United States District Court, D. Rhode Island
TRANSAMERICA LIFE INSURANCE COMPANY and WESTERN RESERVE LIFE ASSURANCE CO. OF OHIO, Plaintiffs,
JOSEPH CARAMADRE; RAYMOUR RADHAKRISHNAN; ESTATE PLANNING RESOURCES, INC.; ADM ASSOCIATES, LLC; HARRISON CONDIT; EDWARD MAGGIACOMO, JR.; and FORTUNE FINANCIAL SERVICES, INC., Defendants.
MEMORANDUM AND ORDER
WILLIAM E. SMITH CHIEF JUDGE.
discussed in the Court's February 27, 2017 Memorandum and
Order (ECF No. 231), Plaintiffs are moving for Prejudgment
Attachment of Caramadre's Membership Interest in ADM
Associates, LLC (“ADM”) and for a Preliminary
Injunction Preventing Caramadre from Transferring Assets of
ADM or his Interest therein (“Motion”) (ECF No.
187). The Motion was referred to Magistrate Judge Patricia A.
Sullivan, who received additional briefing, held a hearing,
and issued a Report and Recommendation
(“R&R”) on July 27, 2017, recommending that
Plaintiffs' Motion be granted (ECF No. 245). With respect
to the part of the Motion seeking an order for prejudgment
attachment, the Magistrate Judge concluded that, pursuant to
Rhode Island General Laws § 10-5-6, Caramadre's
membership interest in ADM could be attached because he is
currently not a resident of Rhode Island and Plaintiffs have
prevailed on their tort claims against him. The Magistrate
Judge also concluded that, pursuant to Rhode Island General
Laws § 10-5-5, his membership interest in ADM could be
attached because Plaintiffs' pending claim for unjust
enrichment is an equitable claim. With respect to the part of
the Motion seeking a preliminary injunction, the Magistrate
Judge concluded that the circumstances of this case warrant
barring Caramadre from transferring or dissipating the
Buckman annuity, which is undisputedly ADM's sole asset.
and ADM (“Defendants”) filed an objection to the
R&R, arguing that the Magistrate Judge erred by deeming
Caramadre a nonresident of Rhode Island and concluding that
Plaintiffs had shown the irreparable harm factor of the
preliminary injunction analysis. The Court reviews de novo
the parts of the R&R to which an objection is made. 28
U.S.C. § 636(b)(1).
considering Plaintiffs' Motion, Defendants'
objection, the R&R, and Defendants' objection
thereto, the Court agrees with the Magistrate Judge's
analysis and adopts her reasoning in its entirety.
Defendants' objection to the finding that Caramadre is a
non-resident of Rhode Island is based on his argument that
Caramadre remains a resident of Rhode Island even though he
has been incarcerated in a different state throughout the
pendency of the litigation. In the case that Defendants cite
for support, the First Circuit examined the citizenship and
domiciliary status of an inmate to assess diversity
jurisdiction, but does not discuss residency status at all.
See Hall v. Curran, 599 F.3d 70, 72 (1st Cir. 2010).
Section 10-5-6 is explicitly based on residency, which is
distinct from domicile. See Miss. Band of Choctaw Indians
v. Holyfield, 490 U.S. 30, 48 (1990). Moreover,
Defendants do not object to the Magistrate Judge's
conclusion that prejudgment attachment is warranted pursuant
to § 10-5-5 based on Plaintiffs' equitable claim for
unjust enrichment. Regardless of Caramadre's state of
residence, the writ of attachment may issue based on
Plaintiffs' unjust enrichment claim.
to Defendants' objection to the issuance of a preliminary
injunction, the Court notes that “[a] finding of
irreparable harm must be grounded on something more than
conjecture, surmise, or a party's unsubstantiated fears
of what the future may have in store, ” Charlesbank
Equity Fund II v. Blinds To Go, Inc., 370 F.3d 151, 162
(1st Cir. 2004), and that “prevarications about
repayment” and “strong indication[s] that the
defendant may dissipate or conceal assets” are
sufficient to demonstrate the irreparable-harm prong of the
necessary analysis, Micro Signal Research, Inc. v.
Otus, 417 F.3d 28, 31 (1st Cir. 2005) (citation
omitted). Magistrate Judge Sullivan's reasoning and
ultimate conclusion that this case's facts tip the
balance in favor of finding irreparable harm bears repeating:
[T]he undisputed evidence establishes Caramadre's
pervasive fraudulent behavior in concocting and implementing
the scheme, as well as his ongoing failure to satisfy his
restitution obligation to Plaintiffs or to his other victims
beyond a de minimis payment, none of which has been
distributed to Plaintiffs. The sheer size of what he owes in
restitution alone is enough to push Plaintiffs' belief
that their judgment will be uncollectable over the line
demarcating the “unsubstantiated fear” found in
Charlesbank Equity Fund II and the concrete and
demonstrable risk as found in Micro Signal Research
and Teradyne. Also, while far from determinative,
the Court cannot ignore Caramadre's 2011 representations
of ‘limited financial resources, ' as well as the
potentially destabilizing impact of the ongoing divorce
R&R (ECF No. 245) is, therefore, ACCEPTED in its
entirety. Plaintiffs' Motion for Prejudgment Attachment
and Preliminary Injunction (ECF No. 187) is GRANTED. A Writ
of Attachment for Caramadre's interest in ADM assets
shall issue forthwith.
