Even in hiding, Martin Frankel never lost his taste for luxury. While authorities scrambled across continents to find him, Frankel checked into the $300-a-night Hotel Prem in Hamburg, dined at the La Mer restaurant downstairs and enjoyed a stirring view of Lake Alster.
He kept in touch with his lawyer in Connecticut and followed the news about his case on television. Rarely alone, he lived with a 35-year-old woman who ran errands and accompanied him during the occasional stroll through the hotel's plush gardens.
Not a shabby lifestyle for one of the world's most wanted fugitives, the man authorities allege orchestrated one of history's largest--and easily strangest--insurance scams. And not a very useful lifestyle for someone trying to avoid discovery.
No wonder, then, that he appeared unruffled when German authorities, acting on a tip, caught up with him Saturday night. "He acted like he expected us at any moment," said a German investigator involved in the arrest. "There was no sign of surprise or alarm on his part. He seemed relieved that it was finally over."
U.S. authorities have prepared an extradition request for Frankel, who was arraigned yesterday and held on charges of holding a fake British passport, an allegation unrelated to insurance fraud, according to his lawyer, Hugh Keefe. A passport from a European Union nation such as Britain would have allowed him to move with relative ease across borders, since EU nations have greatly reduced, and even eliminated, serious identity checks for individuals from other EU countries.
Authorities suspect that Frankel looted as much as $350 million from a group of struggling insurance companies, then spent the money on an obsessively finicky life in a heavily guarded Connecticut mansion, filled with young ladies he placed on his ever-expanding payroll.
He fled the United States in May, after regulatory officials in Tennessee and Mississippi grew suspicious of some of his companies in those states and prepared to move against him.
Frankel's mistake appears to have been moving to Germany, which he apparently did late in July. "The cooperation from the Germans was excellent," said a source close to the investigation. "It was clockwork."
Frankel reportedly had spent the previous weeks in Italy, where he strolled down Rome's crowded streets and frequented the local cafes. He traveled with a pair of ladies at the time, relying on them to hail taxis and find something other than pasta--one of his many food aversions--from local restaurants.
The FBI had several hard leads about his whereabouts, but on one occasion Italian authorities were slow to issue an arrest warrant and Frankel slipped away. That reportedly infuriated the FBI, which has come under increasing criticism as reports trickled in that Frankel was so clumsy at life on the lam--and so irritated by its inconveniences--that he was all but asking to be caught.
But a source close to the search contended yesterday that it was lightning-fast, all things considered. It has never been easier to travel from country to country in Europe, the source said, and Frankel was already accustomed to the life of a recluse, having spent weeks on end in his tightly secured Greenwich, Conn., home.
The FBI and Interpol had launched a massive, 177-country search for Frankel in May, shortly after authorities belatedly began to suspect that he was a fraud rather than the brilliant stock-picker he long claimed to be.
Since then, the outlines of Frankel's alleged eight-year swindle have come into focus, and the details have mortified nearly everyone who had the poor judgment--or lousy fortune--to become entangled in his baroque and sprawling scheme.
The long list of the embarrassed and potentially embarrassed includes state insurance regulators, who apparently allowed him to operate undetected for years, and one of the Democratic Party's senior statesmen, former ambassador Robert Strauss, the Washington lawyer whose firm, Akin, Gump, Strauss, Hauer & Feld, worked for Frankel's Thunor Trust.
Now, many of Frankel's one-time business associates are bracing for a fresh round of questions in the wake of his capture. Many lawyers expect that prosecutors will try to cut a deal with Frankel that would allow him to plead guilty to lesser charges in exchange for information about which of his many associates knew the truth about his dealings.
But Frankel's reputation as a con man might undermine any efforts to widen the probe. An attorney for Thomas Corbally, a business consultant who helped Frankel meet many of the key players in his scheme, said his client is delighted by the news of Frankel's capture.
"We feel that he betrayed a lot of people and he ought to be brought to justice," Edward Little said. "We're not concerned about a potential deal because we don't think anything he'd say about Tom could be corroborated because it's simply not true."
U.S. and German agents used a duplicate key to enter Frankel's luxurious waterfront hotel room in Hamburg. The arrest was made on direct instructions from the Bundeskriminalamt, or BKA, the German equivalent of America's FBI, which issued a warrant for his arrest earlier Saturday after receiving an urgent request to detain him from its American counterpart. A U.S. warrant was first handed down on July 14, suggesting that the FBI had some idea of his whereabouts for weeks.
German authorities said Frankel offered no resistance when he was arrested in his room at roughly 8:45 p.m. Central Europe time.
Hamburg police spokesman Hans-Juergen Petersen said investigators confiscated two false passports, as well as computers and accompanying data, along with an unspecified amount of cash and diamonds. They also detained his companion, Cynthia Allison, who was using the alias Susan Kelly, briefly for questioning.
German officials said Frankel and his companion had apparently been in Hamburg for several weeks, but that legal instructions to arrest him did not arrive until Saturday. German law enforcement officials said the U.S. Justice Department will have 40 days to present sufficient proof of criminal wrongdoing to justify Frankel's extradition, although they said it may take longer for his actual deportation to take place.
U.S. authorities will have scores of questions for Frankel, including: What happened to the money? For the insurance companies he drained of assets--most of them selling prepaid burial services--an answer is urgent.
Though the Frankel saga has been an embarrassment to many prominent lawyers and businessmen, it has been a genuine burden for the hundreds of policyholders from Frankel-owned companies that have since collapsed.
Most of those policyholders, largely in the South, are poor and have been unable to find a funeral home willing to honor their policies when loved ones pass away.
"We're not going to provide the service and wait for the money and hope the claim will be paid," said Mark Seepe, owner of Seepe Funeral Directors and Crematorium in Jackson, Miss., who has turned down a handful of policyholders from Frankel-owned carriers. "You can't run a business that way."
David Segal reported from Washington, William Drozdiak from Berlin.
CAPTION: Martin Frankel, shown in this photocopy of a 1995 photo, was arrested Saturday in Hamburg.
CAPTION: The four-month manhunt for Martin Frankel ended at Hamburg's Hotel Prem, where the financier enjoyed luxurious $300-a-night accommodations with a waterfront view.