SEC bars for 5 years two R.I. brokers for roles in scheme that exploited the terminally ill
Published: October 18, 2014 11:15 PM
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PROVIDENCE, R.I. — The U.S. Securities and Exchange Commission last week barred Edward L. Maggiacomo Jr. and Edward J. Hanrahan from working in the securities industry for five years for their roles as brokers in an investment scheme that exploited terminally ill Rhode Islanders.
The SEC issued orders temporarily barring Maggiacomo, 50, of Warwick, and Hanrahan, 44, of West Warwick, from the industry for their complicity in convicted Cranston estate planner Joseph A. Caramadre’s scheme to steal and use the identities of terminally ill and elderly people to obtain $25 million in illicit gains.
“The SEC’s core mission is to protect the investing public and that includes keeping bad actors out of the industry,” Paul G. Levenson, director of the SEC’s Boston regional office, said Friday.
Maggiacomo and Hanrahan agreed to the terms to settle SEC charges that they offered and sold variable annuities on Caramadre’s behalf as part of the scheme, according to the SEC.
“Caramadre was not registered as a broker, so he needed Hanrahan and Maggiacomo to help complete these crooked deals,” Levenson said. “In barring Hanrahan and Maggiacomo from the industry, we are looking to protect investors from two brokers who have demonstrated that they cannot be trusted in the industry.”
A federal grand jury indicted Caramadre, owner of Estate Planning Resources, and his employee, Raymour Radhakrishnan, in 2011 on 60-plus counts, including conspiracy, mail fraud, wire fraud, identity theft, aggravated identity theft and money laundering related to a complex investment strategy that targeted dozens of people, many with only months to live.
Maggiacomo and Hanranhan were later identified as unindicted coconspirators for assisting Caramadre in securing the investments. They were expected to testify at trial.
In November 2012, Caramadre and Radhakrishnan pleaded guilty to fraud and conspiracy, four days into trial.
U.S. District Chief Judge William E. Smith sentenced Caramadre to serve six years in prison. In addition, Smith ordered Caramadre to perform 1,000 hours of community service in hospice or palliative care.
Smith sentenced Radhakrishnan to a year and a day in prison. He, too, is to perform 1,000 hours of community service in hospice or palliative care.
Smith ordered Caramadre and Radhakrishnan to pay a total of $46.3 million in restitution.
Prosecutors portrayed Radhakrishnan as the person who misled the ill people, some on their death beds, into unwittingly signing documents. Those documents were then used to purchase investments on behalf of Caramadre’s clients. Caramadre’s investors profited upon the individual’s death or received a full return on their investment under the scheme.
Witnesses at trial, some testifying by video from hospital beds shortly before their death, told of receiving a few thousand dollars from Caramadre’s firm after signing papers that they didn’t understand.
According to the SEC order, Maggiacomo, too, spoke directly with terminally ill people and their families, and, in certain circumstances, paid them $2,000 to $5,000 in violation of SEC rules. He then required that they sign forms certifying that they had not received any compensation and that they understood the nature of the arrangement.
He and Maggiacomo also violated rules by brokering investment sales for Caramadre and then forwarding him a portion of their commissions, knowing that he was not a registered broker, the SEC order said.
According to the order, Maggiacomo earned $619,292 in ill-gotten commissions from the investments, $402,539 of which he gave to Caramadre. He was ordered to pay $216,752 plus $46,445 in interest, most of which he has already satisfied through payments to investors in a related civil lawsuit, according to the SEC.
Hanrahan’s order specifies that he received $483,187 in ill-gotten commissions, $399,837 that he gave to Caramadre. He was ordered to pay $83,349 plus $16,603 in interest, a sum he, too, previously paid through related civil lawsuits.
Anthony M. Traini, Maggiacomo’s lawyer, did not return a phone call seeking comment Friday. Hanrahan’s lawyer, John A. MacFadyen, III, could not be reached immediately.
On Twitter: @kmulvane
The SEC issued orders temporarily barring Maggiacomo, 50, of Warwick, and Hanrahan, 44, of West Warwick, from the industry for their complicity in convicted Cranston estate planner Joseph A. Caramadre’s scheme to steal and use the identities of terminally ill and elderly people to obtain $25 million in illicit gains.
“The SEC’s core mission is to protect the investing public and that includes keeping bad actors out of the industry,” Paul G. Levenson, director of the SEC’s Boston regional office, said Friday.
Maggiacomo and Hanrahan agreed to the terms to settle SEC charges that they offered and sold variable annuities on Caramadre’s behalf as part of the scheme, according to the SEC.
“Caramadre was not registered as a broker, so he needed Hanrahan and Maggiacomo to help complete these crooked deals,” Levenson said. “In barring Hanrahan and Maggiacomo from the industry, we are looking to protect investors from two brokers who have demonstrated that they cannot be trusted in the industry.”
A federal grand jury indicted Caramadre, owner of Estate Planning Resources, and his employee, Raymour Radhakrishnan, in 2011 on 60-plus counts, including conspiracy, mail fraud, wire fraud, identity theft, aggravated identity theft and money laundering related to a complex investment strategy that targeted dozens of people, many with only months to live.
Maggiacomo and Hanranhan were later identified as unindicted coconspirators for assisting Caramadre in securing the investments. They were expected to testify at trial.
In November 2012, Caramadre and Radhakrishnan pleaded guilty to fraud and conspiracy, four days into trial.
U.S. District Chief Judge William E. Smith sentenced Caramadre to serve six years in prison. In addition, Smith ordered Caramadre to perform 1,000 hours of community service in hospice or palliative care.
Smith sentenced Radhakrishnan to a year and a day in prison. He, too, is to perform 1,000 hours of community service in hospice or palliative care.
Smith ordered Caramadre and Radhakrishnan to pay a total of $46.3 million in restitution.
Prosecutors portrayed Radhakrishnan as the person who misled the ill people, some on their death beds, into unwittingly signing documents. Those documents were then used to purchase investments on behalf of Caramadre’s clients. Caramadre’s investors profited upon the individual’s death or received a full return on their investment under the scheme.
Witnesses at trial, some testifying by video from hospital beds shortly before their death, told of receiving a few thousand dollars from Caramadre’s firm after signing papers that they didn’t understand.
According to the SEC order, Maggiacomo, too, spoke directly with terminally ill people and their families, and, in certain circumstances, paid them $2,000 to $5,000 in violation of SEC rules. He then required that they sign forms certifying that they had not received any compensation and that they understood the nature of the arrangement.
He and Maggiacomo also violated rules by brokering investment sales for Caramadre and then forwarding him a portion of their commissions, knowing that he was not a registered broker, the SEC order said.
According to the order, Maggiacomo earned $619,292 in ill-gotten commissions from the investments, $402,539 of which he gave to Caramadre. He was ordered to pay $216,752 plus $46,445 in interest, most of which he has already satisfied through payments to investors in a related civil lawsuit, according to the SEC.
Hanrahan’s order specifies that he received $483,187 in ill-gotten commissions, $399,837 that he gave to Caramadre. He was ordered to pay $83,349 plus $16,603 in interest, a sum he, too, previously paid through related civil lawsuits.
Anthony M. Traini, Maggiacomo’s lawyer, did not return a phone call seeking comment Friday. Hanrahan’s lawyer, John A. MacFadyen, III, could not be reached immediately.
On Twitter: @kmulvane
