Posted Tuesday, June 22, 1999

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London, June 22, 1999

Broker on the run as £2bn vanishes

by Barbara Mcmahon in New York

FrankelFBI agents in the United States are looking for a rogue stockbroker who could have pulled off one of the biggest frauds ever.

At least £218 million is missing after Martin Frankel's disappearance from his home in the expensive suburb of Greenwich, Connecticut - but authorities fear up to £2 billion may have been taken. "It could be one of the biggest movements of money of all time," said a consultant who worked for Frankel.

A warrant for the arrest of the 44-year-old, a reclusive financier, was issued after agents discovered a complex web of fake companies set up to siphon money from insurance clients.

Frankel is believed to have systematically drained funds from companies in at least six American states, siphoning off up to £1 billion. In another fraud, the St Francis of Assisi Foundation, a Catholic charity formed by Frankel, may also have lost £630 million.

Frankel is said to have persuaded people that he was a Monsignor from Rome when in fact he was a Jewish stockbroker living in one of the wealthiest parts of America.

Authorities describe him as an eccentric but brilliant college drop-out who conducted his affairs from his multi-million dollar stone mansion. His 12-room house was transformed into a bizarre clearing house, crammed with up to 100 computers linked to satellite data feeds.

Armed guards patrolled the property and up to 10 luxury cars were often parked in the drive, leading neighbours to fear the home was a drug gang headquarters.

The money manager, who always wore jeans and lumberjack shirts, was obsessed with secrecy. His bedroom was furnished with three 32-inch television sets wired to cable and satellite TV, along with security cameras. "He didn't like to be disturbed," explained one former employee.

The FBI believe Frankel set up the sophisticated fraud through insurance clients who invested with his Liberty National Securities so he could purchase government bonds on their behalf. At least some of the missing money is believed to have been channelled into Switzerland and several of the companies he dealt with are now bankrupt or in receivership.

The alleged fraud was discovered after firemen were called to the house and found a burning file cabinet and two fireplaces stuffed with smouldering shredded documents. One scrap of paper on a to-do list read: paper on a to-do list read: "Launder the money".

In addition to finance, Frankel dabbled in astrology. According to an affidavit filed in court, charts found in his home sought answers from the stars ranging from Frankel's possible imprisonment to mundane financial matters.

According to papers filed by investigators he wrote: 1. Will I go to prison? 2. Will Tom turn me in? 3. Should I leave? 4. Should I wire the money back from over-seas? 5. Will I be safe?

© Associated Newspapers Ltd., 22 June 1999 Terms and Conditions This Is London

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