Arkansas Insurance Commissioner Mike Pickens announced that a guilty plea to a felony charge of violating the maintenance of home office records law has been entered for Gary Atnip, an alleged co-conspirator with Martin Frankel who reportedly perpetrated what has been touted as possibly the largest insurance fraud investigation in the country. The plea was entered in the Seventh Division Circuit Court of Pulaski County. Atnip was sentenced to 12 months in the Arkansas Department of Corrections.
Atnip, a Tennessee resident and CFO of Tennessee-based Franklin American Life Insurance Company, was charged with the illegal removal of $5.285 million in funds from Old Southwest Insurance Company of Jacksonville, Arkansas, when Franklin American purchased Old Southwest in March 1999. According to investigators, shortly after Old Southwest was purchased, Atnip reportedly caused the funds to be transferred to a bank in Switzerland, violating Arkansas Insurance Code Sec. 23-69-134, and causing the ultimate collapse of Old Southwest, which remains in receivership.
“This was the first criminal case ever filed under the statute designed to protect the assets and records of insurers,” Marty Nevrla, Director of the Insurance Department’s Fraud Investigation Division, commented. “We hope this conviction and the related federal charges under which Atnip will receive a considerable prison sentence will send a clear message that there is a serious personal cost for unlawfully manipulating the system for personal gain.”
Atnip is currently awaiting sentencing on federal mail fraud and wire fraud charges connected to the Frankel scheme.
The Frankel scheme reportedly consisted of plans to illegally remove, what has been estimated at more than, $200 million from insurance companies and to transfer those funds into accounts for Frankel’s personal use. Both Frankel and Atnip have been ordered to pay $2.5 million in restitution. Atnip is expected to receive a 10-15 year federal prison sentence. Frankel is currently serving time in federal prison.
“I am pleased to see the effectiveness of state-based regulation at work in this investigation,” Commissioner Pickens said. “Without the diligent scrutiny of state regulators Frankel’s plot may never have been uncovered. The Arkansas Insurance Department continues to send this message loud and clear. We will not tolerate insurance fraud on any level in the State of Arkansas.”
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