Frankel Pleads Guilty, Five States Sue Vatican over Insurance Frauds

On May 14, 2002 Martin R. Frankel, 47, a former fugitive, pleaded guilty to 23 federal counts of racketeering and wire and securities fraud. Meanwhile, insurance commissioners for five states sued the Vatican in federal court in Mississippi. During the plea Frankel admitted to creating what John A. Danaher III, a U.S. Attorney, characterized as a ?massive and complete fraud scheme? that diverted approximately $208 million from insurance premiums paid to investment and insurance companies he created or controlled in the 1990s. Frankel faces a maximum sentence of 150 years in prison and $6.5 million in penalties. In exchange for his plea and a promise to help the government recover millions of dollars his victims, Frankel has the prospect of a lesser penalty. Already Frankel has forfeited $88.1 million in assets. His counsel Jeremiah Donovah said his client is contrite and penniless. The suit illustrates the growing tendency to sue foreign sovereigns and their instrumentalities when victims, here state insurance commissioners, believe they have participated in frauds in the U.S.