Case of Martin Frankel
(AKA: Martin R. Frankel, Marty Frankel)
THIS PAGE IS UNDER CONSTRUCTION
The Frankel Fund - Toledo, OH
The Frankel Fund - West Palm Beach, FL
Creative Partners - Toledo, OH
Franklin American Life - Franklin, TN
Protective Service Life Insurance - Franklin, TN
Greenwich, CT
Spain
Rome, Italy
Hamburg, Germany
This page is dedicated to the memory of Frances Burge
Please note there are several people by the name of Martin Frankel. The one listed on this page was born on November 21, 1954 in Toledo, OH.
There is no record that any charges were brought up against this alleged sexual predator on the sex crimes he allegedly committed against children.
At one point Marty Frankel got into Sadomasochism (S and M) and started meeting women through an S and M organizations including placing ads in the Village Voice. At one point Frankel has over 15 young women living at his mansion in Greenwich, CT. The women would perform bondage shows for him.
At one point Frances Burge committed suicide at Frankel's home, yet he was cleared of any wrong doing of her death. Marty Frankel also started a fraudulent charity that had connections with the Catholic Church.
Pleaded guilty to 24 counts of fraud and
racketeering. He admitted plotting to loot seven insurance companies in
Arkansas, Mississippi, Oklahoma, Missouri and Tennessee that mostly sold
funeral policies to the Catholic Church to help the poor.
Frankel's
two sides were on display Friday. While he went on about wanting to
help children, prosecutors said he didn't mention his "special projects"
— a code for his unfulfilled desire to have sex with a child, according
to the testimony of one of his aides.
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Table of Contents:
NEWS CAST
- CNBC - American Greed: The Case of Martin Frankel
1988
- Martin Frankel sued for fraud (1988)
1999
-
Fugitive Trader Tracked to German Hotel Room (05/05/1999)
- Fire Department called to Frankel's home in Greenwich, CT (05/06/1999)
Manager and Up to $3 Billion Missing (06/23/1999)
- How 2 Priests Got Mixed Up In a Huge Insurance Scandal (06/26/1999)
-
Have Carats, Will Travel (07/08/1999)
- O.C. Dealer Reportedly Sold Gold to FugitiveJailed Financier Accused of Swindling (07/09/1999)
Financier Charged in 36-Count U.S. Indictment (10/08/1999)
- Millions Said to Fear Revenge: Finance: Martin Frankel is considering fighting extradition from Germany, his lawyer says (09/07/1999)
- Fugitive Financier Indicted on 36 Counts in U.S. (10/08/1999)
2001
- Financier Frankel Back in U.S. to Face Fraud Charges (03/05/2001)
- Vatican monsignor arrested in Ohio (08/31/2001)
New Haven: New Arrest In Frankel Case (08/31/2001)
2002
Ex-Official Of Vatican Pleads Guilty In Conspiracy (05/06/2002)
- Financier Pleads Guilty to More Charges (05/25/2002)
2003
- Reporter's Notebook: Ellen Joan Pollock recounts how she uncovered Martin Frankel's darkest secret (2003)
- The Pretender: The World of Martin Frankel (2003)
2004
Vatican Official Is Fined for Helping Swindler (09/10/2004)
- Frankel to seek reduced prison sentence (12/10/2004)
- Frankel sentenced to more than 16 years in fraud cases (12/11/2004)
- Onetime Fugitive Gets 17 Years for Looting Insurers (12/11/2004)
2006
- Ex-Financier's Penalty Unchanged at Hearing (03/24/2006)
2012
- US court drops suit state insurance officials brought against Vatican (02/03/2012)
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Fugitive Trader Tracked to German Hotel Room
Associated Press - September 5, 1999
NEW HAVEN, Conn. — Missing money manager Martin Frankel, accused of embezzling millions of dollars to fund his reclusive yet luxurious lifestyle, was arrested Saturday in Germany, the FBI said.
As authorities took him into custody, Frankel told them, "You got me," FBI Special Agent Michael Wolf said.
Authorities found Frankel in the Hotel Prem in Hamburg, Wolf said. He was apprehended without incident and charged with money laundering and wire fraud. It could be several months before Frankel can be extradited for trial in Connecticut, officials said.
Seized from his room were a computer and its contents and an undetermined amount of cash and diamonds, Wolf said. He could not say whether Frankel had been trading from his room.
Also taken into custody was a 35-year-old U.S. citizen, Cynthia Allison, who was using the alias Susan Kelly, Wolf said. He did not elaborate on Allison's relationship with Frankel. She was detained for questioning but had not been charged.
The arrest ends an international manhunt that began when Frankel, 44, disappeared more than four months ago.
Authorities in the United States issued an arrest warrant for Frankel on July 14. He has been missing since May 5, when a fire alarm alerted firefighters to an emergency at his mansion in Greenwich. They found a blazing file cabinet and two fireplaces stuffed with burning documents.
Insurance company regulators said Frankel's unlicensed brokerage--apparently run out of the $3-million Greenwich mansion--had siphoned money from several insurance companies.
Six were in the South--three in Mississippi, and one each in Arkansas, Tennessee and Oklahoma--and one was in Missouri. Regulators say Frankel stole at least $218 million from the insurers, but a lawsuit filed by some of the companies puts the loss at $915 million.
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Manager and Up to $3 Billion Missing
Securities: Clients of unlicensed brokerage included a dozen small insurance companies.
Associated Press - June 23, 1999
GREENWICH, Conn. — A money manager has vanished with as much as $3 billion in clients' money, leaving behind a things-to-do list (item No. 1: "Launder money") and astrological charts designed to answer such pressing questions as "Will I go to prison?"
Martin Frankel, 44, has not been seen since May 5, when an automatic alarm called firefighters to his high-security mansion. There they found a blazing file cabinet and two fireplaces stuffed with burning documents.
Last month, insurance company regulators said Frankel's unlicensed brokerage--apparently run out of the mansion--had siphoned off money from a dozen small insurance companies in five states. The companies, based in Mississippi, Oklahoma, Tennessee, Missouri and Arkansas, were placed in receivership when they were unable to account for assets invested with Frankel's Liberty National Securities Inc.
Regulators said the insurers are missing at least $218 million, but a lawsuit filed by some of the companies put the loss at $915 million. Also missing is as much as $1.98 billion from the St. Francis of Assisi Foundation, which was established by Frankel in the British Virgin Islands last August. It was supposedly a charity to help sick children, but investigators suspect it was only a front for fraud.
A federal grand jury in Bridgeport, Conn., has been investigating Frankel since mid-May, the Greenwich Time reported last month. A sealed warrant has been issued for his arrest, the New York Daily News reported Tuesday, citing unidentified law enforcement sources.
Among the papers seized after the fire was a handwritten list of tasks, the first of which was "Launder money." The second item on the list: "Get $ to Israel get it back in," according to a May 25 FBI affidavit. Also seized, according to the affidavit, were personalized astrological charts answering such questions as: "Will I go to prison?" "Should I leave?" and "Will I be safe?" The affidavit does not indicate what the stars held for him.
In the months before the fire, Frankel spent more than $1 million on shopping sprees at Baccarat, Tiffany and Gianni Versace and trips to Rome, Geneva and London, according to financial records obtained by the Time.
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How 2 Priests Got Mixed Up In a Huge Insurance Scandal
By Alessandra Stanley
New York Times - June 26, 1999
As priests, they make an unlikely pair. One is an affable, worldly American bon vivant who zooms around Rome on a raffish blue motorbike and defied his New York archbishop in the 1980's by running a trendy Manhattan restaurant to raise money for the poor. The other is an owlish Italian canon law scholar who serves as an emeritus judge on the Roman Rota, the court of appeals of the Holy See.
Together, the Rev. Peter Jacobs, 73, and Msgr. Emilio Colagiovanni, 79, provided a clerical cloak of respectability for a Greenwich, Conn., money manager who authorities suspect embezzled more than $300 million from insurers across the United States. Both men insist they were badly duped by Martin R. Frankel, who disappeared last month and is wanted by the Federal Bureau of Investigation.
The priests say they knew Mr. Frankel as David Rosse, a middle-aged tycoon who claimed descent from the Jewish King David and said he was eager to give at least $50 million to the church.
