Booknotes

ELLEN JOAN POLLOCK, AUTHOR, "THE PRETENDER": Rosse.

POLLOCK: Right.

POLLOCK: Well, at some point, Marty Frankel, who was this incredible scamster, was in communication with Lee Iacocca through a mutual friend. And he was trying to get Lee Iacocca to sign onto his scheme and to participate in a charity that Frankel was trying to start to shield his fraudulent scheme from the world's eyes. And he actually offered Mr. Iacocca the use of a private jet, and Mr. Iacocca flew around in this jet, mostly in Italy, for about two weeks. But Mr. Iacocca was smart enough never to really, you know, sign on the dotted line and get involved with Frankel.

But what was interesting about the note was that, at that point, Frankel was going by the name David Rosse, and Iacocca said he didn't recall the name Marty Frankel, but the note doesn't say anything about -- or the response to my note doesn't say anything about whether he recalled the name David Rosse, which was the alias that Mr. Frankel was using at the time.

POLLOCK: Oh, I'm sure he did. I mean, he -- he rode around in the airplane, and I'm sure he knew the name David Rosse. But what he -- what his spokesperson said in response was, he didn't know the name Marty Frankel.

POLLOCK: Right.

POLLOCK: Well, again, at one point, Frankel, in effort to cover over what he was doing, tried to create a charity. He said he was going to acquire a bunch more insurance companies, and he hired Mr. Strauss's lawfirm to represent him. And he met with Mr. Strauss in Mr. Strauss's apartment. And Mr. Strauss set it up so his -- so that Akin Gump would represent Mr. Frankel's interest.

POLLOCK: Right.

POLLOCK: Right.

POLLOCK: It was -- the representation started -- Mr. Strauss and Mr. Frankel met in May of 1998. It was Memorial Day weekend. They met in Mr. Frankel's apartment at the Watergate. It was sort of a holiday weekend. And very soon after, within days, the arrangement was set up. And they continued to represent Mr. Frankel through the end of the year, maybe a little bit into the -- into 1999.

POLLOCK: Well, Mr. Carter dodged the bullet. He was at one point supposed to meet with an emissary of Mr. Frankel and perhaps with Mr. Frankel himself. I think Mr. Carter -- Mr. Carter's people at the Carter Center thought that they were -- had planned a breakfast between -- between -- I guess they were used -- they thought the name was David Rosse -- and the former president because Mr. Frankel had offered to give a lot of money to the Carter Center. And this breakfast was set up. It was going to be attended by Father Peter Jacobs (ph), who was the president of this phony charity. And it -- the breakfast never took place.

POLLOCK: He's in prison in Rhode Island. He's awaiting trial. He'll be tried next October in federal court in New Haven, Connecticut.

POLLOCK: An ugly guy.

POLLOCK: Well, that picture was taken after he'd been in jail for a time in Germany. He was caught in Germany. It was '99, four months after he'd fled the U.S. He was in Hamburg. It was Labor Day weekend, or right around that point, and he was -- he was kept in a prison there -- they didn't quite know what to do with him in Germany. They weren't used to sort of picking up, at that point, internationally known criminals. And he was in a -- in a prison with a bunch of drug addicts and smugglers, sort of low-level criminals. And he kind of didn't look so good when he -- when he came out for hearings.

POLLOCK: That is Frankel going for one of his first court appearances in New Haven, Connecticut, after he was finally brought back to the U.S. He fought very hard to stay in Germany. To anyone who would listen, he would talk about how in Germany, he would get a short sentence for the crimes he committed. In the U.S., he was going to be put away for life. That was tantamount to -- you know, to capital punishment. It was an affront to human dignity. And he tried to make this huge argument that it was almost immoral for him to be extradited to the United States.

POLLOCK: Well, when Frankel fled the U.S. in 1999, it attracted a huge amount of attention. Nobody knew who this guy was until he fled. And it quickly became apparent that he had stolen gobs of money. Nobody knew really how much. The real amount is probably about $215 million, but at the time he fled, it looked like it might have been a billion dollars. And he had apparently stolen it from a bunch of Southern insurance companies that specialized in selling burial insurance.

And the remnants of stuff they found in his mansion, which was -- caught fire shortly after he left, was just fascinating. It looked like he'd involved the Vatican. It looked like he was interested in astrology. It looked like a harem had lived there. And it just sort of caught everybody's interest because the scheme had clearly gone on for the better part of a decade, and it was an incredibly wild story. And as I worked on it, it just -- it became sort of too enticing to give up. It sort of had everything. It had money. It had sex. It had the Vatican. It had some interesting names. And it -- I thought it said a lot about business and human frailty, not to mention greed and -- and -- human frailty was sort of the big thing that attracted me to the story.