PATRICIA A. SULLIVAN, United States Magistrate Judge.
the Court is the Motion of Plaintiffs Western Reserve Life
Assurance Co. of Ohio (“Western Reserve”) and
Transamerica Life Insurance Company
“Plaintiffs”) for prejudgment attachment of
Defendant Joseph Caramadre's membership interest in
Defendant ADM Associates, LLC (“ADM”), and for a
preliminary injunction preventing Caramadre from transferring
his interest in or the assets of ADM. ECF No. 187. This
Motion was originally filed on November 17, 2015. The Court
addressed this issue in the same proceeding that resulted in
the granting of Plaintiffs' motion for partial summary
judgment, but determined that this issue should be held for
additional briefing. ECF No. 231; Transamerica Life Ins.
Co. v. Caramadre, C.A. No. 09-470 S, 2017 WL 752145, at
*7-9 (D.R.I. Feb. 27, 2017)
the Motion was referred to me for further proceedings, I
ordered all parties to advise the Court which of them wished
to be heard on the Motion, present further evidence, or file
supplemental briefs. Only Plaintiffs and Defendants Caramadre
and ADM responded; these parties advised the Court that
resolution of the Motion depends on the application of law to
undisputed facts and that no testimony or additional evidence
would be offered. ECF No. 238. A supplemental briefing
schedule was set and a hearing was held on June 23, 2017. At
the hearing, Defendants requested and were given an
opportunity to supplement the record with additional
information but then opted not to do so. The Motion is now
ripe for report and recommendation pursuant to 28 U.S.C.
§ 636(b)(1)(B). For the reasons that follow, I recommend
that it be granted.
civil action arises out of a complex fraudulent scheme
concocted by Mr. Caramadre, which has been exhaustively
described by this Court, the First Circuit Court of Appeals
and the Rhode Island Supreme Court. See
Transamerica, at *1. This report and recommendation assumes
the reader's familiarity with both the scheme and the
civil and criminal litigation it spawned.
2008, Plaintiff Western Reserve issued an annuity with a
double-enhanced death benefit to Caramadre's alter ego
entity, ADM. See Transamerica, at *4 (holding that
“ADM is an alter ego of Caramadre as a matter of
law”). The annuity provided that this death
benefit would become available upon the death of the
terminally-ill annuitant, Charles Buckman. ADM paid Western
Reserve a premium of $1 million for the Buckman annuity. As a
result of Charles Buckman's death on July 14, 2013, ADM
now owns the contractual right to claim the death benefit on
the annuity from Western Reserve, worth over $1
million. However, the annuity remains in limbo
because ADM has not yet filed a claim.
the scheme was first revealed, soon after the Buckman annuity
issued, Western Reserve tried to rescind the annuity and
tender the $1 million premium back to ADM. After the tender
was refused, Western Reserve and its affiliate, Transamerica,
initiated this lawsuit. Plaintiffs sought rescission of the
Buckman annuity, as well as damages and other relief from
Caramadre and others arising from the scheme. Western
Reserve's effort to rescind the annuity ultimately failed
(after six years of litigation), based on a ruling on two
certified questions by the Rhode Island Supreme Court.
Western Reserve Life Assurance Co. v. ADM Assocs.,
Inc., 116 A.3d 794, 804, 806 (R.I. 2015). After that
decision, Plaintiffs amended their complaint, consolidating
their remaining claims into a single pleading; the
Consolidated Complaint (“Complaint”) was filed on
November 17, 2015. ECF No. 186. Against Caramadre, its claims
are: Count III (state law conspiracy); Count IV (Racketeer
and Corrupt Organizations Act (“RICO”)); Count V
(civil liability for crimes); and Count XII (unjust
enrichment). The unjust enrichment claim is based in part on
the allegations that the Buckman annuity is a financial
benefit received by Caramadre as a result of the fraudulent
scheme through his alter ego, ADM, and that it would be
inequitable for him to retain it. ECF No. 186 ¶¶
298-303. Count XIII is asserted against ADM, alleging reverse
piercing/alter ego based on the claim that ADM was formed by
Caramadre as part of the scheme to obtain the Buckman
annuity. ECF No. 186 ¶¶ 315-22.
the civil case, the criminal prosecution of Caramadre was
initiated by an indictment returned by the grand jury on
November 17, 2011. The criminal case culminated in November
2012 in Caramadre's guilty plea,  pursuant to which he
admitted to mail fraud, wire fraud and identity fraud,
including the fraudulent receipt of “millions of
dollars by making . . . material misrepresentations and
omissions to [ ] terminally-ill people . . .”
