Fugitive financier's twisted trail

Vanished: One of the biggest mysteries in this case of missing money is the power its central figure wielded over other people's lives.


GREENWICH, Conn. -- No one was home when firefighters got to the tree-shrouded mansion on the evening of May 5. Inside, mounds of documents were burning in two fireplaces and in a metal filing cabinet, scorching nearby furniture.

The firefighters doused the flames and called police, who found strange notations on some of the charred documents. The top line on a handwritten "to-do" list pulled from the fire read, "Launder money." The next line: "Get $ to Israel get it back in."

Greenwich detectives and federal agents have been looking ever since for the owner of the $3.1 million house, Martin R. Frankel, 44. They also can't seem to find between $200 million and $3 billion in other people's money that Frankel, under several aliases, had been managing.

Authorities believe that they are tracking one of the biggest financial schemes in history. They won't talk about the case, but the trail Frankel left is so twisted that it has splashed this obsessively private man across the international news media.

The trail touches Walter Cronkite, Lee Iacocca and the Vatican. It veers into personals ads and illicit relationships and a 22-year-old woman hanged to death at another secluded estate.

One former boss blames Frankel for the loss of his wife, daughters and career. A series of small Southern insurance companies who trusted Frankel with their assets no longer appear to have any money.

If nothing else, the man's disappearance two months ago is finally accomplishing one thing he seems to have both desired and dreaded for most of his life: Marty Frankel of Toledo, Ohio -- also known as Eric Stevens, David Rosse and Mike King -- is making a name for himself.

One of the biggest mysteries of the Frankel case is the power its central figure has wielded over other lives.

At 6 feet and less than 150 pounds, Frankel is physically awkward, pale, bushy-haired, with eyes distorted by thick glasses. He has always dressed sloppily, favoring jeans or baggy shorts and rumpled shirts.

Frankel graduated from Toledo's Whitmer High School in only three years, but he never completed his studies at the University of Toledo. His father, Leon, who died last fall, was a magistrate for domestic relations court, and his mother, Tillie, retired as a town clerk.

He grew up the youngest of four children in a tranquil, middle-class neighborhood with tidy ranch-style homes built in the 1950s, endless lawns, a swimming pool and tennis courts nearby.

Neighbor Bernie Solomon remembers the youngest Frankel boy hiring other children to cut the grass on the sly so his parents would think he had done it.

In a "Biography/Resume" that Frankel prepared about 10 years ago, he claimed to have scored a 194 on the Stanford-Binet IQ test during elementary school -- "one of the highest scores ever registered by a child," he wrote.

On the same resume, Frankel said he began studying financial markets in 1978, though he apparently worked in real estate until the mid-1980s.

Advice, then a job

In the summer of 1985, he walked into the Toledo offices of the New York brokerage firm Dominick & Dominick. The branch was run by the husband-and-wife team of John and Sonia Howe Schulte.

At first, Frankel sought advice about playing the stock market. But within a year, he asked for a job. Frankel got his own small office at the firm in late 1986.

He immediately had his bosses bring in extra computers and news wires so he could practice what he said was a new theory of investing called "informational analysis."

"He saw the whole system," said longtime friend Edward Krauss. "He would see peacock feathers going down in one country and gold up in another, and he'd say, `Sell Ford Motor.' "

There was a mystical side to the method. "He had to look at his astrology charts to go to the bathroom," said John Schulte, who said Frankel never actually did any trading, only talking. Schulte said he got fed up after less than six months and fired Frankel in 1987.

Sonia Schulte stayed in touch with Frankel, who was living with his parents. He had a strange, reverse charisma, John Schulte said, with gawky flaws that could seem charming and added to the impression that this was a mind that simply worked differently from others.

Then, one Friday in April 1989, John Schulte drove his Mercedes home and found that his wife and two young daughters were gone. She had left him, he said, for Frankel.

This was a busy time for Frankel. After leaving Dominick & Dominick, he had set up a limited partnership called the Frankel Fund and sought investors to let him manage their money.

John Schulte said that Frankel took two significant clients from him, and that once his wife left, the effort to drain away business intensified.

Frankel began marketing another partnership called Creative Partners Funds, promising "Never a down month" and incredible returns on investments -- by 1990, the funds boasted of a 12-month gain of more than 99 percent.

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