POLLOCK: I met him once. I met him in Germany, and he asked me for money.

POLLOCK: He was at a hearing. He was -- there was a hearing -- he had -- he was accused of some tax violations because he had supposedly imported diamonds into -- into Germany illegally. And he had also used false passports. And so I walked up to him at a hearing, told him I was doing him -- doing this book. He seemed very excited that he -- someone was writing a book about him. And then at the end of the hearing, I handed him my card and I said, "I want you to write to me." And he said, "Send me money!" Like, very savagely. And I said, "Well, I'll send you stamps," because, you know, I wasn't going to pay him. So I sent him about six stamps, and I never heard from him. But I've heard that he's very angry at me.

POLLOCK: For a variety of reasons. He was very, very secretive. He was very secretive about his personal life and his professional life, and they sort of melded together. And I think when he got back to the U.S., he started hearing that I had talked to pretty much everyone he knew, that I'd sort of unraveled how he did the financial scheme. And one of his arguments is that -- you know, that the amounts of money have been exaggerated, and I think it's pretty clear that the amounts of money have not been exaggerated and that he is completely to blame for the trouble he's in.

POLLOCK: He is 47, I think.

POLLOCK: Right.

POLLOCK: Right.

POLLOCK: Not yet.

POLLOCK: He's been charged with a bunch of things, including racketeering, racketeering conspiracy, securities fraud, wire fraud. Initially, he was accused of money laundering, which is a lot of what he did. But because he wasn't extradited on those charges, he's not going to be prosecuted on those charges.

POLLOCK: In New Haven, Connecticut.

POLLOCK: In federal court.

POLLOCK: Right.

POLLOCK: I did not meet them. His father died about a year and a half before he fled. His parents are -- were, by all accounts, lovely people. One of the odd things about Marty Frankel is he was obsessed with money, but in fact, he was brought up very modestly.

He was brought up in Toledo, Ohio. His parents were not acquisitive people. They weren't materialistic people. They lived in a very modest home. His father was a magistrate in divorce court, very well respected in the local bar. And his mom worked for the city of Toledo as a clerk. And they were a family that was very interested in learning, very interested in knowledge and in study. They were also athletes -- you know, amateur athletes.

And they have this son who, in some respects, followed suit. He was interested in studying, and he studied everything from ancient religions to the financial markets. And when he came to the financial markets, he became obsessed. And he would -- you have to sort of picture this guy -- you know, this sort of very, very nerdy guy. He's the guy who sat in the back of everybody's high school class, and everybody wondered what's going to become of this guy, he is such a social misfit.

And he sat in his room, for the most part. He didn't go to school parts of the time. He was very school-phobic, very afraid of taking tests. And he studied.

POLLOCK: He had -- that's a hard question to answer because probably even he doesn't know. He went to the University of Toledo for years, but because he couldn't take tests, he never got a degree. I mean, he probably took, you know, enough courses plus, you know -- you know, double enough courses to -- to graduate. But he had a million incompletes. He just couldn't take the tests.

POLLOCK: It started in -- in the late '80s. He got a job as a broker for a small brokerage firm run by a guy named John Schulte. And immediately, he ran into problems for two reasons. One was that he could not bring himself to trade, which is really one of the most comical aspects of this, is that here's this guy who by all accounts really did know a lot about the financial markets, but he couldn't get himself, as he would say, to "pull the trigger." He would, you know, identify a stock he wanted to buy, and then he just couldn't do it. He was just paralyzed.

And all his -- I mean, all his short life, he's been equating it to his test anxiety. And in fact, it is very similar. So he -- he really wasn't doing much at the brokerage firm. And then he had another problem, which is he fell in love with the boss's wife.

POLLOCK: Right.

POLLOCK: John Schulte lives just outside of Toledo. He runs a -- I guess you'd call it a carry-out, a convenience store.

POLLOCK: Sonja is living in North Carolina, I believe. She was as of recently. And she is awaiting trial with Marty Frankel.

POLLOCK: She is charged with racketeering and securities fraud. She's been accused of helping him really all along the way. The -- she -- one of the things she did was create false statements, false account statements. Frankel was supposedly trading the assets of these insurance companies he owned through fraudulent means, and he would send them account statements every month or so, and they were all frauds because he couldn't trade anything. And Sonja is accused of -- of creating those statements.

POLLOCK: Right. John Schulte is a very unusual person. He is -- he's sort of maniacal. He is a man who holds a grudge, and when Marty Frankel ran away with his wife, that -- you know, that account will never be paid.

POLLOCK: That happened in -- I think it's '86 -- I mean, really quite some time ago. And the man is still angry to this day. He is really, really mad. And in the next few years, there was sort of a battle, who was going to rat out who first. Was Frankel going to get the SEC to come after John Schulte, or was John Schulte going to get the SEC to go after Frankel? And Frankel and Sonja, the wife, won.