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Have Carats, Will Travel
Diamond Wholesaler Details $10 Million Sale To Financier Now Sought In Scan
By Mike Mc Intire
Hartford Courant - July 08, 1999
When the Gulfstream jet touched down at New Jersey's Teterboro Airport in the early morning hours of May 5, a security team was waiting to take the three bags Robert Wiener had escorted from California.
It was very expensive luggage.
Inside the large suitcase and two satchels were several hundred diamonds, some as large as dimes, for which a mysterious Connecticut businessman had paid Wiener $10 million two days earlier. It was only a portion of the $40 million in diamonds that Martin Frankel had wanted to purchase in a hurry, but couldn't, lest such a huge deal upset diamond markets.
Wiener, a diamond wholesaler making his biggest sale, noticed that the security guards seemed uneasy. They took the bags and sped off.
Frankel's aides had good reason to be anxious. At that same moment in Greenwich alarms were going off -- literally -- as sparks from burning files summoned firefighters to Frankel's $3 million mansion and ignited an investigation into one of the most spectacular financial frauds in history.
Wiener didn't know it, but the handoff at the airport was part of a frantic escape plan by Frankel that investigators say involved shredding and burning documents and converting cash into hard-to-trace jewels that later could finances a life on the lam.
Frankel, who is believed to be hiding in Europe, is wanted on fraud charges in connection with the disappearance of more than $200 million from 11 insurance companies he controlled.
The Courant first reported the diamond purchase on Wednesday.
``He was very specific about what he wanted: 1- to 3-carat diamonds of [very good] clarity and with good color,'' Wiener said. ``Goods that are easily sellable on the market.''
In a telephone interview from his World Wide Diamond office in Los Angeles, Wiener provided details of the dramatic last-minute deal that may be helping Frankel elude a worldwide dragnet.
Wiener said he was contacted in April by a California jeweler he had known for years, who spoke of having a client who was worried about potential Y2K-related financial turmoil and wanted to diversify his assets. Wiener never met Frankel, and said he only knew of him ``as a reclusive, eccentric industrialist who didn't trust anyone and wanted to purchase the diamonds quickly.''
After Wiener agreed to sell Frankel only one-fourth of the jewels he wanted to buy, Frankel's security chief, David Rosse, flew to California and retrieved a sample to bring to Frankel. On May 3, Frankel, using the name Devonshire Technologies, wired $10 million from a Swiss bank to World Wide Diamond's account at Bank Leumi in Beverly Hills.
Money in hand, Wiener prepared the diamonds for delivery.
``There were three bags,'' he said. ``A satchel containing diamonds, a large suitcase with more diamonds and another satchel that held diamonds and the documentation that went with all of them.''
Wiener didn't know anything was amiss until a month later, when Bank Leumi informed him it had received an order from a federal judge in Connecticut to freeze the $10 million Frankel had paid for the gems. So now, Wiener is out the money, and Frankel has his diamonds.
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O.C. Dealer Reportedly Sold Gold to Fugitive
Los Angeles Times - July 10, 1999
A Newport Beach commodities dealer reportedly sold fugitive Martin R. Frankel about 3,000 pounds of gold shortly before the alleged scam artist fled the country, according to newspaper reports.
Frankel, who is accused of embezzling $215 million from several U.S. insurers, paid $10 million to Newport Beach-based Monex in exchange for the gold, the Greenwich Time in Connecticut reported, citing anonymous sources. Law enforcement authorities believe Frankel was attempting to launder his cash before he fled into a more universal currency, including gold and diamonds.
Greg Walker, an attorney for Monex, said the company was contacted by the FBI in May and agreed to cooperate. He declined further comment. Although the FBI is attempting to seize some of the proceeds from Frankel's diamond purchases, Monex is not listed in the FBI seizure warrant because too much time has elapsed since the purchases, the Greenwich Time reported.
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Financier Charged in 36-Count U.S. Indictment
By Denise Lavoie
Associated Press - October 8, 1999
STAMFORD, Conn. — Rogue financier Martin R. Frankel was charged with fraud and money laundering in a 36-count federal indictment, the U.S. attorney's office said Thursday.
Frankel, 44, under arrest in Germany, is accused of absconding with more than $200 million in insurance company assets he was supposed to be investing.
Hugh Keefe, who withdrew as Frankel's U.S. lawyer last week after federal authorities froze all of the fugitive's assets, said the indictment will make it easier to extradite Frankel.
The indictment--the first against Frankel by the U.S. government--charges him with 20 counts of wire fraud, 13 counts of money laundering and one count each of securities fraud, racketeering and conspiracy.
Each wire fraud charge carries a maximum penalty of five years in prison; each money-laundering charge is punishable by up to 20 years in prison, as are the racketeering and conspiracy charges. The securities fraud charge carries a maximum term of 10 years in prison.
If convicted on all charges, Frankel faces a maximum of 410 years in prison.
The indictment accuses Frankel of running a "racketeering enterprise" that bought up insurance companies. Frankel then allegedly siphoned the insurers' cash reserves and used them to purchase mansions, cars, diamonds and gold.
Prosecutors claim that from sometime before mid-1991 through May 1999, Frankel and unnamed associates concocted a scheme to defraud insurance companies. The indictment alleges that as part of the scheme, the cash reserves from the insurance companies would be invested with Frankel operating as Liberty National Securities Inc., his unlicensed brokerage.
After he received the assets, Frankel "converted, stole and embezzled the majority of funds for the personal use and benefit of himself and others known and unknown to the grand jury," according to the indictment.
Frankel disappeared from his fortress-like mansions in Greenwich, Conn., in early May. Days later, firefighters responding to an automatic alarm found the homes littered with smoldering documents and a "to do" list upon which item No. 1 was "Launder money."
Frankel had been barred from securities trading years earlier. He worked from his compound in the New York City suburb, equipped with numerous television sets, computers and the high-tech tools of international finance.
When it appeared his financial dealings were about to be exposed in early May, investigators say, Frankel fled to Europe with a wad of cash and a cache of diamonds, living first in Italy and later in Germany.
Frankel was arrested in Hamburg, Germany, on Sept. 4. He remains in prison there.
Frankel has said he plans to fight extradition, although his lawyers in the U.S. and Germany have withdrawn from the case, saying Frankel has no money and cannot pay them.
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Millions Said to Fear Revenge: Finance: Martin Frankel is considering fighting extradition from Germany, his lawyer says
Los Angeles Times - September 7, 1999
HAMBURG, Germany — Since his arrest, Martin Frankel has run and rerun through his head the events of the last months: how it came to pass that he traded his Connecticut mansion for a one-person cell in northern Germany.
German attorney Thomas Piplak visited Frankel, accused of bilking clients out of millions, in jail Monday and described the man as depressed, exhausted and--above all--fearful that the people he is accused of swindling might seek revenge.
So great are Frankel's fears, Piplak said, that he is considering fighting extradition to the United States.
"If we got the impression that he's not secure because there are strong, powerful groups after him, of course we would do everything to keep him here," Piplak said. "He fears being attacked, because he knows a lot of things."
Frankel was arrested Saturday night in Hamburg's Hotel Prem, ending a four-month international manhunt for the 44-year-old alleged rogue financier. Police say he siphoned at least $218 million from several insurance companies; a lawsuit by some of them puts the loss at $915 million.
As much as $1.98 billion may also be missing from the St. Francis of Assisi Foundation, which investigators say was established by Frankel in the British Virgin Islands last August.
When police used a spare key to open his hotel room Saturday, they say they found him with an unspecified sum of cash, diamonds, a computer and numerous fake passports.
"He was surprised by being arrested; he didn't expect it," Piplak said.
Unshaven and appearing morose during the hourlong meeting with his lawyer, Frankel didn't elaborate on who he thinks might pursue him.
Piplak suggested Frankel back up his concerns with a written statement for the judge.
But Piplak said Frankel--who has been described by other acquaintances as a pathological liar--is worried that people won't take him seriously.
"He's doubtful whether anybody will believe him," Piplak said.
Prosecutors have not yet received extradition papers from the United States, and Frankel is being held on a German charge for possessing a fake British passport.
Hamburg's Holstenglacis prison, where Frankel can expect to pass the months before his extradition case is decided, has a reputation as a tough place filled with drug suspects awaiting trial. Piplak said Frankel is receiving no special treatment despite his high profile.
