Missing Florida Hedge Fund Manager Charged with FraudJan 22, 2009 | Parker Waichman LLP
Missing Florida money manager Arthur Nadel has been charged with fraud by the Securities and Exchange Commission (SEC). According to the SEC’s complaint, Nadel provided false and misleading information for dissemination to investors about the six hedge funds he managed, and falsely overstated the value of investments in the funds by approximately $300 million.
Nadel has been missing since January 14, one day before he was supposed o deliver payouts totaling $50 million his investors. According to The New York Times, Nadel left a suicide note, and his family said he sounded “distraught”. The note apparently expressed his guilt over losing his investors’ money.
Nadel was president of Scoop Management Inc., a firm that 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 partner and Valhalla founder Neil Moody. The other three were Nadel’s own funds. Scoop Management managed money for around 600 investors. So far, about 45 have made complaints to law enforcement authorities about Nadel since his disappearance.
A statement from the Sarasota sheriff’s office said that foul play was not involved in Nadel’s disappearance. The office also said it traced a weekend phone call he allegedly made to his wife from Slidell, Louisiana, and had concluded that Nadel did not follow through with his suicide threat. While the Sarasota sheriff’s office has discontinued its search for Nadel, the FBI and the SEC are still looking for him.
According to the SEC’s complaint, the funds Nadel managed appear to have total assets of less than $1 million. The complaint also alleges that Nadel recently transferred at least $1.25 million from two of the funds to secret bank accounts that he controlled. The SEC also alleges that Scoop Capital LLC and Scoop Management, Inc., provided investment advice to all of the funds and also engaged in fraud as a result of Nadel’s actions. The SEC has obtained an emergency court order freezing defendants’ assets and appointing a receiver.
The hedge funds and firms Nadel was associated with, Scoop Capital LLC and Scoop Management, Inc., are also named as relief defendants in the SEC complaint. The SEC alleges that Nadel provided false and misleading information to the relief defendants for dissemination to investors through account statements and through offering memoranda.
“Investors should be able to rely on the truthfulness of an account statement and offering material," David Nelson, Director of the SEC’s Miami Regional Office, said, in a press release. "Mr. Nadel’s alleged actions deceived investors, and we are seeking to hold him accountable for that misconduct.”