Transamerica, at * 2. As part of that plea,
Caramadre now owes restitution in the amount of $909, 907.21
to Plaintiff Transamerica and $1, 102, 464.28 to Plaintiff
Western Reserve. United States v. Caramadre, CR No.
11-186 S, 2014 WL 409336, at *5 (D.R.I. Feb. 3, 2014)
(“Caramadre”). In total, Caramadre owes
over $46 million in restitution to the victims of the scheme;
the sentence requires that this be paid in a lump sum
“immediately.” Caramadre, at *4; ECF No.
247. According to the public record, he has paid a total of
$4, 815.69 towards this obligation. As of this writing, the
public record also reflects that the United States has begun
to take action to collect the restitution in that it has
initiated three garnishment proceedings to recover assets
of Caramadre in the hands of third parties, although no such
action has been filed against ADM. It is undisputed that
Plaintiffs have yet to receive any restitution.
on their belief that the right to the Buckman death benefit
may be the only asset available to Caramadre to satisfy a
judgment in this case and that the dissipation or loss of
ADM's assets will cause them irreparable harm, Plaintiffs
filed this Motion in 2015, seeking to attach Caramadre's
interest in ADM and to enjoin him from transferring this
interest, or any other of ADM's assets, to any other
person or entity. To support their need for security and to
establish the likelihood of irreparable harm, Plaintiffs
point to various Caramadre filings in 2011, in which he
claimed to have “limited
resources.” ECF No. 125 at 10; ECF No. 187-8 at 2.
More significantly, they emphasize Caramadre's $46
million-plus restitution obligation, towards which he has
paid virtually nothing, exacerbated by his sentence of
incarceration during which time he will be unable to earn
more than a de minimis amount. Moreover, Caramadre
is now involved in divorce proceedings. Based on these
obligations, Plaintiffs have consistently argued that
Caramadre will be unable to satisfy a judgment in this case,
which they estimate could exceed $10 million.
Transamerica, at *7. In response, Caramadre has
stood silent, providing no assurance that he expects to be
able to pay Plaintiffs' judgment.
landscape pertinent to Plaintiffs' Motion shifted when
the Court issued its memorandum and order in
Transamerica. In particular, by granting partial
summary judgment in favor of Transamerica and Western Reserve
on two of their four claims against Caramadre and on their
claim against ADM, Transamerica definitively
resolved the issue of Plaintiffs' likelihood of success
on the merits on some of their claims against these two
Transamerica resolved Count V, with the holding that
Caramadre is civilly liable to Plaintiffs for money
damages, pursuant to R.I. Gen. Laws § 9-1-2, based on
the criminal conduct admitted in his plea agreement, which
includes, inter alia, mail fraud, wire fraud,
identity theft, forgery and conspiracy to defraud Plaintiffs
and other insurance companies. Transamerica, at
*2-3. Second, the Court ruled on Count IV that the undisputed
evidence establishes that Caramadre engaged in
“racketeering” and is consequently liable to
Plaintiffs for treble damages, attorney's fees and costs.
Third, the Court sustained Plaintiffs' claim in Count
XIII that they may reach the assets of ADM through Caramadre
through a reverse piercing of the corporate veil based on
application of the “equitable alter ego
doctrine.” Id. at *4. The Court also granted
summary judgment in favor of Plaintiffs on all of
Caramadre's and ADM's counterclaims for breach of
contract, promissory estoppel, breach of the duty of good
faith and fair dealing, declaratory judgment, and negligent
infliction of emotional distress. Id. at *4-7. The
Court specifically rejected the claim that Western
Reserve's unsuccessful attempt to rescind the Buckman
annuity was a breach of contract or otherwise actionable.
Id. at *5.
Court considered, but did not resolve, Plaintiffs'
arguments that a prejudgment attachment is appropriate
because they will likely obtain a judgment against Caramadre
for millions of dollars; that Caramadre will not have the
financial means to satisfy the judgment; and that the only
asset that may be available to Caramadre is the Buckman
annuity owned by his alter ego, ADM. Transamerica,
at *7. The Court alluded to, but did not resolve,
Caramadre's counter-argument that Rhode Island law
permits prejudgment attachment in tort actions only against
nonresidents with property in the state, R.I. Gen. Laws
§ 10-5-6, and all of Plaintiffs' claims sound in
tort while he is still a resident of Rhode Island, despite
being incarcerated in a federal prison in Massachusetts.
Id. at *8. The Court also considered, but did not
resolve, Plaintiffs' argument that the federal court is
empowered to issue an asset-freezing injunction pending
resolution of an equitable claim for unjust enrichment, even
though it may lack authority to issue an injunction to
preserve assets pending adjudication of legal claims.
Id. at *8, (citing Grupo Mexicano de Desarrollo
S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 333
(1999)). Ultimately, based on its ...