Frankel has his own cell, with bath and toilet to accommodate an unspecified organ disorder that requires him to drink lots of water, his lawyer said. For now, he wears his own clothes--a blue shirt and khaki pants--and has requested kosher meals for religious reasons.
But the isolation of the cell has made Frankel feel alone in a country where he has no friends or family. Cynthia Allison, the 35-year-old woman who accompanied him in Germany who was also briefly arrested, then released, is nowhere to be found, Piplak said.
"He has no contacts, has no family," Piplak said. Why Frankel chose to hide out in Germany remains unclear to his lawyer.
But even though fighting extradition would prolong his stay in prison in a foreign land, Frankel's fears appear to be outweighing his sense of isolation.
Piplak said it's not the criminal charges Frankel fears, it's his adversaries.
"He's not afraid to go back to the United States, he's afraid he won't be secure," Piplak said. "His main feeling is being frightened."
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Fugitive Financier Indicted on 36 Counts in U.S.
Securities: Action against Martin R. Frankel could make it easier to extradite him from Germany, where he was captured.
Los Angeles Times - October 08, 1999
BRIDGEPORT, Conn. — Five months after his disappearance sparked an international manhunt, money manager Martin R. Frankel was charged with stealing more than $200 million from several Southern insurance companies.
A U.S. federal grand jury that was convened in June returned a 36-count indictment Thursday against Frankel, 44, who was captured by German police at Hamburg's Prem Hotel in September. The charges range from money laundering to racketeering.
Hugh Keefe, who withdrew as Frankel's U.S. lawyer last week after federal authorities froze all of the fugitive's assets, said the indictment will make it easier to extradite Frankel.
The indictment--the first against Frankel by the U.S. government--charges him with 20 counts of wire fraud, 13 counts of money laundering and one count each of securities fraud, racketeering and conspiracy.
Each wire fraud charge carries a maximum penalty of five years in prison; each money-laundering charge is punishable by up to 20 years in prison, as are the racketeering and conspiracy charges. The securities fraud charge carries a maximum term of 10 years in prison.
If convicted on all charges, Frankel faces a maximum of 410 years in prison.
The indictment accuses Frankel of running a "racketeering enterprise" that bought up insurance companies. Frankel then allegedly siphoned the insurers' cash reserves and used them to purchase mansions, cars, diamonds and gold.
Prosecutors claim that from sometime before mid-1991 through May 1999, Frankel and unnamed associates concocted a scheme to defraud insurance companies. The indictment alleges that as part of the scheme, the cash reserves from the insurance companies would be invested with Frankel operating as Liberty National Securities Inc., his unlicensed brokerage.
After he received the assets, Frankel "converted, stole and embezzled the majority of funds for the personal use and benefit of himself and others known and unknown to the grand jury," according to the indictment.
Frankel disappeared from his fortress-like mansions in Greenwich, Conn., in early May. Days later, firefighters responding to an automatic alarm found the homes littered with smoldering documents and a "to do" list upon which item No. 1 was "Launder money."
Frankel had been barred from securities trading years earlier. He worked from his compound in the New York City suburb, equipped with numerous television sets, computers and the high-tech tools of international finance.
When it appeared his financial dealings were about to be exposed in early May, investigators say, Frankel fled to Europe with a wad of cash and a cache of diamonds, living first in Italy and later in Germany.
Frankel was arrested in Hamburg, Germany, on Sept. 4. He remains in prison there.
Frankel has said he plans to fight extradition, although his lawyers in the U.S. and Germany have withdrawn from the case, saying Frankel has no money and cannot pay them.
Keefe, Frankel's former attorney, said Thomas G. Dennis, chief federal public defender in Hartford, was appointed to represent Frankel earlier this week.
Neither Dennis nor Frankel's new lawyer in Germany, Dirk Meinecke, could be reached for comment.
Associated Press and Bloomberg News were used in compiling this report.
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Financier Frankel Back in U.S. to Face Fraud Charges
Bloomberg News - March 5, 2001
NEW HAVEN, Conn. — Nearly two years after he fled the country, financier Martin R. Frankel was returned to the U.S. to face charges of defrauding insurance companies of more than $200 million.
Frankel was presented before U.S. District Court in New Haven, Conn., on Sunday, a day earlier than planned because of a winter storm bearing down on the region.
"He was detained without bond," said John Durham, counsel for the U.S. attorney's office in New Haven. "It was just his initial presentment; nothing dramatic occurred."
Frankel's arraignment, when he pleads guilty or not guilty to charges of racketeering and fraud, will be held a week from today. In the meantime, he is being detained at the Northern Correctional Institution in Somers, the state's highest-security prison. In his court appearance Sunday, Frankel was advised of his rights.
Frankel was extradited from Germany on Friday after Hamburg prison officials caught him trying to saw through the bars of his cell.
Toledo, Ohio-born Frankel was arrested in a Hamburg hotel in September 1999 after a three-month flight from U.S authorities. He was later convicted of failing to pay import duties on about $8 million worth of diamonds and of possession of nine false passports, and was jailed for three years by a Hamburg court.
Frankel's arrest came after a U.S. federal grand jury returned a 36-count indictment against him. The charges ranged from money laundering to racketeering, and alleged the former stockbroker systematically drained money from insurers he controlled from his 12-room mansion in Greenwich, Conn.
Frankel said during his Hamburg trial he'd rather remain in Germany where it's "against the constitution to kill somebody.
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Vatican monsignor arrested in Ohio
Associated Press - August 31, 2001
CLEVELAND (AP) — A monsignor who has served on a board that provides legal counsel to Pope John Paul II has been charged in an international insurance scam involving disgraced former financier Martin Frankel.
Monsignor Emilio Colagiovanni was arrested Thursday and charged with wire fraud and conspiracy to launder money, the U.S. Attorney's office for Connecticut said.
Colagiovanni, 81, is accused of helping Frankel use the Saint Francis of Assisi Foundation to acquire insurance companies, while concealing Frankel's involvement, according to a complaint.
He clung to a lectern for support while questioned Thursday in the Cleveland courtroom of Magistrate Nancy A. Vecchiarelli.
When Vecchiarelli asked whether he understood the charges, Colagiovanni said: "I don't understand what they're about." He was then flown to Hartford, Conn.
His attorney, Paul Mancino, said his client has done nothing wrong, and that authorities want to secure his testimony against Frankel.
"I think he was duped and taken advantage of," Mancino said.
Prosecutors say Colagiovanni made false statements to representatives of insurance companies and regulators, and said the source of the foundation's funds were the Holy See and other Catholic entities. The source of the funds was Frankel, using the alias David Rosse.
Colagiovanni had agreed to help "Rosse" set up a charitable foundation in the British Virgin Islands, prosecutors said.
The monsignor, who lives in Rome, was arrested in the Cleveland suburb of Seven Hills while visiting his sister.
Frankel, 46, is being held in a federal prison in Connecticut, awaiting trial on racketeering, fraud and money laundering charges. He was arrested in Germany in September 1999 after a four-month search.
Frankel is accused of hiding behind associates to create Thunor Trust, the holding company for six insurance companies in Arkansas, Mississippi, Missouri, Oklahoma and Tennessee. Regulators in those states are seeking more than $600 million in damages from Frankel in civil cases.
Colagiovanni, who is president of the Monitor Ecclesiasticus Foundation, which publishes a journal of Roman Catholic canon law, is accused of scheming to defraud Capitol Life Insurance Co., Western United Life Insurance Co. and the Thunor Trust companies and their policy holders.
If convicted, Colagiovanni faces up to five years in prison for wire fraud and up to 20 years for conspiracy to launder money.
The Vatican press office was closed Friday. A call to a spokesman at his home was not immediately returned.
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New Haven: New Arrest In Frankel Case
By Paul Ziebauer
New York Times - August 31, 2001
A Roman Catholic Church official from Italy will face federal wire fraud and conspiracy charges in Connecticut. Prosecutors say he helped Martin Frankel, the Greenwich financier accused of stealing more than $200 million from insurance companies in five states. The official, Msgr. Emilio Colagiovanni, was arrested in Ohio yesterday, the United States attorney's office in Connecticut said.
