NU Online News Service, May 15, 12:05 p.m. – Martin Frankel, a jailed financier accused of costing seven life insurance companies more than $200 million, is back in the news.

Frankel has been awaiting trial in New Haven, Conn., on federal charges of fraud, conspiracy and racketeering. A source who requests anonymity says Frankel might head off a trial by pleading guilty today at a hearing in New Haven.

Meanwhile, insurance commissioners from Mississippi, Missouri, Tennessee, Arkansas and Oklahoma are suing the Vatican in federal court in Mississippi for allegedly helping Frankel destroy life insurers in their states.

By law, each of the states must cover any insurance claims filed by customers of the bankrupt companies.

The suit names as defendants the Vatican; Thomas Corbally, a New York consultant; Msgr. Emilio Colagiovanni a former Vatican official; Monitor Ecclesiasticus, a church foundation; and several former Frankel associates.

The plaintiffs accuse the defendants of lending legitimacy to a phony charity that Frankel set up to hide his involvement in purchasing the insurers.

The plaintiffs maintain the Vatican is not immune from prosecution in the Frankel case either as a religious organization or as a sovereign state.

“By assisting Frankel in the attempted purchase of U.S. insurance companies during 1998 and 1999, the Vatican, through its agents, carried on commercial activities in the United States, committed acts in the United States which affected its commercial activities elsewhere, and engaged in commercial activities outside the United States which had a direct effect within the United States,” the plaintiffs state.

Those commercial activities “were private, not sovereign, and secular, not religious,” the plaintiffs argue.

The Vatican could not be reached for comment on the charges. An attorney for Corbally did not respond to a request for comment.

In previous statements to the press, a Vatican spokesperson denied Vatican involvement in Frankel’s alleged scheme. Corbally and others accused in the suit have also stated in the past that they were Frankel’s victims, not his accomplices.

Frankel was arrested in Germany in 2000 after allegedly fleeing the U.S. in 1999 when Mississippi and other states began questioning financial transactions of some of the insurance companies he owned. He was extradited to the U.S. last year.

The states also have a lawsuit pending against Frankel seeking $600 million in damages.

Mississippi Insurance Commissioner George Dale released a statement about the Vatican suit saying that it is his duty to pursue recovery from any persons or entities that contributed to the insolvency of the seven insurers.

“The law charges me to recover for the stolen money that ultimately may have to be paid by the taxpayers,” Dale says.