In the late '80s, John Schulte was accused of violating securities law for the way he was running his -- his brokerage firm and in fact, did a little bit of time in a federal penitentiary. But they also accused him of molesting his daughters, and he was acquitted. And when he was acquitted, because this got so much press in Toledo, it was such a widely known case, he put up that sign outside his brokerage firm, saying, "The truth is now known."

POLLOCK: They didn't. She helped him through a variety of early -- of his early schemes. First he set up something called the Frankel Fund, and then he set up something called the Creative Partners. And especially with Creative Partners, she was at his side. And eventually, the fled Toledo and they moved to Greenwich, Connecticut, and their circumstances really changed. He ended up owning two mansions in Greenwich.

And she at first moved to Greenwich with him, and then she, I think, got fed up with the very weird scene at the mansion, as he sort of started experimenting with sort of strange sex and -- and eventually tried to distance herself from him, moved to Florida and then North Carolina, married somebody else. But every month or two, she'd come back to work on those statements. She couldn't -- there -- you know, there's a lot of evidence that she really wanted to sever ties with him.

She -- she just -- she wanted to get rid of him, but she is -- as she told one of the other people who have actually pled guilty in this case, "He has too much on me" and she couldn't get away.

POLLOCK: I'm trying to remember now. I think about six or seven people have pleaded guilty, at this point.

POLLOCK: Yes, some serious crimes. I mean, some -- you know, it's lying to the FBI over, you know, cars and stuff like that. But Frankel's bodyguard was just sentenced to 10 years in jail for racketeering and money-laundering-related...

POLLOCK: That's David Rosse.

POLLOCK: Well, that's a good question, and he would give you one answer, and I'll give you another. His answer was that -- and he told people this constantly -- was that he was running away from John Schulte. He thought John Schulte was going to kill him. I mean, again, this is 10 years after the divorce he still thought John Schulte was going to kill him.

The real reason is probably more complicated, and that he was banned from the securities industry in 1992, after his first fraud, which is the Frankel Fund. And so he had to operate under assumed names. And he used, you know, a handful of them, and David Rosse was the last one he used.

POLLOCK: Right.

POLLOCK: It...

POLLOCK: It is. That's where the fire took place.

POLLOCK: Well, after -- Frankel left in a hurry, and he left instructions for a couple of the women who were left in the mansion to shred documents. And they had three industrial-strength shredders waiting to eat up all the incriminating evidence. And the women got bored. Shredding -- I think shredding documents is a tedious affair. And so they started burning the evidence in fireplaces, and the fire got a little out of hand. I mean, it wasn't -- some of the early press accounts made it look like the mansion was up in flames. In fact, it really was just sort of a smoldering fire that set off fire alarms.

And when the security service called and wanted a password, the women didn't know the password. In fact, there was also a lot of looting. After he left, all the people he'd gathered around him who were doing clerical work and taking care of his computers and driving people around -- they just looted the place.

POLLOCK: Almost 13 years.

POLLOCK: I was the editor of a publication for lawyers and worked for "The American Lawyer" magazine, which is a magazine about lawyers, before that.

POLLOCK: I'm not. I can pass as one, but I'm not.

POLLOCK: In New York.

POLLOCK: Brandeis University in Massachusetts.

POLLOCK: I'm nosy. I'm nosy, and I like to know how things work. I think I'm just naturally a gossip and...

POLLOCK: No, I am the nosiest person in my family. I may be the nosiest person at "The Wall Street Journal." And I always want to know what I'm not supposed to know, and this was -- this -- I mean, one of the reasons I was interested in this is there were so many secrets. And it was tough. It was the toughest reporting I've ever done, not necessarily for good reasons. I covered Whitewater, at one point. I've covered, you know, all kinds of bizarre stories and -- and this was the toughest, and it made it more appealing to me.

Also, I never understood why someone would become a criminal. I didn't get it. I wanted to understand why you would deliberately lie, why you would deliberately, you know, set up a fraudulent scheme. What would go through your mind? And you know, I wanted to tell this in a compelling way, and I didn't want people to hate Marty Frankel, necessarily. I wanted to show sort of all sides of him. I wanted to show, you know, sort of the vulnerability of some of these characters. And it sort of played into my sort of mania for reporting and gossip, I think.

POLLOCK: I did.

POLLOCK: I think it said "MSNBC" on it, actually! (LAUGHTER)

POLLOCK: This -- it was very silly. I -- at one point, I finally decided I have to stop reporting and I have to start writing. And when you're writing a book like this, you have to keep the momentum up. I really wanted to tell it as a tale. I wanted -- you have to really stay focused. I wanted to get people inside of rooms. I had to just completely become obsessed. And so I decided I wasn't going to take the cap off until I finished the book.

