Martin R. "Marty" Frankel, born in 1954, is a name synonymous with one of the most infamous investment frauds in American history. Known for his series of elaborate schemes in the late 20th century, Frankel's fraudulent activities resulted in losses amounting to hundreds of millions of dollars. Despite the complexity of his schemes and the various aliases he adopted, Frankel's criminal empire eventually crumbled, leading to his arrest in 1999 and a 200-month prison sentence in 2004.
Frankel, the fourth child of Leon Frankel and the second of Tilly Frankel, grew up in a Jewish household. He attended the University of Toledo but never graduated. Instead, he turned to astrology to guide his financial decisions, a practice that led to erratic trading habits and frequent conflicts with brokerage firms. In 1986, after being fired by his boss, John Schulte, Frankel began a partnership with Schulte's wife, Sonia, both in business and life.
Operating under the pseudonym James Spencer, Frankel established Winthrop Capital and later the Frankel Fund with Douglas Maxwell. However, his reluctance to make trades and misuse of investor funds led to significant financial losses and legal troubles. By 1987, Frankel had moved to Florida, where he attracted investors in Palm Beach but continued his fraudulent activities, using shareholder accounts to cover personal expenses and pay off concerned investors.
As the SEC began investigating him, Frankel returned to Toledo and created Creative Partners, masking his involvement through the name Rothschild International Investments and a Swiss bank account. Meanwhile, Sonia Schulte, now divorcing her husband, directed her clients to Frankel's new firm, further entangling herself in his schemes. Despite paying fines and being barred from trading in 1992, Frankel continued his fraudulent activities under various aliases.
In a bid to lend legitimacy to his operations, Frankel founded the St. Francis of Assisi Foundation in the British Virgin Islands, purportedly to fund hospitals through insurance company investments. He even falsely implicated retired CBS Evening News anchorman Walter Cronkite and obtained a fraudulent letter of endorsement from Monsignor Emilio Colagiovanni of the Roman Curia.
Frankel's deception unraveled in 1999 when he fled the United States, traveling through Rome to Hamburg, Germany, where he was arrested for passport fraud. Extradited to the U.S. in 2001, Frankel faced multiple charges. In 2002, he pleaded guilty to 24 federal counts of securities fraud, wire fraud, and related racketeering and conspiracy. By the time he was sentenced in 2004, 16 of his associates, including Sonia Schulte and Monsignor Colagiovanni, had also been convicted.
During sentencing, Frankel attempted to justify his actions by claiming his primary motive was to provide for Sonia Schulte and her children. However, the judge dismissed this reasoning, pointing out the vast scale of his theft. Frankel received a 200-month federal prison sentence, which ran concurrently with a 16-year state sentence from Tennessee.
Frankel was released from prison on October 27, 2016, after serving roughly 12 years of his 17-year sentence. His release was marred by violations of halfway house rules, leading to additional periods of incarceration before his final release to a reentry facility in Brooklyn.
Frankel's legacy is a cautionary tale of greed, deception, and the eventual downfall of a man whose schemes affected numerous states, including Arkansas, Mississippi, Missouri, Oklahoma, Tennessee, and Virginia. The insurance companies he looted were left in receivership, highlighting the widespread impact of his fraudulent activities.
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