The Vatican Exposed: Money, Murder, and the Mafia (29 page)

In the official six-page proposal, as presented by Bolan to the Vatican on August 22, Rosse (Frankel) would establish a foundation in
Liechtenstein. The foundation would be governed by a "secret set of
by-laws." Rosse would be the original grantor of $55 million in
funds. These funds were to be wired to the foundation from a Swiss
bank. Of the $55 million, $50 million would be sent to a U.S. brokerage account in the name of the foundation for exclusive use by
Rosse. The additional $5 million would be diverted to an account
controlled by the Vatican.3

The generous payoff of $5 million came with a catch. "Our
agreement," Rosse outlined in a letter to Bolan, "will include the Vatican's promise that the Vatican will aid me in my effort to acquire
insurance companies by allowing a Vatican official to certify to
authorities, if necessary, that the source of funds for the Foundation
is the Vatican."4

Frankel was presenting the same deal to the three Vatican officials
that Sindona and Gelli had presented to Marcinkus. The Vatican
would serve as a money launderer in exchange for a 10 percent cut of
the millions Frankel would loot from U.S. insurance companies in the
name of Holy Mother Church.

If the deal offered only $5 million, the Vatican officials would
have likely turned up their noses and left the conference table with righteous indignation. But Bolan, on behalf of Frankel, was offering
much more. With his 90 percent, Frankel would buy progressively
larger and larger insurance companies in the United States until he
had created a multibillion-dollar empire. Frankel would control the
trust (the foundation that bore Vatican credentials) that owned the
insurance companies, even as he (under an alias) managed their assets
through a brokerage firm under his control. And the Vatican stood
to make a fortune in excess of $100 million simply by granting its
imprimatur to the scheme.

Before the agreement was sealed Frankel was obliged to provide
the Vatican Bank with documentation that he possessed the funds for
the plan. Frankel responded by releasing the private telephone
number of Swiss banker Jean-Marie Wery, a managing director of
Banque SCS Alliance. Wery assured the Holy See that Frankel
(Rosso) was a very wealthy man who had ample funds to launch a $1
billion venture.

On September 1, 1998, Monsignor Colagiovanni, Monsignor
Piovano, and Bishop Salerno contacted Bolan to affirm Holy Father
John Paul II's willingness to create a new church foundation with
David Rosse (Frankel) as president. They were also pleased to report
that Posse could open his own account at the Vatican Bank, a privilege that was offered to only an honored few.

One month later the three Vatican officials came up with a
scheme of their own in order to safeguard the Holy See from charges
of theft and criminal conspiracy, while still allowing the Vatican to
profit from the scheme. Rosso should establish his own charity-the
St. Francis of Assisi Foundation to Serve and Help the Poor and Alleviate Suffering-that would be not conspicuously connected to the
Vatican.5 The St. Francis Foundation would be united to a second
foundation-Monitor Ecclesiasticus-that was directly under papal
control. Monsignor Colagiovanni wrote a letter to Rosso in which he
offered the assurance that "any fund or donation given to Monitor
Ecclesiasticus Foundation" would fall under the protection of the
"very strict confidentiality and secrecy laws" that apply to any entity
linked to the Vatican Bank. "Only the Pope personally," the Monsignor continued, "can disclose details of any deposits or donation."'

With Monitor Ecclesiasticus, a foundation that publishes a canon
law review that is distributed to cardinals and bishops throughout the
world, Holy Mother Church provided an immaculate connection to
the Vatican for Frankel-a means by which the Jewish con artist
could bilk hundreds of millions from U.S. insurance companies under
the righteous name of St. Francis of Assisi, the patron saint of the
poor and destitute.

Frankel quickly set about purchasing insurance firms throughout
the country. In the midst of the negotiations for Frankel's acquisition
of Capitol Life, an insurance company in Colorado, attorney Kay
Tatum inquired where the St. Francis of Assisi Foundation acquired
the money for the purchase. Tatum was told that the money came
from the Holy See, which had donated $51 million to Frankel's foundation through Monitor Ecclesiasticus. With due diligence, Tatum
called Monsignor Colagiovanni at the Vatican and recorded the conversation in a memo. Monsignor Colagiovanni assured the lawyer
that Monitor Ecclesiasticus was a Vatican foundation and that the
Holy Father had provided the money.7

Of course, it wasn't true. The Holy See had not provided one
dime to the St. Francis of Assisi Foundation. The Vatican wasn't
giving contributions to the elaborate scam. Frankel had to come up
with the cash. Holy Mother Church was simply on the take.

