Fugitive U.S. financier captured, FBI reports

Connecticut man wanted in insurance fraud

September 05, 1999|By NEW YORK TIMES NEWS SERVICE

Martin R. Frankel, the Connecticut money manager suspected of defrauding insurance companies of hundreds of millions of dollars before fleeing overseas, has been captured and is in federal custody, an official with the FBI said yesterday.

The circumstances of his capture were unclear last night because FBI officials withheld details of his arrest. But the official confirmed that Frankel had been arrested four months to the day after fleeing his Greenwich, Conn., mansion for Italy, where he relied on business associates, a cache of diamonds and a streak of good luck to stay a step ahead of law enforcement officials.

It seemed likely that Frankel had been apprehended while on the run. Hugh F. Keefe, a lawyer who represents Frankel, said early yesterday evening that he was not aware his client had been apprehended. Asked if Frankel might have turned himself in as part of a negotiated deal, Keefe laughed.

The lawyer added that he had spoken to a federal prosecutor yesterday morning. "He asked me if Frankel was still alive," Keefe said. "I have a feeling he knew more than he was letting on."

The arrest appeared to begin a concluding chapter in what authorities have described as one of America's largest and most bizarre cases of insurance fraud.

For eight years, federal law enforcement officials and prosecutors charge, Frankel lived a luxurious life on the money he claimed to be managing for a string of Southern insurance companies.

His operation involved scores of people, including prominent lawyers, insurance industry executives, private detectives, a coterie of women, and priests with ties to the Vatican, all of whom say that they were dupes of a man they thought was a brilliant speculator in stocks and bonds.

If official accounts are accurate, Frankel, 44, also had remarkable success in fooling state insurance regulators. His strategy was to buy small, troubled insurance companies through intermediaries, then manage the sometimes considerable investment assets those companies held against future policy claims.

For years, Frankel claimed to be earning returns that were well above industry norms, but he was not exposed as a fraud until after he fled the country, leaving behind smoldering documents in one of his several houses in Greenwich.

A native of Toledo, Ohio, Frankel first ran afoul of financial regulators in the early 1990s, when a small investment fund he ran generated steep losses for retirees who entrusted their savings to him.

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