PROVIDENCE, R.I. (AP)—An estate planning lawyer and one of his employees fraudulently made more than $30 million by making investments in the names of people who were terminally ill with ailments such as cancer and Lou Gehrig's disease, a federal prosecutor said during his opening statement at the pair's trial Tuesday.
The lawyer, Joseph Caramadre, and his employee, Raymour Radhakrishnan, are charged with dozens of counts, including wire and mail fraud, identify theft, conspiracy and money laundering. Caramadre is also charged with witness tampering.
Prosecutor Lee Vilker told the jury that Caramadre bragged he had discovered a loophole in variable annuities and so-called "death-put bonds," both of which offer a benefit if the owner dies.
"It's not a loophole if you have to lie to get it," Vilker told the jury.
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Both men have pleaded not guilty. Their respective defenses didn't offer opening statements Tuesday, and instead planned to so after the government presents its case. Radhakrishnan is representing himself, a decision U.S. District Court Judge William Smith strongly urged him to reconsider.
Vilker said that beginning in the mid-1990s, Caramadre developed an investment strategy in which he would buy variable annuities and, later, death-put bonds. The strategy depended on finding terminally ill people who were going to die quickly, Vilker said.
The companies never asked if the person was terminally ill, and there is nothing illegal about profiting from another person's death, but Vilker said Caramadre and Radhakrishnan lied to both the dying people and the companies about what they were doing.
Caramadre took out an ad in the Rhode Island Catholic newspaper in 2007 offering $2,000 cash to anyone with a terminal illness. Vilker said dozens of people called, and Caramadre sent Radhakrishnan, who had recently graduated from college, to meet with them. Radhakrishnan would allegedly give them money and in exchange ask them to sign papers, sometimes blank.
"These dying people were never made aware that the things they were signing were being used by the defendants to profit after their deaths," Vilker said.
Vilker said some of the people were told accounts would be opened to benefit their families, or to help others with a terminal illness, but that didn't happen.
