About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

GAO-01-990R 1 (2001-08-02)

handle is hein.gao/gaocrptansx0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 August 2, 2001 The Honorable Michael G. Oxley Chairman Committee on Financial Services House of Representatives Subject: Briefing Slides on Martin Frankel's Alleged $200 Million Insurance Scam As you requested, this report transmits to you our briefing slides describing insurance regulatory oversight and information sharing in the matter of a highly publicized insurance investment scam exposed in May 1999. (See enclosure I.) These slides present the results of our report Insurance Regulation: Scandal Highlights Needfor Strengthened Regulatory Oversight (GAO/GGD-00-198, September 19, 2000). We used these or similar slides in, at last count, 15 briefings to various federal and state officials and national organizations. Enclosure II lists the various organizations and dates on which the presentations were made. These slides detail the alleged embezzlement of more than $200 million in insurance company assets over nearly an 8-year period by Martin Frankel and associates. Mr. Frankel, a former securities broker who was barred from that industry in 1992, allegedly migrated to the insurance industry and continued to operate as a rogue by engaging in illegal activity. The specific objectives of these briefings were to (1) outline the alleged scam and (2) describe weaknesses in oversight and information sharing by insurance regulators. Throughout the 1990s, Martin Frankel, with assistance from others, allegedly obtained secret control of entities in both the insurance and securities industries. He is alleged to have anonymously acquired and controlled insurance companies in several states and, despite being barred from the securities industry, to have exercised secret control over a small securities firm. Using the name of this securities firm, Mr. Frankel allegedly took custody of insurance company assets and provided false documents on investment activity to disguise his actual purpose. Instead of managing these assets in a prudent manner, he allegedly diverted them to other accounts he controlled and used them to support the ongoing scam and his lifestyle. The scam was finally exposed after insurance regulators in Mississippi took enforcement action against three of the Frankel-connected insurers by placing them under regulatory supervision. Weaknesses in key insurance regulatory oversight activities, extending over several years, contributed to delays in detecting the investment scam. We found inadequate tools and measures for assessing the appropriateness of insurance company purchasers, analyzing securities investments, evaluating the appropriateness of asset custodians, verifying insurers' assets, and sharing information within and outside the insurance industry. We also found GAO-01-990R Briefing Slides on Insurance Scam

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most