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Ex-Official Of Vatican Pleads Guilty In Conspiracy
By Paul Ziebauer
New York Times - September 6, 2002
NEW HAVEN, Sept. 5— A retired Vatican official who is an expert on Catholic canon law pleaded guilty today to a federal conspiracy charge for his role in an international insurance swindle run by Martin R. Frankel, the Greenwich financier who is now in prison.
In a signed statement, Msgr. Emilio Colagiovanni, 82, whose career included sitting on the board that provides legal counsel to Pope John Paul II, pleaded guilty to conspiracy to commit wire fraud and launder money. He faces a maximum of five years in prison and a $250,000 fine.
In the six-page statement, Monsignor Colagiovanni, an Italian citizen and a priest for 60 years, said that in 1998 and 1999 he helped Mr. Frankel defraud American insurance companies that Mr. Frankel wanted to buy. His contribution, he said, was allowing his own Rome-based foundation, the Monitor Ecclesiasticus Foundation, which publishes a journal of canon law edited by the monsignor, to siphon $50 million of Mr. Frankel's money into a second foundation. It had been created by Mr. Frankel specifically to acquire the companies, the monsignor acknowledged.
Mr. Frankel then told the companies' executives this second foundation, the St. Francis of Assisi Foundation, had received the $50 million from ''various Roman Catholic charities and tribunals at the Vatican'' interested in raising money for charitable causes, according to the plea.
In return for his acquiescence in the scheme and access to Vatican-based bishops and cardinals -- whose support Mr. Frankel and the monsignor sought, according to federal prosecutors -- Mr. Frankel paid the monsignor's foundation $40,000.
Mr. Frankel pleaded guilty in May to federal corruption charges. He has also pleaded guilty to corruption and theft charges in Tennessee and Mississippi. He is expected to be sentenced next year.
In today's plea statement, Monsignor Colagiovanni named several Vatican officials whom he said he or aides to Mr. Frankel met with to seek their support in the scheme. They include Msgr. Francis X. Salerno, secretary for the prefecture for the economic affairs of the Holy See, and Archbishop Giovanni Battista Re, in the secretariat of state office.
The document does not make clear whether these or other Vatican officials other than the monsignor helped Mr. Frankel's scheme; Mark G. Califano, the assistant United States attorney who prosecuted the case, would not comment on the matter this afternoon.
Lieutenants working for Mr. Frankel first approached the monsignor in mid-1998, while he visited a sister, cousin and other family members in Ohio, the confession said. They told him that Mr. Frankel wanted to make a ''sizable'' donation to the church and help its charities, including the Mother Teresa Hospital in Albania. He was arrested in August 2001 in suburban Cleveland as his family was preparing to attend a memorial Mass for his sister.
He is due in court again on Dec. 9 for a status hearing and, possibly, his sentencing by Judge Ellen Bree Burns of Federal District Court, who also presided in court today.
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Financier Pleads Guilty to More Charges
Court: Ex-fugitive admits to nine counts in Mississippi. Officials seek the stolen assets.
Los Angeles Times - May 25, 2002
RAYMOND, Miss. -- Martin Frankel, the financier accused of swindling more than $200 million from insurance companies while living in luxury, pleaded guilty to corruption charges in Mississippi on Friday, more than a week after his guilty plea to federal charges for the same scam.
The 47-year-old former fugitive pleaded guilty to nine counts of mail fraud, one count of conspiracy and one count of making false statements and representations. He faces up to five years in prison on each count.
Circuit Judge L. Breland Hilburn deferred sentencing for a year as part of a deal with state and federal prosecutors. Frankel has agreed to cooperate in the investigation and possible recovery of assets.
State insurance officials said Friday they have recovered from $80 million to $90 million. Most of the looted money was from Mississippi companies.
Insurance Commissioner George Dale said policyholders have been reimbursed from a state fund financed by assessments on life insurance companies doing business in Mississippi.
Looking pale and thin, Frankel responded only briefly to questions by Hilburn on Friday.
He was represented by a public defender.
Hilburn approved Frankel's return to authorities in Connecticut.
Frankel is accused of gaining control of small insurance companies in Arkansas, Mississippi, Missouri, Oklahoma and Tennessee and stealing cash from the company reserves. The FBI said he put the money in banks around the world.
In Mississippi, Frankel and unnamed co-conspirators are accused of taking $192 million from First National Life Insurance Co. of America, Franklin Protective Life Insurance Co., and Family Guaranty Life Insurance Co. The companies have been in liquidation since 2000.
He ran the scam from a two-mansion compound in tony Greenwich, Conn., that he turned into a warren of offices with more than 80 computers and wide-screen televisions tuned to financial news channels.
Authorities said Frankel spent money on private planes, luxury cars, pricey wines and lavish gifts for women.
On May 15, Frankel pleaded guilty to 24 federal corruption charges in New Haven, Conn. For those charges, he could get up to 150 years in prison and $6.5 million in fines at sentencing next year.
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Reporter's Notebook: Ellen Joan Pollock recounts how she uncovered Martin Frankel's darkest secret.
Wall Stree Journal Books - 2003
I WAS SITTING at my desk, about nine months after Marty Frankel's capture in Hamburg, Germany, when my phone rang. It was one of Mr.Frankel's women, a high-strung, strange lady with whom I had been chatting on and off for months. She was distraught, and said she had to speak with me immediately.
Experience had taught me that I should jump at any opportunity to speak to members of Mr. Frankel's household. They were a very volatile bunch. Because I was more used to dealing with executives and professionals, the women's mood swings always caught me off guard.
I tried doing research. Mr. Frankel had met most of the women through personal advertisements seeking submissive women for sadomasochistic sex. "I seek a woman who wants to serve a truly kinky, twisted, perverted master, a woman who views her master's sexual satisfactionas her highest goal in life," he wrote in one ad. I asked the Wall Street Journal library to dig up a New Yorker magazine article I remembered that dealt with the world of S&M. It didn't help.
On another occasion, a former lover of Mr. Frankel's called, and I told her I had to return her phone call because I was on another line. Later, when I listened to my voice mail, there was a message from the woman telling me she had changed her mind about wanting to speak with me. "The sound of your voice makes me want to vomit," she said. She meant it. She never spoke to me again.
So this time, I leapt at the chance to talk with the distraught caller. She was in Westchester County, N.Y., she said, driving aimlessly in her car, and would not venture into Manhattan. "Fine," I said, I would make my way to Westchester. She began to hang up, without assigning a meeting place and I caught her just in time. She chose a coffee shop near a train station and mentioned an exit number off the Saw Mill River Parkway.
I started checking the Internet for train schedules and realized that taking a train, while cost effective, was probably very foolish. It was unlikely that this woman would stay put for very long. I called a car service and headed north.
About a half-hour into my trip, I realized that the woman's directions were all wrong, and that the exit number didn't exist. But we finally made it to the coffee shop. The woman looked terrible; worn out, with no makeup to hide the circles under her eyes. There were several empty plates in front of her, and I couldn't help thinking about another source's comment that many of Marty's women had odd eating disorders.
What had set the woman off were comments that Marty had made on television the previous evening. ABC's Brian Ross had gotten a scoop, an interview with Marty from his Hamburg jail. Marty had stated that he'd wanted to use his money to help the unfortunate. Watching the interview, I hadn't taken these comments very seriously. But this woman wanted me to know just how bad her former boss could be.
He'd had a secret desire, she said, to sexually abuse children. As a result of this wish, his women had embarked on a scheme known as "special projects," and a child was brought into the world, carried by a surrogate, to help satisfy this desire. Ultimately, he had never acted on it.
It was a stunning and horrifying revelation. But I had known that there was some deep secret in the household. Another woman had told me that Marty had had a fantasy, but that she doubted he would ever act on it. When I had asked what it was, she'd gotten flustered and clammed up.
Having unburdened herself of the secret, my companion at the coffee shop abruptly got up and left. When I called her several weeks later, she hung up on me.
Over time, other people told me about the secret. I learned that the child was safe, and that authorities were aware that she had been born under bizarre circumstances.
