Virginia gubernatorial candidate Terry McAuliffe (D) was one of dozens of investors with a Rhode Island estate planner charged with defrauding insurers by using the stolen identities of terminally ill people, according to court documents filed Wednesday by federal prosecutors in Providence.
McAuliffe’s name appeared on a lengthy list of investors with Joseph A. Caramadre, an attorney and accountant who obtained the identities of dying people to set up annuities that ultimately cost insurance companies millions of dollars, the documents say.
The list also included the law firm of a former Rhode Island Supreme Court justice, a Roman Catholic monsignor, a former Cranston, R.I. police chief, and a bookmaker, according to the Providence Journal, which first reported McAuliffe’s investment Wednesday.
Federal court documents do not accuse McAuliffe of wrongdoing, and it wasn’t clear whether he had made money or lost money on the investments. His campaign spokesman said McAuliffe was a “passive investor” who was deceived like many others. Spokesman Josh Schwerin also said that the campaign and McAuliffe donated sums to the American Cancer Society totaling $74,000 — approximately the amount McAuliffe earned as a return on the investment and received in a campaign donation from Caramadre.
“Terry was one of hundreds of passive investors several years ago and had no idea about the allegations against the defendant — who, at the time, was widely respected by business leaders and elected officials,” Schwerin said. “The allegations are horrible and he never would have invested if he knew he was being deceived.”
Caramadre and his former employee Raymour Radhakrishnan were charged in November 2011 in a 66-count indictment accusing them of wire fraud, money laundering and witness-tampering. Both men pleaded guilty last November, the FBI said in a press release.
Federal authorities say Caramadre, through his firm Estate Planning Resources, began developing products in the 1990s that used the identities of terminally ill people to purchase variable annuities from insurance companies. The annuities offered death benefits when those annuitants died. The investments — which Caramadre allegedly made on behalf of himself, friends, family and others — included returns of all the money invested and sometimes a guaranteed profit, federal authorities said.
In 2006, Caramadre also began investing in “death-put bonds” that relied on obtaining the identities of terminally ill people, according to prosecutors. These investments allowed the owner to redeem the bonds years or decades earlier than the maturity date when the bond’s co-owner died.
The FBI, in a November 2012 press release announcing mid-trial guilty pleas by Caramadre and Radhakrishnan, said Caramadre located terminally ill people by visiting AIDS patients at a hospice, locating relatives of terminally ill people, and placing an ad in a local Catholic newspaper offering $2,000 cash to people with a terminal illness.
In 2009, Caramadre gave McAuliffe’s campaign an $26,599 contribution, including an in-kind event donation of $1,599, according to records kept by the Virginia Public Access Project.
Researcher Alice Crites contributed to this story.