All of Arthur Nadel's Assets to Stay FrozenMar 20, 2009 | Parker Waichman LLP
Arthur Nadel's lawyers have lost their bid to access some of the accused Ponzi schemer's assets. Last week, we reported that a Tampa Bay law firm representing Nadel in his criminal case said the former hedge fund manager owed it just over$93,000 in unpaid legal bills.
The law firm had asked U.S. District Judge Richard Lazzara to unfreeze $250,000 worth of Nadel's assets to pay his current and future legal bills. In return, the firm had offered to represent him for a “deeply discounted” rate. As we reported last week, one of Nadel's attorneys told HeraldTribune.com that if the judge did not agree, the decision could “force a re-evaluation of our position here" - meaning the firm could decide to drop Nadel as a client.
According TampaBay.com, Nadel's lawyers had argued that his wife could pay for his fees out of funds she had from selling property, had earned, or received as alimony prior to her marriage to Nadel. But since their marriage, all of her funds had been co-mingled with her husbands, and deposited into his now-frozen hedge funds.
But both the trustee overseeing the liquidation of Nadel's assets, as well as several of his investors, opposed any such action. Last week, an attorney for a group of 22 investors filed a motion to intervene and oppose Nadel’s attempt to free any of the seized assets.
According to TampaBay.com, at a hearing on Friday, an attorney for the Securities and Exchange Commission also voiced opposition, saying there was no reason Nadel should pay his defense team with whatever money is left from the investors he defrauded.
Judge Lazzara agreed, saying it would be a "gross abuse of my discretion" to lift the freeze on assets, " TampaBay.com said. The Judge also said that he would have liked to have spoken with Nadel's wife about her money, but she was not present at the hearing, TampaBay.com said.
According to TampaBay.com, it is not known yet if the Tampa law firm will stop representing Nadel. But Judge Lazzara pointed out that if it did, Nadel could seek court-appointed counsel.
Arthur Nadel was president of Scoop Management Inc., which managed six private investment funds. He disappeared on January 14, a day before he was to deliver a $50 million payout to investors. He left his family a purported suicide note, but it was always suspected that Nadel was alive and on the run.
Nadel turned himself in to the FBI in Tampa two weeks later. His was charged with one count each of securities fraud and wire fraud, and his case was moved to federal court in Manhattan. Nadel is in jail, having been unable to meet the conditions of a $5 million bond. If convicted, Nadel could face a maximum of 20 years in prison on each charge.
Nadel's fraud is estimated to have cost his investors as much as $397 million.