Many of my interactions with the citizens of Marty Frankel's world were unusual. For some the decision about whether to talk with me was fraught with conflict. They feared they would be indicted; in fact, some ultimately were. Criminal defense lawyers often urge their clients to refrain from talking to reporters while their cases are pending. Yet for many of Marty's pals, this was a first brush with the law. Perhaps they were criminals, but they also felt they were victims. And they wanted to tell me that.
Still, other of Marty's associates were just plain, well, unusual. One Ohio friend, who as far as I could tell was not a suspect in the case, had been called by law enforcement officials with questions. He was convinced that they were out to get him. One night, I returned home very late from the office and found this gentleman had left a message for me with my husband. I grabbed a lukewarm piece of leftover pizza and returned the phone call. Suddenly we were disconnected.
I quickly redialed. To him, our little snafu was proof that his phones were tapped. I had to confess that I had inadvertently cut us off with my chin as I chomped on my pizza.
I wasn't sure he was convinced.
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The Pretender: The World of Martin Frankel
Wall Stree Journal Books - 2003
In this excerpt from "The Pretender," masquerading as a stock trader, and using aliases, Mr. Frankel had acquired seven Southern insurance companies with embezzled money. To further succeed, he crafted a planto gain entrée into the highest echelons of business. And for a while it looked as if it was going to work...
SITTING IN his trading room with his computers blinking at him, Marty forced himself to try a few trades. It was 1998, and he had just acquired First National Life Insurance Co. and was tapping its portfolio. Shaky, fearful and choked with anxiety, he managed to execute some 25 trades of government and corporate bonds through Prudential Securities. The trades were small for an insurance-company portfolio, worth about $25,000 each and not especially risky. But for Marty they were absolute agony.
After one small purchase, he kept one of his lovers on the phone with him as he tracked price fluctuations on his screens and tried to quell an escalating anxiety attack. He refused to let her hang up. About an hour after he'd made the trade, the price edged slightly downward, and he became so agitated about losing even a tiny amount that he couldn't think straight.
"I have to be out of these. I have to be out of these," he moaned. The price popped back up, and he quickly sold the bonds at exactly the same price at which he had bought them.
The good news was that he actually made a trade -- a rarity for Marty. The bad news was that the emotional toll on him was enormous. And he hadn't made a penny. Marty never gave up hope that he would conquer his trader's block. "I need you to help me," he begged one of his women. "I need you to isolate me because then I can trade."
Marty's renewed efforts to trade came at a time when he was feeling heavy financial pressure. He was going through mountains of money. He had finally bought the house he was living and working in, plunking down $3 million in cash from Franklin American, a Tennessee insurer. His payroll, if it could be called that, numbered well over 20 people, including sex partners and other women, techies, security guards, maintenance men, personal chefs, maids and "nannies" to keep an eye on his current girlfriend for him.
Each time he bought an insurance company, "cars would bloom like spring flowers," as one of the women put it. Marty's favorites drove around in $1.8 million worth of cars, stolen from the premiums paid by customers of the insurance companies he had bought. There were Mercedeses for himself and his special sex mates. There were BMWs, Lexuses and Chevrolet Tahoes. Once Marty had a new limousine chopped in half so that a few extra inches could be added to accommodate his six-foot frame.
Then there was the tribe's American Express bill, which at least once hit the $600,000 mark.
Marty had to find a way to seriously increase his cash flow. Barring making lots of money from trading, that meant buying more insurance companies -- and the pools of ready cash that came along with them. So he developed a grand vision: He wanted Franklin American to be a billion-dollar company, he told John Hackney, its chief executive, over the phone.
Previously, they had talked endlessly about Marty's admiration for Warren Buffett and Bill Gates. Now, he added to his list of idols Sandy Weill, who had made Travelers Group into an insurance powerhouse before merging it with Citibank to form financial giant Citigroup. But for Mr. Hackney, turning Marty into the next Sandy Weill was not a priority, and to Marty's dismay, he kept turning down acquisition targets.
Adding to Mr. Frankel's pressures were his relationships with his women. Gawky, with a deathly pallor, he was not a looker. But he attracted women by appearing to absorb himself in their problems and needs. And, of course, there was the money. He was especially beholden to Karen Timmins and Kaethe Schuchter, both of whom had learned something about his business machinations. Mr. Frankel had met Ms. Timmins through a personal advertisement seeking sex mates. Instead, he made her an office manager, and she remained bitter about his rejection. Ms. Schuchter briefly was Mr. Frankel's lover, and then waged war against her successor to his bed. Known as "the bitch" in Mr. Frankel's household, her special skill was coaxing favors out of him.
Karen Timmins tried to help Marty indulge in his most dangerous sexual fantasy. He had confessed to a few women that he fantasized about having sex with children. He meant it to be a secret, but the news quickly spread through the house. When one woman who heard the gossip broached the topic with Marty, he got extremely agitated and upset. "I know," he said. "It's so terrible you can't even say it out loud."
Soon some women in the house embarked on what they called "special projects," or sometimes "mergers and acquisitions," the quest to find Marty tiny sex partners. It was Ms. Timmins who went furthest to fulfill his new wishes. Working through an agency in California, she got donors to supply eggs and sperm to create a baby, and got a surrogate to carry it. Over $40,000 in expenses for the "special project" were paid with money wired directly from Marty's Swiss bank accounts, where he had hidden some of the purloined insurance-company cash.
The baby was a girl. Her birth in California and arrival on the East Coast around the beginning of 1998 sent Marty into a tizzy of conflicting emotions. On one hand he was titillated by the idea of having a potential future sex partner in the house, and on the other hand he was scared, even repulsed, by his own impulses. As soon as the baby was born, he said he didn't want her. Nevertheless, almost at once he was doing astrological charts to figure out how he would relate to the child. One chart showed their future sex life together would be "wonderful."
As Marty tussled with his inner conflicts, Ms. Timmins -- who hoped that the baby would draw her closer to Marty and that they would become a sort of family -- spent $1,500 on portraits of the child. She put them in a prominent spot in the dining room. Every time he walked through the room, the portraits were a bitter reminder of just how perverted he had become.
Finally, he couldn't take it anymore. He demanded that Karen give the child up. The two had a row that lasted for days and Karen quit, saying she would never give her baby away. Soon she was back, and Marty never abused the child. In a statement, Ms. Timmins's lawyer, Thomas J. Murphy, said, "Because she is cooperating with the government's investigation, Ms. Timmins isn't yet fully able to respond beyond saying that she and her daughter enjoy a very close mother-daughter relationship."
Meanwhile, Kaethe Schuchter -- a slender European woman with a wardrobe of skimpy outfits -- had become integral to Marty's plan to expand his empire. In 1998, he began telling people that he was funding Ms. Schuchter's lavish lifestyle so she could meet rich people and connect him with new investors. She poured her heart into the New York social scene. She indulged in her hankering for $500 Manolo Blahnik stiletto heels. She wore clothes by Versace. She dined at Jean Georges, one of New York's most exclusive eateries. The sophisticated and money-conscious people she met on the party circuit took note.
Ms. Schuchter's first efforts to lure monied folk into her boss's net backfired. One socialite, former Indonesian First Lady Dewi Sukarno, was singularly unimpressed -- both with Mr. Frankel's bizarre set-up in Greenwich and his pitch for her to invest. But Ms. Schuchter finally hit pay dirt with Thomas Corbally, a debonair man in his late 70s.
Mr. Corbally had worked for over half a century to cultivate an air of mystery about himself. It was not always clear on what continent he lived, what he did for a living or sometimes even whom he was married to. But the one thing people knew for sure about Tom Corbally was that he knew everyone, everywhere. Barbara Walters, Rita Hayworth, Lee Iacocca, Henry Kissinger, Larry Tisch, Roy Cohn, Heidi Fleiss . . . he'd hobnobbed with them all.
Given Marty's goal of building a billion-dollar business empire and meeting people who could help make that happen, Mr. Corbally was exactly the kind of man he needed. Ms. Schuchter met him through a socially connected boyfriend and immediately saw his potential. Likewise, he saw potential in her. To him, it looked as though she was rolling in money. They began to travel together, enjoying the comforts of some of Europe's finest hotels, the Hotel Plaza Athenee in Paris and Claridge's in London.
When Mr. Corbally was clearly in her thrall, she began to regale him with tales of her boss, whom she described as a reclusive and rich trader with a magic touch. As Ms. Schuchter had hoped, he was tantalized, and a meeting was arranged. (She couldn't be reached for comment.)