POLLOCK: I spent five months writing.

POLLOCK: The chocolate fetish was really ugly. There came a time where at 4:00 o'clock every day, I had to have chocolate with my coffee. I also had to wear lipstick every moment I was writing. And on days I left my lipstick at home, I was in trouble.

POLLOCK: I wrote it in my office. I have a very small child at home, and I could not write it at home. I would ever have gotten done. So I wrote it in the temporarily abandoned offices of "The Wall Street Journal," because we've now moved since September 11th because we were across the street from the Trade Center.

POLLOCK: It affected the writing of the epilogue and the acknowledgements. The book was done. The book was done. I was in sort of the final editing stages. On September either 9th or 10th, I spent a huge amount of time Xeroxing the copy-edited manuscript, so I could, you know, go through last changes. And on September 10th, I left that on my desk. And on September 11th, I was rushing to the office to deal with that and to be on the phone with people at Simon and Schuster and -- as I watched the plane plow into the Trade Center.

POLLOCK: Oh, yeah. I live just a few blocks from the Trade Center and worked across the street from the Trade Center, so -- so just -- I mean, I actually thought maybe this book wouldn't get done because I -- I -- you know, my -- all my stuff, you know -- a writer becomes obsessed with their notes -- was still in the office. But it was essentially done. I wrote the -- I wrote the epilogue and the acknowledgements for the book on a borrowed computer with a malfunctioning space bar in the advertising offices of "The Wall Street Journal," still in my smoky clothing. It was -- it was a bizarrely depressing but dramatic moment, in its own weird, horrible way.

POLLOCK: He is.

POLLOCK: Well, when I said it, I meant physically ugly. Personally, he could be both incredibly attractive or really ugly. I mean, this is a man who could one moment be unbelievably charming and even gentle, and the next moment be savage and nasty and mean. I mean, I saw a little bit of that when he smiled at me when I told him I was writing a book and then, you know, the next moment savagely asked me for money. He could be both things, and that was -- and that was really what made him so successful.

POLLOCK: Right.

POLLOCK: Kaethe Schuchter.

POLLOCK: Right.

POLLOCK: Kaethe Schuchter was a -- one of Marty Frankel's early lovers when he arrived in -- in Greenwich. And after a bitter war between women, she became the ex-lover. And he then enlisted her to help him meet people to connect him with -- with more sources for money, more sources for important contacts, things like that. She became his conduit to the outside world. She's in Germany now. She managed to escape -- she's so far escaped. She's been indicted, but it's very unlikely she'll be extradited here.

POLLOCK: She is -- you know, I don't know how old she is. I would guess she's in her late 30s. And I have a source who's a criminal defense lawyer who was involved in this who said, "Kaethe is my idol." And I said, "Why is Kaethe your idol?" He said, "She committed the perfect crime" because it's believed that she has control of $1 million or $2 million. She may be the person who comes out ahead in all this.

POLLOCK: Karen Timmons was a woman who Marty Frankel met through a personal ad. He rejected her. He did not want her as a romantic interest. She was extremely bitter about that. She would sort of talk as though Marty wanted to marry her. She was rather bright, and he sort of used her as an office manager.

POLLOCK: Mona Kim is another woman who he met through a personal ad, and he rejected her, as well. And she became a clerical assistant, and she will go to trial with him in October. She is -- she is accused of helping Frankel purchase $10 million in gold.

POLLOCK: Right. She is a former lover. She, like many of his former lovers, stuck around. I think they were really together briefly. And she was a clerical assistant. She has not been indited, and I'd be very surprised if she was. And when Frankel fled to Italy and then Germany, she fled with him.

POLLOCK: Miriam is an early lover also in Greenwich -- very bright. And she sort of introduced him to the world of S&M.

POLLOCK: Well, I admit I was not in the room with them. But I talked to many people involved in the house. And it was no -- there were no secrets in that house. I mean, really, everybody knew everything. It was -- it was a cult.

POLLOCK: When we were writing about this in "The Journal," we were afraid to call it a harem, but it was a harem. It was -- everybody was emotionally entangled with Marty. At one point, I was trying to figure out who had been his lovers and who hadn't been his lovers. And one of the women said to me, "You don't understand. It doesn't matter who was his lover and who wasn't his lover. It was all the same thing." They all came through personal ads, and they were all in love with him. And they were all emotionally entangled with him, and he -- and he treated them as though they were all emotionally tied.

POLLOCK: Berge, yes.

POLLOCK: She was really, without a doubt, the saddest situation in the house. She came through a personal ad. She'd lived a very tragic life, had suffered severe depression. He was not interested in her, led her on a little bit, and she sort of sunk into a terrible depression and killed herself in the mansion that he sort of reserved for some of his women.

