Update: Two RI Men Plead Not Guilty to $25-Million Investment Fraud

The indictment says the men regularly advertised an offer promising a $2,000 charitable gift to people with terminal illness in the newspaper Rhode Island Catholic. Radhakrishnan met with people who responded to the ad and provided them with money from Caramadre, prosecutors said. He told the families he worked for a philanthropist, the indictment said.

During these meetings, Radhakrishnan assessed whether he was meeting with someone who was close to death. If that was the case, authorities say, Radhakrishnan claimed Caramadre had more money waiting for them.

Radhakrishnan and Caramadre forged the signatures of the patients or lied to them about why their signatures were needed to get them to sign documents that opened variable annuities and brokerage accounts that purchased “death put” bonds in the victims’ name, prosecutors said. A death put allows the beneficiary of a deceased person’s estate to sell the bond back to the issuer if the beneficiary dies or becomes legally incapacitated.

Authorities allege Caramadre and others turned a profit by exercising the death benefits. More than 200 variable annuities and more than 75 brokerage accounts were purchased this way, authorities said.

In some cases, victims were told signatures were required to document Caramadre’s charitable gift. Others were promised an account would be opened to benefit the survivors of the terminally ill person or other families grappling with terminal disease, prosecutors said.

Caramadre and Radhakrishnan are also accused of lying to insurance companies, brokerage houses and other corporations they did business with by claiming the patients were clients of Caramadre’s law practice. Prosecutors claim the men also concealed the compensation patients received for opening annuities. The men lied about the victims’ financial assets and investment experience and claimed the investment proceeds would go to the terminally ill, the indictment says.

Authorities also claim the financial institutions were told Caramadre had no ownership interest in the investments and that Caramadre paid for burial expenses at the request of the Catholic Church. That was false, authorities said.

Authorities say Caramadre told his investors he discovered a “loophole” that allowed patients to open variable annuities and co-own joint brokerage accounts used to purchase death put bonds. They accuse him of entering profit-sharing agreements with some outside investors but say Caramadre still received a significant percentage of the profits.

Prosecutors are also seeking forfeiture orders to seize property and luxury cars from Caramadre, including a 2005 Rolls-Royce Phantom, the indictment said.