Miss. ending insurance fraud suit after 11 years
Saturday, September 29, 2012
JACKSON, Miss. (AP) — Mississippi officials are dropping the remnants of an 11-year-old lawsuit after collecting as much money as they think they can get in reparations for insurance fraud by a convicted financier who claimed Vatican ties.
Attorneys for Mississippi Insurance Commissioner Mike Chaney filed a motion Wednesday in U.S. District Court in Jackson, Miss., that seeks to voluntarily dismiss the last three defendants, including an elderly priest. Claims against the Vatican were dropped earlier this year. A judge has not ruled on the motion.
The lawsuit originally was filed in 2001 by Cheney's predecessor, George Dale, after financier Martin Frankel bilked insurers in five states out of $200 million during the 1990s. Insurance regulators in Tennessee, Oklahoma, Arkansas and Kansas joined the lawsuit.
Frankel is in prison after pleading guilty to 24 counts of fraud and racketeering.
The last defendants in the lawsuit were Monsignor Emilio Colagiovanni, a priest in his 90s, the Monitor Ecclesiasticus Foundation, and Endurance Investments, Ltd. The motion said $154 million was recovered from other sources.
"Each of the remaining defendants is considered uncollectible ... Therefore, Plaintiffs have determined it is not economically justified to engage an expert and take the Court's time to prove up damages and seek a default judgment," the motion said.
Frankel, who had already been barred from securities trading, bought small insurance companies in the 1990s, often using an alias, David Rosse, and third parties to hide his involvement. He would buy a company, loot it, and then use some of the money to buy another one. The companies were left insolvent, and their policies were taken over by other insurers.
Frankel came to believe the Roman Catholic Church could help bring the appearance of legitimacy to his scheme.
Frankel cultivated a relationship with Colagiovanni and formed a charity, the St. Francis of Assisi Foundation to Serve and Help the Poor and Alleviate Suffering, and set it up in the British Virgin Islands in 1998 to deceive regulators about the source of money he was using to buy insurance companies, court records said.
The lawsuit said Colagiovanni agreed to use the Monitor Ecclesiasticus Foundation and its Vatican bank account to work with St. Francis and to vouch for Frankel's charity with regulators. In exchange, Colagiovanni was to get $5 million to use on charitable projects, court records said.
A federal judge in Connecticut fined Colagiovanni $15,000 and gave him a suspended sentence in 2002 after he pleaded guilty to one count of conspiracy. He was given probation on state charges in Mississippi the same year after prosecutors said he cooperated with the investigation.
The Vatican was added as a defendant in 2002, with Mississippi insurance officials saying Colagiovanni was acting as an agent of the Vatican.
The claims against the Vatican were dropped in February. At that time, a lawyer for Mississippi said the plaintiffs stood by the allegations against the Vatican and dropped it from the lawsuit only to avoid an even longer fight over jurisdiction. The Vatican is recognized as a sovereign state.
Vatican attorney Jeffrey Lena said Friday that the dismissal of the lawsuit was an "important event" and referred to a previous statement, which said the Holy See was "the unwitting victim of Frankel's fraud."
Lena's statement also said reports — by the U.S. General Accounting Office and the Tennessee Comptroller of the Treasury — show that insurance officials missed opportunities to stop Frankel's scheme and the lawsuit "effectively shifted the spotlight from the regulators' own conduct."
Frankel was not a defendant in the lawsuit in Mississippi. His assets, including hundreds of diamonds, 21 cars and SUVs, an airplane and two mansions were auctioned off years ago to provide restitution.
Frankel set fire to one of his mansions and fled the country in 1999. Authorities searching the mansion found a to-do list at the Connecticut home with the top priority listed as "Launder more money NOW." He was arrested in Germany four months later. He pleaded guilty to 24 counts of fraud and racketeering in 2002.
Frankel is serving a nearly 17-year federal sentence. He's scheduled for release in 2015.
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