POLLOCK: Mona Kim (ph) found her. Mona went to look for Frances one day. They were going to go to an amusement park, and when she couldn't find her, immediately started worrying because everybody -- everybody in the house knew that Frances was in love with Marty, and everybody knew she was depressed. And Mona found her hanging from the bottom of -- of a deck.

POLLOCK: I don't think I asked it quite like that, but it was obviously something that I needed to know because I needed to try to explain to my readers why someone this appalling in so many ways could be so attractive. And I mean, that was really one of the hardest things, in terms of writing the book. It was because he was a fabulous listener. And he -- if he was sitting right here, he would figure out in what ways you were vulnerable. He would figure out your secret desires within moments, and he would exploit it.

And for example, there was one woman -- he had a couple of Russian women he was involved in, and one of them badly wanted to be a rock star. And he would be on the phone with her at 1:00 o'clock in the morning, listening to her perform her music over the phone. And that was typical.

If -- if -- Kaethe Schuchter (ph) was -- was an artist of some -- you know, some talent, I guess, but an unsuccessful artist. For some reason, she liked to paint ducks. He called her his "little ducky." He encouraged her art. She had social ambitions. He got her an apartment in New York, for which she was paying thousands of dollars a month. He had her -- he got her what they called in the house "hot and cold limousine service," 24-hour-a-day limousine service. He knew what these women wanted, and he catered to it.

And that's important not just because that makes for a good tale, which I hope it does, but also because that's what he did in the financial world, too, and in his business world. He figured out what people needed, and he fed them. He fed them the perfect line and...

POLLOCK: No.

POLLOCK: He did one trade early on, and he made $18,000. Over time, he made a few other trades, but they were not significant trades.

POLLOCK: At the end. At the end.

POLLOCK: Well -- or close to the end. I mean, he ran through -- he stole $215 million. That's pretty clear.

POLLOCK: Stole. Now, you know, everybody right now is so wrapped up in Enron, and people are trying to understand accounting, and they trying to understand these partnerships. This was much more simple. He bought these insurance companies -- using a fraudulent trust, but he bought them. And he promised -- he told the executives of the insurance companies that he was going to invest the assets. And instead...

POLLOCK: Yeah?

POLLOCK: He -- he created a trust, which he called the Thuner (ph) Trust, which was after the -- the Scandinavian God Thuner, which is the same, I guess, as Thor. And he lied about who put up the money to buy the trust. He said Sonja (ph) put up, you know, I think, $900,000. At the time, Sonja was making $25,000 a year. He lied and said that a broker who worked for him briefly -- you know, who was a kid -- had put up a lot of money and that a friend of his brother's had put up a lot of money.

POLLOCK: There was money in the trust, and...

POLLOCK: He got that money from investors in his second fund, which was called Creative Partners. He set up sort of a mutual fund. He got people to invest in it, and then he just took the money and he bought this small insurance company in Franklin, Tennessee, setting up this fake trust. And then he took the assets of the insurance companies, paid back the insurers -- the investors in Creative Partners, and said he was closing down the fund. So he had a lot of, you know, very happy investors in Toledo because they were paid back. But they didn't know that they were paid back with money stolen from a little insurance company in Franklin, Tennessee.

POLLOCK: That is John Hackney. John Hackney, on a day-to-day basis, ran the insurance companies.

POLLOCK: Starting -- I used to know this perfectly. I guess it's 1991. And this is really a perfect example about how Marty exploited somebody's needs. Frankel knew, at that point, that the SEC was going to come after him. He was officially banned from the securities industry in 1992. He needed -- he knew he needed to cleanse his name. He knew he had to get out of Toledo. So he -- he answered an ad, oddly enough, in "The Wall Street Journal," one of those little, tiny ads, somebody offering to help people buy Southern banks. And through that guy, he met John Hackney. And he figure out that John Hackney was the perfect front man.

John Hackney had worked at banks. John Hackney sort of had a good public persona. He was kind of a good ol' boy. And John Hackney was absolutely desperate. He was out of work. He'd been laid off from his previous job. He had a beautiful wife. She was pregnant. And he needed work so badly that he was willing to look the other way, even though he knew that Marty Frankel was setting up a trust using fake names, using, you know -- lying about -- lying about -- about how was putting up the money.

POLLOCK: That was taken in New Haven, Connecticut, I guess about a year ago, maybe a little more, on the day that John Hackney pleaded guilty to several federal charges related to this case.

POLLOCK: He is living in Alabama. He is working like a dog, trying to support his family, and he is awaiting sentencing in this case. And they're not sentencing him, I would guess, because they are waiting to see how he testifies at Mr. Frankel's trial.

