Martin Frankel: Sex, Greed and $200 Million Fraud

To prepare for his ultimate con, Frankel immediately set out to become an expert on the Catholic Church and on St. Francis of Assisi in particular. He sent his helpers out on a mission to scour bookstores and the Internet for every possible volume they could find on the subjects. Dozens of books on St. Francis and other Catholic saints soon made their way into Frankel's library...and a Franco Zefferelli film about St. Francis, which Frankel watched over and over again. It was not long before Frankel could give a complete recitation of the thirteenth century saint's life and also discuss papal encyclicals.

At first, the proposed St. Francis of Assisi Foundation seemed like a very good idea. Bolan, Jacobs and the monsignor were all impressed with "Rosse's" knowledge of Catholic saints and institutions and promised to help introduce the proposal to decision makers in the Vatican. By the time the meeting in Rome took place, the idea, as outlined in an eight-page letter from "Rosse" to Bolan, had changed materially: the new foundation would be headquartered in Liechtenstein; would have "secret" bylaws designating "Rosse" as the original grantor of $55 million; $50 million of the funds would be forwarded to a U.S. brokerage account which "Rosse" would control exclusively; the remaining $5 million (which was supposedly just the beginning) would go into an account controlled by the Vatican.

As if these new conditions were not controversial enough, "Rosse" added the following stipulations: "Our agreement will include the Vatican's promise that the Vatican will aid me in my effort to acquire insurance companies," by permitting a Vatican official "to certify to the authorities, if necessary, that the source of the funds is the Vatican."

Fortune Magazine could not understand how "Rosse's" letter to Bolan, a prosecutor and judicial advisor, did not set off all kinds of alarms. "In short, Frankel/Rosse appears to be requesting that the Vatican front for him as a money launderer in return for a 10% cut of the funds (looted from his U.S. insurance companies)."

Apparently somebody at the Vatican was paying attention because the final deal was different from what had been proposed by "Rosse" and Bolan: David Rosse would form the charitable St. Francis of Assisi Foundation, but it would not be conspicuously connected with the Vatican. Instead, the charity would be connected to Monsignor Colagiovanni's Monitor Ecclesiasticus. Father Jacobs became the president of St. Francis and Bolan became a trustee. Many aspects of the original $55 million financial deal remained in place.

There was something for everyone in this arrangement: Frankel had purchased the "immaculate" connection that should keep the regulatory community from looking too closely at his insurance empire and the church would benefit from a safe distance in the fruits of Frankel's crooked dealings. It was almost too clever.