Broker Vanishes With Clients' $3B

By DENISE LAVOIE, AP

GREENWICH, Conn. (AP), 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 in this rich New York City suburb. 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 Greenwich 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 could not 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 kids, but investigators suspect it was only a front for fraud.  A federal grand jury in Bridgeport 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 filed in federal court in Bridgeport.

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.  No attorney has identified himself as representing Frankel, and family members in Ohio, including Frankel's mother, told The Blade of Toledo that they had not heard from him in several weeks. He apparently was not married.

Law enforcement officials said Frankel used several aliases, including the name of his bodyguard, after being barred from trading by the Securities and Exchange Commission in 1992.  All of the insurance companies are owned by Thunor Trust, which lists Tennessee-based businessman John Hackney as trustee. Hackney did not return a call Tuesday.

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.

Frankel's stone mansion is in Greenwich's ``backcountry,'' a secluded area of multimillion-dollar estates, woods and horse trails. Since the fire, the long, hilly driveway that leads to his home and several other houses has been guarded by police.   Frankel, a native of Toledo, Ohio, had converted his $3 million home into a maze of offices with more than 80 computers and wide-screen televisions tuned to financial news channels. Frankel also owned a home next door.

Neighbors complained repeatedly about cars coming and going day and night. But the activity only increased, said Phil Russell, a lawyer who represents three neighbors on the cul-de-sac. Russell said Frankel did not socialize with his neighbors and never told them what kind of business he was in.  The FBI and federal prosecutors in Connecticut refused to comment on the case Tuesday.

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Martin Frankel NPR's Eric Westervelt reports on the wild world of Martin Frankel, the high school dropout and failed securities broker who, authorities say, made off with 350-million dollars in one of the largest insurance fraud schemes ever.

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