POLLOCK: Until April, 1999. They never met. They talked on the phone for hours a day. I mean, one of the bizarre questions in this is what did John Hackney think that Marty Frankel was doing? Supposedly, Marty Frankel was a master trader and was investing the assets of this little empire of insurance companies. But he spent huge amounts of time on the phone just yakking with Hackney. They talked about everything from sex to the Civil War.

I mean, one of the things I sort of enjoyed about this is the incredible culture clashes here. Frankel was a Jewish guy from Toledo, a man who lived in his head. John Hackney was a Southerner from Tennessee, hadn't met many Jews, and was a -- you know, was a former frat boy, you know, a guy with a million friends. And they had zero in common, and yet they were on the phone every day, very curious about each other. But they never really understood each other.

POLLOCK: I think it was seven. I always mix it up, whether it's six or seven.

POLLOCK: That was pretty much it. That was pretty much it. But you know, insurance companies have to have reserves. Even small insurance companies throw off a lot of cash.

POLLOCK: And he ran through a lot of it.

POLLOCK: That is Father Peter Jacobs. He is a priest. He's a priest who's been in and out of trouble with -- with the church for most of his career.

POLLOCK: His father was Jewish. Father Jacobs spent most of his career in New York City. He worked in Harlem at a boys' school. He spent a lot of time working with junkies and whores, worked very hard by day. And by night, Father Jacobs partied. He was involved with really sort of the glitterati, you know, the literary sort of glittery crowd in New York, at one point owned a restaurant that was frequented by celebrities. He's friends with Norman Mailer. He's friends with Bianca Jagger.

POLLOCK: He's attached to the diocese of Washington. I'm not exactly sure why, but he spent most of his time in New York. He's retired now. He's -- he's pretty elderly and not in great health.

POLLOCK: He isn't under indictment.

POLLOCK: I would guess not, but I'm not sure. He -- he helped Marty Frankel. There's -- there's no question about that. I mean, there -- there are so many people involved in this scheme who walked a very fine line between legality and illegality. And I think that's actually sort of one of the lessons of this book. I mean, I wrote it to be a good tale, but there are some real lessons. And one of them, I think, is just how many people in business, in the professions, really walked this very gray line and how many people define truth differently than a lot of us do.

POLLOCK: Walter Cronkite was a friend of -- is -- well, was a friend of Father Jacobs'. Father Jacobs met Marty Frankel, and Marty Frankel said, "I want to set up a charity, and I'm going to have the charity buy insurance companies. And the profits will go to -- will go to -- the profits from the insurance companies will go to charity." And Father Jacobs tried to get his friend, Walter Cronkite, involved. And basically, Walter Cronkite said no. He probably, in retrospect, should have said it a little bit more firmly, but he was on the phone with Father Jacobs, and -- and he -- you know, he -- he -- Father Jacobs was saying, "Well, will you help us identify charities?" And Mr. Cronkite made it very, very clear that he did not want to be on any boards. He did not want to be a member of any organizations. And I think what he basically said was, you know, "Yeah, I'll yak with you on the phone."

And at one point, somebody from one of these organizations -- one of, you know, Frankel's charities -- called Cronkite, and Cronkite reiterated. He said, "I don't want to be involved," and called Father Jacobs and said, "No. I don't want to be involved." But that didn't matter because Marty Frankel still used his name in some of his promotional materials and said that "Lee Iacocca and Walter Cronkite have agreed to be on our advisory board."

POLLOCK: For one of the charities.

POLLOCK: That's another good question without a completely clear answer. Father Jacobs had retired to Rome. He sort of divided his time between New York and Rome. And he had many Vatican ties, and he offered to help Frankel make connections with the Vatican and, in fact did. And a lawyer named Tom Boland (ph), who is a former law partner of Roy Cohn and is a religious -- a very religious -- a deeply religious man, on Marty Frankel's behest went and negotiated with the Vatican and tried to get the -- the Vatican to back this fake charity. And Boland did not realize it was a fake charity. And he met with very senior people at the Vatican. He had a series of meetings with people at the Vatican who were extremely interested in doing business with this man. They knew him as David Rosse.

The one thing they balked at -- and not immediately, but pretty quickly -- was they did not want to be in the insurance business. And so Frankel, frustrated, basically lied. He got another Catholic foundation called the Monitor Ecclesiasticus (ph) Foundation, which did have ties to the Vatican -- had a Vatican bank account and did have ties -- to agree to be involved with St. Francis. And in fact, the head of that foundation, Monsignor Collagiovanni (ph), signed several fake affidavits, one of which said that the Holy See was providing funds for St. Francis.

POLLOCK: I believe firmly that the monsignor knew that that wasn't true. One of the -- one of the affidavits said that -- that -- that the Monitor Ecclesiasticus had given a billion dollars to St. Francis, and Monitor Ecclesiasticus is a very small foundation which puts out a -- a journal of canon law. He must have known that wasn't correct.

