BULL STREET - The art of the Con

Insurance

I have always believed that if the insurance examiners ever did a thorough count of the securities held by the average small insurance company in the United States they would get a very unpleasant surprise. They would find that a substantial amount of each company’s assets were impaired by counterfeits, forgeries and stolen securities purchased for pennies on the dollar. If I fervently believe that, I have often wondered why the regulators didn’t adhere to the same concept and thoroughly check the books. I wonder if they are really not frightened to do it because of what they would uncover. Perhaps, I am just dreaming but I don’t think so.

The insurance industry has always been a fertile field for crime. Regulations vary dramatically from state to state and the industry has little or no oversight. It is a simple matter to buy or print counterfeit securities and use them as part of your asset base if you are so inclined. Moreover, trading other guys damaged assets for the insurance company’s cash is also something is a walk in the park with underpaid insurance examiners, political appointees acting as insurance commissioners and in many cases states that have laws with no teeth. For the right price, in many states you can buy approval for whatever you want for the right price.

Certainly some of the above is changing but by and large, it historically has been an industry that looks like the wild west. Bankruptcies, illegal activities and lawsuits have plagued the insurance industry from top to bottom. However it is still easy pickings and that is exactly what Martin Frankel determined independently

Martin was into an upper-middle class born in Toledo in 1954. He was an excellent student throughout his scholastic career but was never anywhere close the well-liked. For the most part, he was smarter than his cohorts lauded it over them, not earning Martin any Boy Scout merit badges. However, as time went on he became adverse to taking exams and in college became a drop-out. However, while temporarily retired and living off of his parents, he discovered the world of high-finance and considered it his oyster.

Marty went to work for John Schulte and Company where he hoped to become financially independent through a career in the brokerage business. He broke every rule in the book while at the firm and excused his action with the excuse that he was intellectually superior to everyone else and if the Schulte’s were patient he would make them rich. Marty became stultified when it became time to solicit a trade or put in an order and was going nowhere in the stock brokerage business in a hurry.

However, he was caught in bed with Schulte’s wife and barely escaped with his life. However, in order to get even he told Schulte’s wife Sonia that her husband was molesting their two daughters and Sonia went ballistic. She brought action against her husband who by this time had enough of Frankel and became enraged. Frankel did the smart thing and left town in a hurry.

He opened a firm called Winthrop Capital and which became a branch of LaSalle Street Securities operating out of his own home. For good measure he took one of John Schulte’s best friend with him when he left. Headed quickly downhill he also took out a series of ads claiming that his firm guaranteed clients against loss. His next move was to create the Frankel Fund with some new partners and was soon able to raise about a million dollars. The fund was soon decimated by stock market losses and two of Frankel’s associates called the cops. Frankel repaid the losses out of their accounts. For his gratuitous actions Frankel was bared by the Securities and Exchange Commission from the industry for life.

That did not set Martin back for one second, he and his now partner, Sonia Schulte went in partners on a smaller fund which also suffered from acute pangs of ill performance. However, Marty was now into bigger things and he decided to buy the Franklin American Life Insurance company of Franklin, Tennessee. He had already established the Thunor Trust with an imaginary balance sheet of $3.7 million dollars just for that purpose. The company had been on last legs and the insurance regulators in Tennessee were overjoyed to see it acquired. Now of course, Frankel had come into $20 million of reserves that he could play with . He used the insurance companies’ reserves as his piggy bank and immediately paid all his debts out of this fund. By the end of 1998, Martin had purchased insurance companies with assets of over $400 million.

Now that he had established some degree of legitimacy he wanted to go for even bigger fish. He started cultivating a series of well positioned but not to bright people who had their hooks into business, government and religion. The first was Thomas Bolan, the founder of New York’s Conservative Party and ex-law partner of Roy Cohn. Bolan was a friend of President Ronald Reagan and a respected member of the Catholic Church. His next acquisition was Father Peter Jacobs who was celebrated for his services to the poor community of New York. Jacobs was well known in New York and the Vatican where he was always well received. The third member of this triumvirate was Monsignor Emilio Colagiovannia, also well connected in Rome and the president of the Monitor Ecclesasticus Foundation established by the archdiocese of Naples.

Naturally, Frankel cultivated all of these men under an alias, that he was going to donate $50 million to Catholic charities. Frankel or David Rosse as he became known studied his subject thoroughly and devised one of the great scams of all time to bring these men into his fold. However, the bottom line was simply the fact that Frankel would fund a brokerage account that he would run in exchange for the Vatican helping him buy insurance companies. In retrospect what he was really offering was to give the Catholic Church 10% of the money that he was able to scam out the insurance companies he acquired with their help. The deal was closed with a piece in it for all of the players. Everyone was pleased.

Marty was now moving into big-time society and purchased an expensive mansion in Greenwich on which he built high fences surrounding the entire property because of continuing sense of paranoia. He moved in with Sonia Schulte and her two daughters along with some of his employees. As his wealth grew, he treated his employees amazingly well and in turn received a degree of unmitigated loyalty. There was nothing he couldn’t and didn’t buy for his loyal employees and himself. The females provided him with extensive sex and loving care. The relationship was idyllic and totally symbiotic. Frankel’s sexual gravitations soon turned toward sex with multiple people along with fetishes on just about every subject available. Sonia had enough and packed it in with her daughters.

Marty’s paranoid personality started providing for the day when everything began to fall apart. He put his money into diamonds and big bills and kept his passport handy. The inevitable day soon came arrived and when the police arrived at the mansion, Frankel and his favorite women were already long gone. He continued to live like a king while touring Europe incognito with his entourage of hot looking females. Eventually he was apprehended at the Hotel Prem in Hamburg along with Cindy Allison, one of his female cadre.

Frankel in fairly short order had wrecked no less than five insurance companies, he had compromised and embarrassed the Vatican and created an area of destruction that seemed to have sucked in every single person that had befriended him. His swindle was so contrived and accomplished by literally no assets that it caused insurance laws to be rewritten throughout the country. Frankel will probably a substantial part of the rest of his life in jail and will soon be forgotten but the laws that will be created to insure that this will never happen again will live long after he is only a memory. We will then really have something to be grateful for to Martin Frankel for having created.

 

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