FBI Says Money Manager Frankel Has Been Captured In Germany
SEP 04,1999
NEW HAVEN, Conn. -(Dow Jones)- 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.
Frankel told authorities as they took him into custody "You got me," FBI
Special Agent Michael Wolf said Saturday, the Associated Press reported.
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
Seized from his room were a computer and its contents and an undetermined
amount of cash and diamonds, Wolf said. He couldn't 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 didn't elaborate on Allison's
relationship to Frankel. She was detained for questioning, but hasn't been
charged.
The arrest ends an international manhunt which began when Frankel, 44,
disappeared more than four months ago.
Authorities found piles of documents burning in Frankel's high-security
mansion in Greenwich on May 5. An arrest warrant was issued July 14.
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 a Southern border state, 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.
Frankel allegedly controlled Thunor Trust, set up in 1991 by businessman
John Hackney to buy small, struggling insurance companies. Through his lawyer,
Hackney has denied any wrongdoing and said he is a victim of Frankel.
Those insurance companies believed their policyholder money was being
invested through Frankel's brokerage firm, Liberty National Securities. But
apparently, no trades were ever made. Instead, prosecutors say Frankel stole
the money.
Also missing is as much as $1.98 billion from the St. Francis of Assisi
Foundation, which investigators say was established by Frankel in the British
Virgin Islands last August.
Wolf said a tip led authorities to Frankel, who they had been tracking for
some time. Frankel was believed to have lived for several weeks in Italy
earlier this summer.
Frankel may have been financing his run with more than $10 million in
diamonds and gold he bought before disappearing.
Law enforcement officials have said Frankel used several aliases after being
barred from trading by the Securities and Exchange Commission in 1992,
including David Rosse, the name of his personal bodyguard.
Frankel has been described by some investors as the Hugh Hefner of high
finance, keeping a live-in retinue of young women he met through personal ads.
Frankel has described some of them as "ex-girlfriends," but it isn't clear
how many of the women he had sexual relationships with. At least some of the
women performed office work at Frankel's unlicensed securities brokerage.
Investors say Frankel was gangly and neurotic, but offered an impressive
biography and dedication, and that charmed them into trusting him with their
money. A few powerbrokers lent their support to his purported charity in the
Virgin Islands, but Frankel was accused of using other big names - including
retired CBS newsman Walter Cronkite and former Chrysler Chairman Lee Iacocca
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