ATNIP PLEADS GUILTY IN ARK.

Arkansas Insurance Commissioner Mike Pickens announced that Gary Atnip, an alleged co-conspirator with Martin Frankel, entered a guilty plea to a felony charge of violating the maintenance of home office records law. 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, Ark., when Franklin American purchased Old Southwest in March 1999. According to investigators, shortly after Old Southwest was purchased, Atnip caused the funds to be transferred to a bank in Switzerland, violating Arkansas Insurance Code Sec. 23-69-134, which led to the ultimate collapse of Old Southwest. It remains in receivership. Marty Nevrla, director of the Insurance Department’s Fraud Investigation Division, commented that Atnip’s case was the first to be “filed under the statute designed to protect the assets and records of insurers.” 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, including Old Southwest, 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 to 15 year federal prison sentence. Frankel is currently serving time in federal prison.