Mr. Corbally's arrival at the Greenwich mansion excited the gaggle of women who played at working in Marty's offices. He looked a little like Jason Robards, but with an impressive head of silver hair. His suit was custom-tailored in London and looked it. His gravelly voice made "Johnny Cash sound like a soprano," in the words of one of his old friends.
Ms. Schuchter escorted him into the trading room and introduced him to Marty, who used the alias "David Rosse." His host received him unshaven, in stocking feet, and began to talk. Marty insinuated he was much wealthier than Ms. Schuchter had led Mr. Corbally to believe. Marty told him that he wanted to make more than $100 billion in acquisitions. But the purpose was not simply to make money. "I've been all over the world," Marty explained. "I've seen everything, done everything. Been in Palm Beach -- lived down there." Now, all he wanted to do was trade every day and devote his wealth to finding cures for cancer and helping the world.
Marty had a proposition. He wanted Mr. Corbally to join his team, and help put together a group of professionals to make his dream happen. For this, Mr. Corbally would claim 1% of the value of the acquisition.
He didn't need a calculator to figure out that if Marty made $100 billion in acquisitions, $1 billion would be his. He signed on.
Making introductions was Mr. Corbally's primary career skill. Originally from Newark, N.J., he ended up in London, where his street- smart swagger was a hit in the upscale bars and clubs of Mayfair after World War II. There he befriended some illustrious contemporaries -- Lord White, Lord Hanson, and Sir Jimmy Goldsmith. A minor role in the Profumo affair, the sex scandal that rocked British politics in 1963, earned Mr. Corbally a few choice mentions in the FBI's secret files. He was, according to the bureau, an American businessman "who reportedly ran sex orgies in his London flat."
One former business associate called him the "world's greatest ladies man." His marriage to Gertrude "Gorgeous Gussie" Moran, a Wimbledon star who scandalized tennis by wearing lace-trimmed knickers, ended soon after the wedding. Later, Mr. Corbally introduced so many attractive ladies as "the future Mrs. Corbally" that fellow revelers didn't know how many former Mrs. Corballys there actually were. Once, when he was dining with some associates, a woman approached the table to say hello. Mr. Corbally drew a blank. "I suppose you don't recognize me with my clothes on," she said.
For Mr. Corbally, Marty Frankel couldn't have come along at a better time. The closest thing Mr. Corbally ever had to a real job was drying up. For many years, he had a close relationship with Jules Kroll, the founder of perhaps the world's best-known private detective agency. Part of what Mr. Corbally did was steer business to Kroll Associates, for which he received a commission.
Mr. Corbally also arranged introductions and did some minor-league snooping for clients ranging from Shearman & Sterling, the giant law firm, to Roy Cohn, the notorious New York power broker, but Kroll was his main source of income. He truly came into his own in the 1980s, when Kroll represented corporations in a flurry of takeovers. Mr. Corbally tapped into the pool of British peers and assorted business types he'd been cavorting with for years.
But times had changed at Kroll, and increasingly Mr. Corbally was viewed as a character out of the firm's past. "We are a very straitlaced firm," said Kroll's president, Michael Cherkasky. "You looked at him and said, 'Who is this guy?' "
Still, Marty Frankel's sense that Tom Corbally was the right man to jump-start his efforts to expand his businesses proved quickly to be correct. Shortly after their meeting, Mr. Corbally announced that his friend Robert Strauss would be happy to meet Marty.
Even for Mr. Corbally, Robert Strauss was an A-list contact. He was one of the most powerful lawyers in Washington, D.C. Nearly 80 years old, Mr. Strauss had been U.S. ambassador to the Soviet Union and a member of Jimmy Carter's cabinet. But his real clout came from his position as former chairman
Having met Mr. Corbally at social functions, Mr. Strauss didn't know him well, though he knew him well enough to return his phone calls. He thought of Mr. Corbally as a man who knew a lot of people in trouble. And for a law firm like Akin Gump, trouble inevitably translated into dollars.
Marty donned one of his few suits for his trip to Washington. It was Memorial Day weekend in 1998. Little business was being done anywhere, and Mr. Strauss had invited Mr. Corbally and Marty to join him at his apartment in the Watergate complex.
Mr. Corbally introduced his friend as "David Rosse." Marty told Mr. Strauss that he owned insurance companies, planned to buy more and wanted a large law firm to deal with competitive and regulatory issues. Marty quietly explained his philosophy of trading large volumes of U.S. Treasurys rapidly; this enabled him to capture small gains on each trade that added up to enormous profits overall -- with virtually no risk. Intrigued, Mr. Strauss even asked Marty for investment advice, which his visitor supplied with aplomb.
They all agreed that Marty's lieutenants should meet with an Akin Gump partner as soon as possible. Everybody shook hands, and Mr. Corbally and Marty left the Watergate triumphant.
Shortly after that meeting, L. Kay Tatum, a partner at Akin Gump who specialized in corporate transactions, got a call from Mr. Strauss asking her to meet with some prospective clients. Akin Gump was a big firm, and she certainly didn't talk with Mr. Strauss often. She happily agreed.
Meanwhile, Marty called John Hackney and ordered him to fly to Washington and join up with Tom Corbally and Kaethe Schuchter to meet Mr. Strauss. "Strauss wants me to start working on some of his investments for him," Marty bragged.
At Akin Gump's Washington headquarters, Mr. Hackney thought Mr. Corbally seemed nervous. He had never met the man before, but he'd been briefed by Marty, who told him that Mr. Corbally was "a weird, kinky old guy who likes to go out with young women." Mr. Hackney was wearing a conservative suit, a white shirt and a tie, but Ms.Schuchter showed up in a slinky outfit in red that barely covered her rear. To him, she looked "just so tacky."
The little group was ushered into a hushed conference room at the law firm, and Mr. Strauss introduced everyone. Mr. Hackney worried about Ms. Schuchter's "cheesy" outfit, but if Mr. Strauss noticed, he didn't react. Neither did the other Akin Gump staffers, although afterward they talked about how she looked like a hooker.
Mr. Strauss turned the meeting over to Kay Tatum, said his goodbyes and left. The little group discussed Franklin American. Marty's emissaries told her that "David Rosse" was devoted to the notion of giving to charity and had ties to the Vatican as well.
Mr. Hackney returned home to Tennessee, and the next day received a phone call from a buoyant Marty. Mr. Corbally, in on the conference call, glowingly reported to Marty on Mr. Hackney's stellar performance in Washington. "Bob Strauss really liked you and thought you were a nice guy," Mr. Corbally told Mr. Hackney. "If I were trying to typecast the CEO of an insurance company it would have been you." The conversation gave Mr. Hackney a strange feeling because in his view he hadn't been play-acting at all. It was "no big deal," he told Marty.
Marty was thrilled. Few business people would question the integrity of a person, or the soundness of a company, represented by the likes of Bob Strauss and Akin Gump. Having Akin Gump as his law firm, Marty figured, would make it easier for him to impress and fool the many people he needed to impress and fool to buy more insurance companies. He ordered Mr. Hackney to send the law firm a $100,000 check.
For Mr. Corbally, things were looking up, too. To reward his first efforts, Marty had made some grand gestures. He supplied Mr. Corbally with a Mercedes 600SL. He also agreed to buy a $5.8 million apartment for Mr. Corbally's use on Park Avenue. If all went as planned, there would be more riches to come. Mr. Corbally set out to forge additional connections that would make it happen.
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Vatican Official Is Fined for Helping SwindlerAssociated Press - September 10, 2004
A
federal judge fined a Vatican official $15,000 on Thursday but spared
him prison time for his role in the insurance scam of disgraced
financier Martin Frankel.
Msgr.
Emilio Colagiovanni, 84, must pay the fine within 30 days and cannot
leave the United States until he does, District Judge Ellen Bree Burns
ruled in New Haven, Conn.
Colagiovanni
pleaded guilty two years ago to charges that he falsely vouched for a
bogus charity Frankel set up to hide his theft of $200 million from
insurance companies in five states.
The
priest, who publishes a periodical of canon law for the Roman Catholic
Church, said he was "very sorry if anybody has been hurt of my doing."