To further the fraud, Monsignor Colagiovanni signed a declaration stating that Monitor Ecclesiasticus was "a channel and instrument in fulfilling the will and wish of the Supreme Administrator,"
that is, the pope.

Several days later Frankel set about to purchase an insurance company in Spokane, Washington, from Metropolitan Mortgage & Securities. C. Paul Sandifer, the president of Metropolitan Mortgage &
Securities, wrote a letter to the Vatican to inquire about Monitor
Ecclesiasticus and the St. Francis of Assisi Foundation. "The foundation [St. Francis]," Sandifur wrote, "claims to be an agent of the
Holy See and desires to engage in a business transaction of $120 million. The foundation also claims that it was established by Monitor
Ecclesiasticus ... which they represent as a Vatican foundation."
Within two weeks Sandifur received a reply from Archbishop Gio vanni Battsita Re, the third-highest-ranking Vatican official. The
archbishop made no mention of Monitor Ecclesiasticus and its official status as a publishing arm of the Roman Catholic Church. He
confined his one-sentence response to the St. Francis of Assisi Foundation and said, "No such foundation has the approval of the Holy
See or exists in the Vatican."s

An alarmed Sandifer brought Archbishop Re's response to the
attention of Kay Tatum, who again contacted Monsignor Colagiovanni at the Vatican and received yet another false affidavit. In this
statement, dated February 13, 1999, Colagiovanni said that Monitor
Ecclesiasticus had given a billion dollars to the St. Francis Foundation
and that this money had come from "various Roman Catholic tribunals and charities."9

Upon purchasing seven insurance companies in five states,
Frankel set about siphoning the cash reserves of such holdings into
offshore investment firms. One such account was the Jupiter Capital
Growth Fund that Frankel had established in the British Virgin
Islands. Jupiter Capital had no real assets and served no purpose
except to perpetuate a shell game. A look at the transactions within
this dummy corporation for a six-month period shows how the shell
game was played. In December 1997, $51 million was wired into the
Jupiter account at Merrill Lynch; one month later, $40.34 million
was wired out to Frankel's bank accounts in Switzerland and Italy. On
February 5, 1998, $40.38 million was wired in; 19 days later, $40.38
million was wired out. On April 14, 1998, $90 million was wired in;
two days later, $90 million was wired out. On April 28, 1998, $50
million was wired in; ten days later, $50 million was wired out.10

Frankel used the money to purchase mansions, a fleet of expensive automobiles, diamonds, and gold. In one of his two mansions in
Greenwich, Connecticut, Frankel established his headquarters with a
network of eighty computer terminals hooked to satellite dishes and
a virtual harem of more than one hundred female assistants who he
had culled from the Internet and personal ads in the newspaper.
According to several women who stayed at the mansion, Frankel
roamed through his estate in pajamas like the Hugh Hefner of high
finance. On weekends he often visited the Vault, a New York City nightclub that caters to sadomasochists." Records showed that
Martin Frankel, the founder of the St. Francis of Assisi Foundation,
was obsessed with kinky sex and astrology.

Details of Frankel's personal life came to light on August 8, 1997,
when Frances Burge, age twenty-two, was founded hanged from a
rope on the back deck of the financer's mansion. Burge was one of
Frankel's "houseguests." She had met him by responding to a personal ad in the Village Voice. According to Frankel, his relationship
with Burge was "rocky" from the start. "Frances did not look as I
expected," he told the police after her death. "She was overweight
but she was a nice person. During that evening, Frances had taken
her clothes off and wanted to have sex. I didn't want to."12

Like many of the other women in Frankel's keeping, Burge had
light duties and told her mother that she was serving the financier as
an "office assistant." When the police searched Burge's room at the
estate, they found films and literature on sexual bondage, a leather
riding crop, and ropes. They also found a pad with a handwritten
draft for a personal ad that read: "Young woman looking for a special
relationship with that special kinky fun erotic person."13