The monsignor has at various times said different things about these affidavits. Once he said, oh, his named was forged. But other times -- most of the time, he has agreed he signed it. And he has been arrested and it's unclear -- he was visiting -- he's based on Rome. He was visiting his elderly sister in Cleveland and was picked up by -- by U.S. law enforcement officials and is in the U.S., awaiting the disposition of his case.

POLLOCK: Well, first he bought them through -- through this trust. But then his idea was that he was going to buy them through this charity. And he -- basically, it failed. He wanted to buy a lot more insurance companies. He wanted to be AIG (ph). He wanted to be, you know, a billion-dollar company. And he enlisted the help of Akin Gump and got in many doors. I mean, people -- you know, people would hear that Bob Strauss and Akin Gump represented these entities. And I won't bore you with the names of all these sort of entities he was using to try to buy the insurance companies besides St. Francis. The doors swung open.

POLLOCK: We do.

POLLOCK: Well, they did not find out that there was anything wrong until he fled. Akin Gump was most active for Frankel's entities in late '98. But they -- you know, they -- they hadn't resigned the account or anything. And when Frankel disappeared in May, Akin Gump was pretty worried about where he'd gone to and was -- and was trying to figure out where -- where he'd gone because they were still, you know, to some degree involved.

POLLOCK: Right.

POLLOCK: Those were the -- those were the main ones, but...

POLLOCK: ... along the way, he -- along the way, he would establish other ties. For example, when Tennessee regulators started poking around, he hired former Senator Matthews, who's a lawyer, who...

POLLOCK: Harlan Matthews, who I guess filled in Vice President Gore's Senate seat when he became vice president. And he -- so he had that credible person behind him.

POLLOCK: That's right, Brad Dye (ph) briefly represented him. And one of the more curious episodes of the book and one I actually wish I knew more about was when Frankel and his people were preparing to meet with the regulators in Mississippi, near the end, when things are about to fall apart, Brad Dye got very nervous. And he got up, closed his briefcase and walked out. He just -- he smelled -- he clearly -- and I don't know this for a fact. He clearly smelled something bad and thought, "I don't want to have anything to do with this."

POLLOCK: Right.

POLLOCK: Well, one of the scary things about this story -- I mean, really, it's a big cautionary tale of the story, is how many times people tried to -- to blow the whistle on Marty Frankel. Really, among the first people to do it was his nemesis, John Schulte, who went to the SEC. And one of the things John Schulte did was he hired a private investigator to go through Frankel's garbage. And he would keep, you know, feeding what he was finding to -- to regulators.

Early on, two investors sued Frankel, and their lawyers -- a lawfirm in Toledo called Shoemaker Loop (ph) -- they took on this case of these investors, even though it wasn't a big money-maker for them, because they were so outraged. They wrote to the SEC and said, "We know you're investigating him." This is early on, in '92. "But he's at it again. You have to stop him." Nothing happened.

And then there was this investigator in Greenwich years later, where Frankel's neighbors were -- they didn't like him. They -- there were cars in and out. There were guards. They were worried about guns. They were worried about drugs, probably unnecessarily. Their kids were in the neighborhood. They were worried about -- you know, that their kids were going to have problems. And they hired a private investigator, a former FBI guy. And within 29 hours, he had figured out Frankel's real name, that he'd been banned from the securities industry, that he was probably violating the ban, and that he was breaking the law.

He went to the SEC. He went to the U.S. attorney's office. And you know, although there's some signs that an investigation was started, nothing really came to fruition.

POLLOCK: In the middle of this, there's chapter six, which I just think of -- I call it "domestic bliss." It was anything but that because it was mostly about all the women bickering in the household. But it's about -- it's basically, you know, the chapter about Frankel and sex and his growing an odd obsession with S&M sex and his relationship with -- relationships with these women and how it's a miracle he got anything done because of all the bickering in the household and all -- and all -- the sort of sexually charged and infused atmosphere of this house.

POLLOCK: Sadomasochistic sex.

POLLOCK: He got pleasure from hurting women, and he solicited bed partners who got pleasure from being hurt. I mean, everything from -- from whips to -- you know, or riding crops to tying people up to weird clips to -- you know, it was painful sex.

POLLOCK: Yes. Yes. I interviewed a -- I interviewed a bunch of women who had lived in the house. And as I said, there were no secrets. And there was, you know, at times, more than one person in the bed. And there were videotapes made.

POLLOCK: You know, I didn't see them. I -- I just -- I have to admit, my stomach wasn't strong enough to actually ask to see the tapes. One of them I actually -- I'd heard about and then actually located. And another one I think has sort of vanished. But -- but so you know, there was -- there were plenty of people who had seen some of these videotapes. There were plenty of people who had witnessed the sex. There were plenty of participants in it. And there were no secrets in that house.