Colagiovanni
could have been sentenced to five years in prison, but the judge said
that was not appropriate because of Colagiovanni's age and declining
health.
____________________________________________________________________________________
Frankel to seek reduced prison sentence
By John Christoffersen
The Associated Press (Jackson Clarion Ledger, MS) - December 10, 2004
NEW HAVEN, Conn. — Martin Frankel, the Greenwich financier who stole more than $200 million from insurance companies in Mississippi and other states to finance a lavish lifestyle, will ask for a reduced prison sentence based on his mental state and harsh prison conditions he suffered in Germany, his attorney said Thursday.
Frankel will urge the court today to impose a sentence of about 10 years, said his attorney, Bill Koch. He said he will cite larger fraud cases that resulted in similar sentences. A psychologist will discuss Frankel's mental condition.
"His mental and emotional conditions have played a contributing role before he was even involved in this crime," Koch said. "As a society, we have a history of granting some leniency to people who have mental illnesses."
Federal sentencing guidelines call for a sentence of more than 20 years, but that is before any reductions that may be granted, Koch said.
According to documents filed by federal prosecutors, Frankel says any prison time would violate his human rights. Koch, who filed his motion under seal, said he will not press that argument in court.
In papers filed in U.S. District Court, prosecutors support the calculated range, calling the scheme one of the worst of its kind to hit the insurance industry. But prosecutors also say Frankel should receive a modest sentence reduction for cooperation with authorities that helped lead to convictions of others in the scheme.
Frankel, 50, has pleaded guilty to 24 counts of fraud and racketeering. He admitted plotting to loot seven insurance companies in Arkansas, Mississippi, Oklahoma, Missouri and Tennessee that mostly sold funeral policies to the poor.
In 1999, Frankel triggered an international manhunt when he disappeared from his mansion in Greenwich. He was arrested in Germany four months later.
Frankel will also seek a reduction in his sentence for enduring harsh conditions while in prison in Germany, Koch said. Frankel, who is Jewish, was housed in the same prison where Jews were executed during World War II, had snow coming into his cell and faced some mental abuse, Koch said.
Frankel says the sentencing guideline calculation violates a treaty between the United States and Germany, according to court papers. He objects to the inclusion in the sentencing report of his alleged attempt to escape prison in Germany and to references to "special projects."
"Special projects" was a code name for Frankel's unfulfilled desire to have sex with a child, according to testimony at the trial of one of his aides.
"The defendant's theory, as the government understands it, is that he is being 'sentenced' for money laundering; for his alleged escape attempt; and for deviant and illegal sexual plans and activities," prosecutors wrote. "In fact, he is being sentenced for racketeering, wire fraud, and securities fraud, in part, by reference to the money laundering guidelines and in the context of a lot of other information."
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Frankel sentenced to more than 16 years in fraud cases
By John Christoffersen, Associated Press
Record-Journal, CT - December 11, 2004
NEW HAVEN — Former financier Martin Frankel was sentenced to more than 16 years in prison Friday for masterminding a scheme to loot insurance companies of more than $200 million to pay for a life of luxury cars and diamonds.
Frankel, who is diagnosed with a mental disorder and narcissistic tendencies, asked for leniency in a 45 minute speech that rambled from the Bible to St. Patrick, from apologies to justifications.
"Everybody looks at me as if I'm an evil genius," the balding 50-year- old man said, waving his hands. He wore a denim blazer over his prison scrubs.
Frankel apologized for the scheme but said he began stealing to help his girlfriend's children, who he said were being abused. When U.S. District Court Judge Ellen B. Burns questioned why he needed $200 million to help the children, Frankel said things just got out of hand.
"I wish to God I never ever heard about money, thought about making money," Frankel said, lamenting that he did not become a social worker.
Prosecutors said only a fraction of the stolen money went to Frankel's girlfriend. They said he was motivated by greed, sexual desire and a lust for the high life: a mansion in Greenwich, luxury cars, diamonds the size of nickels, and several girlfriends.
"I hear remorse, yet I hear him blaming everybody but himself," U.S. Attorney Kevin O'Connor said. "Whatever he feels today, he's $200 million and 15 years too late."
Burns sentenced Frankel to 16 years and 8 months. Frankel had pleaded guilty to 24 federal charges of fraud and racketeering.
His attorney, Bill Koch, asked for a sentence of about 10 years, saying Frankel was mentally ill. A psychologist testified Friday that Frankel has a personality disorder.
"He has a view of himself in grandiose and exaggerated ways," psychologist Madelon Baranoski said. "He believed he was a master trader. But he never traded."
In reality, Frankel spent 13 years in college without obtaining a degree and was fired from one of the few jobs he held, according to testimony.
Frankel's two sides were on display Friday. While he went on about wanting to help children, prosecutors said he didn't mention his "special projects" — a code for his unfulfilled desire to have sex with a child, according to the testimony of one of his aides.
Despite his disorders, Baranoski and another expert testified that Frankel understood what he did was wrong and had the ability to control his behavior.
Frankel showed that side of his personality as well, bragging to the judge that he made $150,000 in 30 stock trades in six weeks.
"Do you know how much money I gave away," Frankel said. "We had 10 Mercedes. I didn't drive any. I'm the one who dedicated my life and threw away my life to save the kids."
Frankel's attorney also said he was treated harshly while in prison in Germany, where he was arrested in 1999 after an international manhunt. But prosecutors said the mistreatment amounted to a toothbrush that was too firm for Frankel's liking.
Both sides agreed that Frankel cooperated with authorities in prosecuting other defendants in the case, but prosecutors said the cooperation was not an extensive as the defense suggested.
Frankel defrauded insurance companies in Arkansas, Mississippi, Oklahoma, Missouri and Tennessee through a trust set up to hide his involvement, since he was barred from securities trading because of a similar scheme he committed years before in Ohio.
Each month, Frankel and his associates drew up phony statements showing company investments paying off. He hid his involvement, setting up a bogus Roman Catholic charity, the Saint Francis of Assisi Foundation, to own the insurance companies.
"The last thing I ever wanted to happen to my insurance companies is for them to go under," Frankel said. "I feel ashamed that I allowed this to happen."
The scheme left a trail of victims, including policy holders, the insurance companies, their employees and the public because fraud drives up premiums, officials said. Authorities have recovered some of the money, in part by auctioning hundreds of diamonds Frankel obtained with the ill-gotten gains.
Frankel was one of 17 defendants in the case. All but one, who is a fugitive, have been convicted.
The defendants included two priests and, most recently, Thomas Bolan, a former New York prosecutor who became a powerhouse fund-raiser for the Republican party and the Catholic church and who introduced Frankel to top church officials.
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Onetime Fugitive Gets 17 Years for Looting Insurers
By Alison Leigh Cowan
New York Times - December 11, 2004
NEW HAVEN, Dec. 10 - Capping a bizarre tale that stretched from Greenwich, Conn., to Hamburg, Germany, Martin R. Frankel apologized in a courtroom on Friday for having looted $200 million from insurance companies he owned and received a prison sentence of nearly 17 years.
Senior Judge Ellen Bree Burns of Federal District Court imposed a term of 16 years and 8 months on Mr. Frankel, who used embezzled cash to finance his lavish lifestyle and then became an international fugitive. Sixteen of his accomplices have been convicted so far.
Before making her decision, the judge heard a long meandering statement of remorse from Mr. Frankel and testimony about his mental health and the size of the losses inflicted by his schemes.
Throughout the day's testimony, Mr. Frankel, who is 50, sat attentively in a brown leather chair, scribbling notes on a pad he had brought into the court in plastic sheeting because of the rain. Looking wan, he wore a tan prison-issued outfit with a blue jacket and had a fresh haircut.
"I want to apologize to everybody," he said, addressing victims of his fraud, which he continued out of habit to refer to as "my insurance companies" and "my policyholders."
"The last thing I wanted to have happen to my insurance companies was to have them go under," he said.
Mr. Frankel has been in jail since the authorities found him in Germany, carrying millions of dollars of diamonds and 12 passports bearing different names along with his picture. He fled the country in May 1999 after insurance regulators from Mississippi became suspicious. Authorities found the Greenwich compound where he operated his businesses deserted and fished out of the smoldering wreckage a to-do note saying "launder money."
