe is on the other foot….

bam

Aug. 28, 2012, 8:34 a.m.

It seems the preponderance of comments do not support insurance company policy. I agree. There does not seem to be many references to the actions of the prosecutors and FBI. This is troublesome.
The power of the authority is swooping in and seeking to take a power position to support the corporate activity and crush Mr.Caramadre because he beat the big corporates in civil court based on common sense and what’s fair is fair. They will not allow this to stand.

Beware the authoritarian government.

Kyle

Aug. 28, 2012, 9:29 a.m.

For the people dying, no matter if they understood what they were signing or not, had an opportunity to get at least $2000. The fact that somebody else was making a lot more money is a separate and different issue. The person making a lot of money is offering the dying person $2000 or more to do something we all will do no matter what: die. So given the two scenarios of A) die and get nothing, or B) get $2000 or more now and THEN die, it is really a sweet deal. Money never had a better “time value” than in this situation.

Jack

Aug. 28, 2012, 12:51 p.m.

I wish the Federal government would stop wasting money annoying Joseph Caramadre and go after the big boys. Unfortunately, the big boys give away large amounts of money to members of Congress. This is why Congress has a low rating with the public.  I wish more members of Congress would show more backbone and do the right thing instead of worrying about their own interests.  Members of Congress were elected to serve the public not special interests.

Dan Kidd

Aug. 28, 2012, 1:22 p.m.

I was actually surprised that TAL’s ultimate moral question came to “is it wrong to profit off of the dead and dying?”. This is interesting to me because I believe, as was pointed out, many people profit off of those who are dying and it did seem that Caramadre did his best to fully inform those who were signing agreements to enter in the program were informed of its intent and benefit to himself. Perhaps not actual dollar amounts, but certainly the goal of the exchange.

What I personally believe to be the most appropriate moral question is this: Is it morally correct to find a loophole in a policy, regardless of whose policy we are speaking about, and exploit it for your own capital gain? Are you not taking the mistake of someone else and using that to your own financial benefit? Is it right for us to financially punish companies for their simple mistakes in writing policy? 

And let us say that you feel this is a different case because it insurance companies: Even if you were to reason that these insurance companies have it coming and they deserve to lose money, etc, the money eventually comes from us who pay into the insurance company. The company will look at its overall profit loss and determine that a raise in cost is necessary for them to be growing in annual profit. I think Caramadre was clever and did nothing illegal, I do believe he made an ethically poor choice when he chose to exploit a mistake and gain money from others.

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