Five States Sue Banks in Frankel Case

Five Southeastern states that lost $200 million to financier Martin Frankel’s reported insurance schemes filed suit against their banks, arguing those institutions should have been prepared for Frankel’s actions, according to a Reuters report.

State insurance commissioners are suing AmSouth Bancorp and First Tennessee National Corp.’s First Tennessee Bank looking to recoup funds reportedly stolen by Frankel through illegal wire transfers. Filed in a Mississippi circuit court, the suit seeks a jury trial and compensatory damages, according to court papers.

Commissioners from Mississippi, Tennessee, Missouri, Arkansas and Oklahoma claim bank officials should have discovered the unusual nature of transfers in and out of accounts held by insurance companies managed by the respective states.

The banks, in separate but similar filings, claim the states had no basis for their lawsuit under federal statutes and regulations.

Frankel pleaded guilty three months ago to federal charges of racketeering, conspiracy, wire fraud and securities fraud. He agreed to cooperate with prosecutors as they try to recoup the millions he reportedly stole from insurance companies.