Documents in a federal fraud case show Virginia Democratic gubernatorial nominee Terry McAuliffe was among scores of investors with a Rhode Island estate planner who allegedly profited from death benefits paid on policies issued on terminally ill people without their knowledge.
A 2011 fraud, conspiracy and identity theft indictment alleges Joseph Caramadre and an aide stole terminally ill people's identities and used them to falsely secure annuities or bonds that paid off when those people died.
McAuliffe's name appears on a long list of Caramadre's investors released in a Wednesday hearing in U.S. District Court in Providence, R.I. There's no indication that any of the investors, including McAuliffe, are being investigated for wrongdoing.
But on Thursday, Republican candidate for governor and Attorney General Ken Cuccinelli reacted to the controversy involving his Democratic challenger.
"This is either the most incredible coincidence in the history of Virginia politics or Terry McAuliffe was in on this scheme actively and making money off it while terminally ill people were dying," he said.
Cuccinelli's campaign co-finance chairman Pete Snyder told News4's Northern Virginia Bureau, "I've invested in a lot of deals in my lifetime, I have never just blindly said, 'Hey look, you know, here's $45,000. Go do what you want with it.' I need to see a business plan. Someone needs to pitch me and tell me this is what they're trying to do."
"When you're investing in something that is a combination of Bernie Madoff meets Jack Kevorkian - it has a smell to it," Snyder added.
In the meantime, McAuliffe's northern Virginia supporters aren't phased by his investments.
"Being a past investor along with hundreds of people doesn't really mean much of anything legally," said Delegate Scott Surovell, D-Fairfax County.
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McAuliffe has pledged to donate the full amount of the 2009 campaign contrubutions Caramadre made to charity. His campaign released the following statement to NBCWashington Wednesday evening:
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. The allegations are horrible and he never would have invested if he knew he was being deceived. The McAuliffe Campaign has donated $27,000 to the American Cancer Society and Terry McAuliffe has donated $47,000 to the American Cancer Society. As part of its work, the American Cancer Society provides support, transportation, and care to those suffering with illness at all stages of their life.
The Associated Press previously cited an indictment stating McAuliffe had lied to a federal investigator regarding the death benefits scheme, in an article carried by NBCWashington and other media outlets. The AP has since retracted those reports, saying McAuliffe was not the "T.M." that had lied to investigators.
