Bear Stearns Cos. has been sued on behalf of seven defunct insurance companies for purportedly helping convicted financier Martin Frankel steal more than $200 million, court papers show.
The lawsuit, filed Friday by five state insurance commissioners with the U.S. District Court in Manhattan, calls for Bear Stearns to make restitution, which could be used to pay back creditors and policyholders. It also seeks treble damages and punitive damages.
The commissioners said Bear Stearns facilitated Frankel's fraud, and that it and some employees "purposely contrived to avoid learning, or were recklessly indifferent to Frankel illegally laundering money through the Bear Stearns accounts."
Bear Stearns had filed a lawsuit March 16, in anticipation of Friday's lawsuit, seeking a declaration that it was not liable for Frankel's actions.