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Financier Frankel: Jewels To Jail

A state court convicted eccentric American financier Martin Frankel Wednesday of failing to pay custom taxes on smuggled diamonds and carrying falsified passports. He was sentenced to three years in jail.

Frankel, who pleaded guilty to the German charges last week in the hopes of avoiding extradition, asked the court to block his return to the United States, where he is accused of bilking millions out of U.S. insurance companies.

"If Germany extradites me, it will be breaking its own law," Frankel told the court during closing arguments. "Even the most violent criminal here gets the chance to be rehabilitated and released."

Frankel's lawyers said they would decide later whether they will appeal.

In addition to the jail sentence, the court ordered Frankel to surrender $1.6 million worth of diamonds from the stash he smuggled into Europe during his four-month run from the law.

Frankel, a 45-year-old Toledo, Ohio, native, had faced up to 10 years in prison on the German charges. Prosecutors said they sought a lesser term because the crime was financial, and caused no physical harm.

But the prospect of jail time in Germany doesn't appear to worry Frankel. Last week, he brazenly told reporters he would much rather sit in a German cell than be sent back to the United States. He repeated the statement Wednesday.

A mountain of lawsuits await him on the other side of the Atlantic, where he is accused of running an unlicensed brokerage from his fortress-like compound in Connecticut and cheating insurance companies in five states out of $200 million to pay for his lavish lifestyle.

The sentence could be so stiff that Frankel has likened the long years he may face if convicted in the United States to the equivalent of a death sentence. His strategy appears to be pinned on the hopes that Germans - with their outspoken stance against the death penalty and excessive punishment - will refuse to send him home to such a fate.

"I hope that Germany will respect its commitment to human rights," Frankel told reporters as he left the courtroom.

Prosecutor Hans-Gerd Meine said any extradition would be impossible until the German case had run its course, including potentially lengthy appeals. But he said Frankel could still be sent back afterward. An extradition would require a separate hearing.

At the trial's opening last week, Frankel seemed set for stall tactics. He surprised the court by saying he wanted to call four defense witnesses from the United States and Italy - which could have taken months to arrange.

But he backed down during Friday's proceedings, apparently abiding by a pretrial agreement with the court.

Prosecutors in Germany allege he evaded paying a 20 percent customs duty on more than 500 diamonds - valued from $5 million to $8 million - found with him when he was arrested in a Hamburg hotel Sept. 4.

That arrest ended an internatinal manhunt that began when authorities responding to a May 1999 fire at Frankel's compound found a file cabinet billowing smoke from smoldering documents but no trace of Frankel. He bolted just a day earlier, traveling first to Rome, then Germany.

In October, he was indicted on U.S. federal fraud, conspiracy and other charges in Connecticut. At least three of his associates have pleaded guilty to charges related to his alleged money laundering.

Insurance commissioners in five U.S. states - Arkansas, Mississippi, Missouri, Oklahoma and Tennessee - have also filed a federal lawsuit asking for more than $600 million in damages from Frankel for the money he allegedly bilked from companies in their jurisdiction

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