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Briefing Slides on Martin Frankel's Alleged $200 Million Insurance Scam

GAO-01-990R Published: Aug 02, 2001. Publicly Released: Aug 02, 2001.
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Highlights

This report provides information on a highly publicized insurance investment scam exposed in May 1999. Martin Frankel, with the assistance of others, allegedly obtained secret control of entities in both the insurance and securities industries. Instead of managing the assets of these companies 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 placed three of the Frankel-connected insurers under regulatory supervision. Weaknesses in key insurance regulatory oversight activities, extending over several years, delayed detecting the investment scam. GAO 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 of the insurance industry. In addition, GAO found weaknesses in the support services provided by the National Association of Insurance Commissioners, a voluntary association of state insurance regulators.

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Full Report (33 pages)

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Topics

Information Management
EmbezzlementFraudInsurance regulationInteragency relationsSecurities fraudSecuritiesComputer matchingSecurities firmsFinancial instrumentsSecurities industry