International Swindle Guts Old Southwest

by Michael Whiteley  on Monday, Mar. 31, 2014 12:00 am  

Capitol Life had amassed assets of $438.1 million. But it was struggling.

“We knew the president of Capitol Life, and we were very familiar with the company. We’d had it under supervision for years,” says Nancy Ryan, public affairs director for the Colorado Division of Insurance.

By comparison, Old Southwest was small. Born inside the offices of a Jacksonville funeral home in 1959, the company was wholly owned by Westelle Kemp Moore and her family.

With three employees, Old Southwest paid $1,800 a month to rent offices at Moore’s Jacksonville Funeral Home. It listed its furnishings at the time of the sale as two armoires, four Queen Anne chairs, three tables, a black office chair, a refrigerator, a sliding partition and a postage machine.

Annual reports show a steady increase in assets — from $5.1 million to $5.9 million between 1994 and last year. Reserves, the cash and investments stored to back policies, increased from $4.3 million to $4.9 million during the period.

Westelle Moore and members of her family declined to discuss the company. One family member who asked not to be named said the company suffered from a family feud that prompted division of the family’s holdings four years ago.

Control of the insurance company switched from Boyce Freeman Moore and his immediate family to his sister, Jimmie Lee Moore in 1995. The Moores went looking for a buyer, says a former financial consultant.

Franklin American, based just outside of Nashville, offered $400,000 up front for the Jacksonville company in late 1998, plus an amount equal to the company’s estimated $752,000 in capital and surplus, maintenance on its interest and asset valuation, and a share of the unrealized gains on stocks and bonds.

More exotic entities associated with Frankel made a similar offer in Golden in October 1998, promising $550,000 in cash. There the stories take on stark differences — except for a murky link to what Arkansas investigators know as Frankel’s Liberty National Securities Inc.

Pickens and Gross say the 44-year-old securities broker had run afoul of the SEC and been banned from investing other people’s money by 1992.

“What I do know is that at one point the SEC revoked Martin Frankel’s license,” Pickens says. “I don’t know whether it was part of the plea agreement, but they sealed his record and allowed him to go on his merry way.”

Frankel had become custodian of the investments of a complex network of insurance companies operated by the Thunor Trust. At the top of that group was 49-year-old former consultant and security information executive, John Alvis Hackney, who’d assumed the role of trustee in 1991.

 

 

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