A judge must decide whether to approve a settlement with a company accused of being negligent while former financier Martin Frankel defrauded insurance companies in Tennessee and four other states.
Prudential Financial Inc. of Newark, N.J., is one of the third-party firms that was sued two years ago by Tennessee insurance regulators to try to recover some of the $200 million taken from Franklin American Life Insurance Co.
Davidson County Chancery Court Judge Carol McCoy will hear a state motion to seal the settlement on Friday and will consider approving it next week.
Similar court approvals, meanwhile, are being sought in Mississippi, Missouri and Oklahoma. Frankel’s scheme also defrauded companies in Arkansas.
Frankel, who hasn’t been sentenced yet, bought insurance companies, then stole their assets to finance a wealthy lifestyle that included a two-mansion compound in Greenwich, Conn. He was a fugitive for months before he was captured in Germany.
Authorities said he funneled money through Swiss bank accounts and several investment firms. After the scandal in 1999, state investigators seized $57 million in Franklin American assets in a Prudential account in New York City.
Prudential and other investment firms have been accused of negligence because they did not detect and report unusual trading. Prudential agreed to a settlement without admitting the company did anything wrong.
Tennessee is expected to receive 8 percent of the undisclosed amount, which court documents referred to as “substantial.”
“We’re all just looking to move on,” Nashville attorney William Haynes III said. Haynes represents the state’s insurance commissioner.
Similar settlements have been reached with several other firms, said Paula Wade, spokeswoman for the state’s insurance department.
Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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