He spent a year and a half in prison in Germany for having failed to pay taxes on the smuggled diamonds and for carrying the fake passports. He was extradited to the United States to be tried on fraud and racketeering charges.
Kevin J. O'Connor, the United States attorney for Connecticut, and John H. Durham, his deputy, presented evidence on Friday that Mr. Frankel used subterfuge to drain $200 million in assets from several insurance companies he acquired during the 1990's.
Mr. Frankel's court-appointed lawyer, Bill Koch, tried to counter that estimate because a loss above $80 million weighs heavily in sentencing. But the judge sided with the prosecutors.
She also agreed with two expert witnesses who concluded that Mr. Frankel knew right from wrong and could control his behavior despite some signs of mental disorder.
Mr. Koch sought to draw sympathy for his client by noting how stark the contrast was to his former life. Specifically, he noted that Mr. Frankel had only one unpaid supporter in the courtroom Friday. "That's all he has," Mr. Koch told the court, pointing out Joseph Ghattie, Mr. Frankel's former driver.
Later, Mr. Ghattie told reporters that his former boss was "a good man" and that he was there to "cheer him up."
The judge did not seem persuaded. Nor did she accept the argument that Mr. Frankel deserved a break because he claimed that conditions in the German prison had been harsh.
The judge did take into consideration the acknowledgement by prosecutors that Mr. Frankel had sought to assist them in recovering assets and pursuing his accomplices. But Mr. O'Connor said that given Mr. Frankel's roundabout way of answering questions, he would have made a poor witness at trial.
The most bizarre 45 minutes took place when the judge allowed Mr. Frankel to address the court. He used the opportunity to settle old scores, quote the Bible, crack a joke and plead for leniency. He said most of his misdeeds were caused by his love for a co-conspirator, Sonia Howe, and his desire to earn enough money to protect her two children from harm. The judge was a bit incredulous.
"So, you stole $209 million in order to take care of the children?" she said.
"No," he said. "Can I explain it to you?"
"I'm begging you to explain it to me," the judge said.
Mr. Frankel explained that once he began faking financial statements, the scheme would have unraveled had he stopped.
Mr. Frankel advised the judge to show compassion and to consider that punishment for the sake of deterrence does not work for the mentally ill. "If somebody is mentally ill," he said, "you shouldn't punish them because it won't stop other mentally ill people from doing it."
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Ex-Financier's Penalty Unchanged at Hearing
Associated Press - March 24, 2006
NEW HAVEN, Conn. — A federal judge ordered Martin Frankel on Thursday to serve the same sentence he got in 2004 for stealing $200 million from insurance companies: nearly 17 years in federal prison.
The former financier was ordered resentenced after a Supreme Court ruling last year gave judges more leeway in their use of sentencing guidelines.
During a brief hearing in U.S. District Court, Judge Ellen B. Burns said she saw no reason to alter the sentence.
Frankel, 51, wearing baggy brown prison scrubs and large glasses, stroked a long gray beard that he grew in prison as Burns reread the 200-month sentence.
He spoke briefly, asking Burns to note that he was at risk in prison.
Defense attorney William Koch elaborated after court, saying that the highly publicized case, which inspired two books, made Frankel "particularly vulnerable" to physical assaults in prison.
He will be eligible for release in 2015, according to the U.S. Bureau of Prisons.
Frankel was convicted of taking over and looting insurance companies in Arkansas, Mississippi, Oklahoma, Missouri and Tennessee.
He bought the insurance companies through a trust set up to hide his involvement, having been barred from securities trading because of a similar scheme years before in Ohio.
He claimed that he was investing the companies' assets, but instead stole the $200 million to pay for an expensive lifestyle, with a two-house compound in Greenwich, Conn., luxury cars and several girlfriends.
Prosecutors said Frankel was motivated by greed and a lust for the high life.
Frankel fled the country in May 1999 shortly after a meeting with Mississippi regulators, who questioned his management of several insurance companies.
He was arrested in Germany four months later and pleaded guilty to 24 counts of fraud and racketeering in 2002.
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US court drops suit state insurance officials brought against Vatican
By Francis X. Rocca
Catholic News Service - February 13, 2012
VATICAN CITY (CNS) -- A federal court in Mississippi Feb. 2 dismissed a 10-year-old lawsuit accusing the Vatican of complicity in a scheme to bilk more than $200 million from insurance companies.
The state insurance commissioners of Mississippi, Tennessee, Missouri, Oklahoma and Arkansas had filed the lawsuit in 2002 charging the Vatican and Msgr. Emilio Colagiovanni with racketeering and fraud.
Jeffrey S. Lena, an attorney for the Holy See, noted in a statement that the dismissal "was not the result of any settlement agreement," and that the insurance commissioners had requested the court's action "of their own accord."
The end of the lawsuit demonstrates that "all too frequently there's an inappropriate jump, based on an incomplete record, made between what people thought happened and what happened," Lena told Catholic News Service.
The commissioners claimed that Msgr. Colagiovanni and the Holy See had aided financier Martin Frankel in purchasing small, ailing insurance companies, whose assets he then siphoned off, leaving them unable to pay claims.
"The plaintiffs knew that the Holy See never received any money" from Frankel's scheme, but chose to sue anyway, Lena said.
Lena noted that a federal court in Connecticut, using the appropriate procedures of international law in 2001, sought and obtained the Vatican's cooperation with an investigation of Frankel's scheme. The Vatican provided that court with relevant sworn testimony by Cardinal Giovanni Battista Re, then-prefect of the Vatican's Congregation for Bishops. But the plaintiffs in the Mississippi case never made any such attempt, Lena said.
The case itself followed a pattern of negligence by the insurance regulators, "who allowed Frankel's nine-year scheme to persist unabated" despite "highly unusual and improbable investment activities" and other "red flags" raised by the Frankel and his associates, Lena said in his statement.
Msgr. Colagiovanni, a retired judge of a Vatican court, was arrested during a visit to Cleveland in 2001 on charges of wire fraud and conspiracy to launder money.
In 2002, he pleaded guilty to federal counts of conspiracy to commit wire fraud and money laundering. The same year he pleaded guilty in state court in Mississippi to one count of conspiracy to decide state insurance regulators. In 2004, he was fined $15,000 by a federal judge and placed on five years' probation.
According to the commissioners' lawsuit, Msgr. Colagiovanni and the Vatican helped Frankel purchase companies, through charitable foundations and with a letter claiming the Vatican had given funding to Frankel's St. Francis of Assisi Foundation.
Msgr. Colagiovanni admitted in 1999 that he had signed the letter even though he knew the claim was false, because Frankel had told him he wanted to donate millions of dollars to Catholic charities anonymously through the foundation.
Lena noted that Frankel set up the foundation in the British Virgin Islands only after the Vatican's then-Secretary of State Cardinal Angelo Sodano rejected in writing a proposal by Frankel's associates to establish it in the Vatican.
Frankel, who is now in prison in the United States, also allegedly tried to use the Vatican bank account of the Monitor Ecclesiasticus Foundation, a foundation which Msgr. Colagiovanni headed as president. The Naples-based foundation published a canon law journal but was not an agency of the Vatican, Lena said.
"That Colagiovanni was ever in any way a representative of the Holy See is the fantasy that animated the plaintiffs' 10-year case," Lena said.
The 92-year old priest, who now lives in a nursing home in Italy, was already suffering from the early stages of Alzheimer's during his dealings with Frankel, said Lena, who concluded that "in the end, this was an elder abuse case."
As Lena told CNS, the commissioners had requested the court's action, and in a statement to CNS in Washington, the commissioners said that filing the motion for dismissal "was not filed due to any perceived defect or deficiency in the receivers' evidence or in their legal theories of liability against the Holy See."
Their evidence, it said, included "the federal fraud conviction of Monsignor Emilio Colagiovanni for his role in assisting in Martin Frankel's conspiracy to loot these seven insurance companies."
The decision to dismiss their claims "was an economic one," according to the statement.
"Given the passage of time and the lack of progress in the case, combined with significant recoveries obtained by the receivers from other parties as well as successful asset recovery efforts," it said, "the receivers determined that it was not in the financial interest of their estates, or to the claimants of their estates, to pursue the case against the Holy See further."
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