Ponzi Scammer Arther Nadel to be Moved to ManhattanFeb 3, 2009 | Parker Waichman LLP
Accused Ponzi scammer Arthur Nadel has been ordered transferred to Manhattan, Bloomberg News reported today. Nadel is the Florida hedge-fund advisor who allegedly bilked investors of hundreds out of millions in savings.
Most recently, Nadel was refused bail by a U.S. Magistrate judge in Florida. Nadel, who is accused of cheating his investors out of as much as $350 million, was on the run for two weeks before he surrendered to the FBI in Tampa, Florida last Tuesday. At the hearing Friday, U.S. Magistrate Judge Mark Pizzo denied Nadel’s request saying there was no good explanation for his two-week disappearance: "There is a quantifiable risk and simple house arrest with electronic monitoring doesn’t resolve the matter,” Pizzo said.
Nadel was president of Scoop Management Inc., which managed six private investment funds: 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.
Today, the U.S. Magistrate Judge ordered Nadel transferred to the federal court in New York City, said Bloomberg, where he faces criminal charges that state that investors in funds handled by Nadel were told they had over $300 million in their accounts. In actuality, the funds totaled less than $125,000.
Nadel disappeared on January 14, the day before he was to deliver a $50 million payout to investors, and was arrested on the January 27, when he was ordered held without bail. Bloomberg reported that it remains unknown when federal marshals will transport Nadel to New York City.
Ostensbly, Nadel left his family a so-called suicide note, but it was always suspected that Nadel was alive and fleeing. Since his disappearance, scores of angry investors have made complaints to law enforcement authorities about Nadel. Following his arrest, the FBI charged Nadel with one count each of securities fraud and wire fraud. If convicted, Nadel could face up to 20 years in prison on each charge.
In addition, the Securities and Exchange Commission (SEC) has charged Nadel with securities fraud saying that the funds Nadel managed appear to have total assets of under $1 million. The complaint also alleges that Nadel recently transferred at least $1.25 million from two of the funds to secret bank accounts he controlled. According to the SEC, Nadel overstated the value of the funds by $300 million.
The SEC also obtained an emergency court order freezing Nadel’s assets and appointing a receiver and filed an emergency action against investment advisors Valhalla Management and Viking Management, as well as the six hedge funds involved in the case. Without admitting or denying the allegations, each of the investment advisors and hedge funds involved consented to the entry of preliminary injunctions, asset freezes, and receivership, among other things, the SEC said.
After Nadel went missing, his partner, Neil Moody, told investors in a statement that the funds managed by Nadel “may have virtually no remaining value.” Moody apparently reported the situation to the SEC and other authorities. Following his arrest, the FBI said Nadel would likely face more charges, and the scope of its investigation against him would likely expand.