Frankel's scheme proceeded nicely until George Dale, a Mississippi Insurance Commissioner, noticed massive wire transfers from
the reserve accounts of three Mississippi insurance companies that
were owned by the St. Francis of Assisi Foundation. Dale noted that
the funds were being sent to a firm in New York called Liberty
National Securities. Upon making a series of calls, he discovered that
Liberty National was nothing more than a post office box with a telephone answering service. As he probed further, Dale came to realize
that the St. Francis of Assisi Foundation, the owner of the companies,
served no parochial or charitable purpose, except to channel funds to
Swiss, Italian, and Vatican banking accounts.14

When the Mississippi insurance commissioner approached the
Holy See about the matter, he received an official letter from the
Curia stating that neither Monitor Ecclesiasticus nor the St. Francis
of Assisi Foundation fell under the jurisdiction of the Vatican. This
was the third fraudulent statement to be issued from Holy Mother
Church about the sordid matter.

Before arrest warrants were issued, Frankel consulted his astrological guide in one of his Greenwich mansions and noticed that his
stars were misaligned. He quickly packed his bags, leased a jet, and
headed off to Europe with two of his girlfriends.

In October 1999 a federal grand jury indicted Frankel for looting
more than $200 million from seven insurance companies. Two
months later the scam artist was arrested in Germany for carrying
false passports and attempting to smuggle millions of dollars in diamonds into the country.

The FBI seized one of Frankel's estates in Greenwich, valued at
$3 million, in May 2000, claiming that it served as headquarters for
money laundering and fraud operations. At the same time, the
Internal Revenue Service (IRS) took possession of his second Greenwich estate, valued at $2.5 million, saying that the property had been
purchased with money stolen from insurance funds.15

The next month Frankel pleaded guilty in Hamburg, Germany, to
charges of evading the payment of $1.2 million in customs duties on
the $5.35 million of diamonds that he smuggled into the country. His
plea delayed his extradition to the United States. Going into the
courtroom, Frankel said that he would rather serve time in Germany
than the United States where prison conditions were "inhumane."
"The German constitution," he told reporters, "has laws that let a
person rehabilitate himself and I am being tried under German law." 6
He was sentenced to three years in prison and fined $1.6 million.

In March 2001, realizing that his extradition to the United States
was imminent, Frankel made a desperate attempt to escape from the
prison in Hamburg. Using a piece of wire, he tried to cut through the
bars of his cell. Frankel failed to notice that a security camera was
monitoring his actions. Two weeks later he pleaded innocent to
charges of grand theft, racketeering, money laundering, and fraud
before U.S. authorities.

Insurance commissioners from five states initiated a massive lawsuit against the Roman Catholic Church in May 2001, claiming that
the Vatican had acted as a front for Frankel's criminal activities.
"High ranking officials of the Vatican," the lawsuit said, "authorized
and ratified the plan whereby Monitor Ecclesiasticus would be used as a conduit for the flow of Frankel's money to the St. Francis Foundation to purchase U.S. insurance companies." The suit seeks more
than $200 million in damages. But the chances of collecting a dime
from the Vatican with its status as a sovereign state remain remote.
Frankel, who committed the greatest insurance theft in U.S. history,
had come to learn a lesson from the Sicilian Mafia: the Holy See, as
Richard Behar pointed out in a feature article in Fortune, provides a
perfect place "to wash dirty money." 17

The Frankel affair provided vivid testimony that the Roman
Catholic Church had not changed its avaricious ways in the aftermath
of the Ambrosiano affair. The Vatican remained willing and eager to
enter into an unsavory relationship for the sake of gain. The signing
of the Lateran Treaty had set a course from which the Church could
not alter. It was a course that led to the concordat with Hitler, the
establishment of the Fascist state of Croatia, the Nazi ratlines, the
agreement with Sindona and the Sicilian Mafia, the counterfeit securities, the death of John Paul I, the bankruptcy of hundreds of businesses, wholesale genocide, gangland slayings, and the financial destitution of thousands of families. The deal with the devil-made so
long ago by Pope Pius XI as he heard rats in the walls of the Lateran
Palace-could not be reneged or undone.