Florida Investor Sues Nadel Partners for FraudFeb 5, 2009 | Parker Waichman LLP A Florida investor has filed a lawsuit charging accused Ponzi scammer Arthur Nadel's partners with fraud. The lawsuit charges that Neil Moody and his son Chris committed fraudulent inducement, breach of fiduciary duty, unjust enrichment, constructive trust and conversion in their role as general partners in Nadel's firm, Scoop Management Inc.
Nadel was president of Scoop Management, which managed six private investment funds. The funds managed by Scoop included Viking IRA, Valhalla Investment Partners LP, Viking, Victory, Victory IRA and Scoop Real Estate. Viking IRA, Valhalla and Viking funds were managed by Nadel under contract with his partners, Neil and Chris Moody.
Nadel 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. Since his disappearance, scores of angry investors have made complaints to law enforcement authorities about Nadel.
Nadel turned himself in to the FBI in Tampa late last month. He has been charged with one count each of securities fraud and wire fraud. If convicted, Nadel could face maximum of 20 years in prison on each charge.
Until now, neither Moody had faced any legal action relating to the Nadel fraud. In a statement issued after Nadel's disappearance, Neil Moody claimed that he only learned on Jan. 14 “of an extremely serious situation suggesting that the funds may have virtually no remaining value.”
The lawsuit against the Moodys was filed by Louis Paolino Jr. Among other things, itt claims that the Moodys took fraudulently obtained money from investors in Scoop's funds and bought homes with part of the proceeds.
According to the Sarasota Herald Tribune, Paolino has said he was frequently on the phone to either Neil or Chris Moody. He said Neil Moody told him the hedge fund, which traded stock market futures, was supposed to remain 90 percent liquid by the end of each day. Paolino's mainstay fund, the one he thought would carry his estate through the turbulent late 2000s, was Viking Fund LLC, the Herald Tribune said.
According to the Herald Tribune, Paolino once ran Mace Security, the publicly traded maker of chemical self-defense spray of the same name. He had placed $3.2 million of Mace money, as well as his own, with Scoop. In May, he was fired by the Board of Directors of Mace, and the board tried to get the company's money out of Scoop. Scoop did issue Mace a check for $1 million in November, but nothing more was ever returned to the company, the Herald Tribune said.
Paolino's attorney has also filed a "lis pendens" order against some property owned by the Moodys. Paolino's attorney told the Herald Tribune that the order "puts everyone on notice that deals with that property that there is a potential that property might be ordered over to the plaintiff."