POLLOCK: Oh, definitely, my number one source were the interviews with the people involved. And you know, I can't name them all because a lot of them, you know, were very worried about being indicted. Some of them were indicted as I was working on the book. And defense lawyers usually tell their clients "Don't talk to the press." And I actually -- you know, I've covered law long enough, I know something about this. And I actually think that sometimes that's good advice and sometimes it's terrible advice.

And I did many, many interviews with the people involved, and that's absolutely my primary source of information. I mean, there were also court documents and indictments along the way.

POLLOCK: I went to the mansion. I wasn't able to go inside the mansion, although I interviewed a lot of people who were -- I interviewed a lot of people who were inside, obviously. But I did go to the mansion. I spent time in Greenwich. I spent a lot of time in Toledo. I went to Germany. I went to Franklin, Tennessee, where the insurance companies were based. Where else did I go? I was in Washington, D.C. I -- you know, I went most -- I didn't go to Mississippi, where I should have gone. Some of the action takes place there, and I did that over the phone. And I didn't go to Italy, and I should have gone to Italy.

POLLOCK: Well, near the end, there were two sets of regulators who became suspicious. One unsung hero of this is a guy named Billy Lovelady (ph), who was the Tennessee auditor, who wrote a -- who wrote a memo to his bosses saying that he worried that the assets of these insurance companies were being looted. And he used the word "looted." And he actually figured the whole thing out. And he wrote a memo to his bosses, the insurance commissioner and other people in the department. And it fell into a deep bureaucratic hole. Nothing happened.

POLLOCK: Looking at the books. He looked at the books, and then he realized that the assets were being managed by something called Liberty National Securities, which was Frankel's brokerage firm. And he went to public records, realized that Liberty National Securities was a tiny, tiny entity with, like, a capitalization of something like $59,000, and realized how can this tiny firm be -- be trading all this -- all this" -- you know, these -- these hundreds of millions of dollars in assets? It just didn't seem right to him.

POLLOCK: It did work. I have to say it did work. I mean, ultimately, it failed, but it worked for a while. Definitely, I would say in Tennessee -- and you know, there might be officials in Tennessee who would argue with this -- they were able to stall. They were definitely able to stall.

POLLOCK: Oh, no. No, no, no.

POLLOCK: I think -- I actually do think that the Akin Gump people made some mistakes.

POLLOCK: I can't tell you who I talked to for this or not, for the most part. But at one point, Frankel sent a bunch of binders filled with material, silly material, for the most part, to Akin Gump. And it included pictures of Father Jacobs and the pope and Father Jacobs's mother, with the pope's Christmas tree, things that were very unbusinesslike. And in that -- in one of those binders was a document that Frankel had created. And it made it look as though it was an Akin Gump document, drafted by Akin Gump lawyers. And that document was the document that said that -- that Walter Cronkite and Lee Iacocca were on the advisory board. And the Akin Gump people didn't notice.

I -- I don't -- I really believe that the Akin Gump people did not know that there was anything illegal, but should they have noticed? Should they have flipped through the binders and said, "Wow. That says it's written by us. We didn't write that."

POLLOCK: That is Cynthia Allison (ph). She is one of Marty's women. She is one of the most -- more pathetic of Marty Frankel's women, I would say. She -- they met through a personal ad. He was not interested in her. They did not have a romantic relationship. She badly wanted to have a romantic relationship with him and one day said something like, "I'd like to kill him," or something like that -- a sentiment, by the way, that a lot of people had at various times. He could be very annoying. And Frankel got wind of it and banned her from the house, even posted her picture at the guard booth to make sure she didn't come back into -- into the compound.

When he fled, he fled with two women, Mona Kim and Jackie Ju (ph), and they wanted to go home.

POLLOCK: Yeah. And first to Italy. And the only woman who would agree to come and be with Marty on the lam was Cynthia Allison.

POLLOCK: He is in Rhode Island. He is awaiting trial in -- which will be in October in federal court in New Haven. And I don't know what he'll get.

POLLOCK: In Rhode Island.

POLLOCK: I'm sorry.

POLLOCK: In Rhode Island. I don't know what he'll get, but it's going to be a lot of years. I mean, I would think, assuming he's convicted...

POLLOCK: He could be convicted of securities fraud, of racketeering, of wire fraud. The list goes -- I mean, it's a pretty long list. His bodyguard was just sentenced to 10 years and...

POLLOCK: David Rosse. And I'm assuming that -- that Marty Frankel will be -- if he is convicted, will serve a lot more time than that. He could spend most of the rest of his life in jail, I would think.

POLLOCK: Thank you.