Missing Fla. money manager turns himself in
Published: Tuesday, January 27, 2009 at 1:00 p.m.
Last Modified: Tuesday, January 27, 2009 at 1:00 p.m.
TAMPA, Fla. — A Florida hedge fund manager who disappeared this month just as he was due to pay investors $50 million turned himself in to authorities Tuesday to face federal securities and wire fraud charges.
Arthur Nadel, accompanied by two attorneys, surrendered in Tampa, about an hour north of his home in Sarasota, the FBI said.
He was due in federal court later Tuesday afternoon. The FBI did not provide additional details about his surrender or where he has been for the past two weeks. Nadel's attorney, Todd A. Foster, did not immediately respond to a telephone message left with his office.
Federal regulators last week sued Nadel for fraud, saying he misled investors and overstated the value of investments in six funds by about $300 million. The Securities and Exchange Commission also won a court order freezing his assets.
A criminal complaint unsealed Tuesday in federal court in Manhattan alleges Nadel has been defrauding investors since 2004.
Nadel, 76, disappeared Jan. 14 after telling his wife in a note that he felt guilty. He also threatened to kill himself, according to the Sarasota County Sheriff's Office. Police found his green Subaru the next day in an airport parking lot.
In a lawsuit filed in federal court in Tampa, the SEC said Nadel recently transferred at least $1.25 million from two funds to secret bank accounts that he controlled.
Two investment companies co-owned by Nadel, Scoop Capital and Scoop Management, agreed last week in a settlement with the SEC to injunctions and an asset freeze. They neither admitted nor denied wrongdoing.
According to Scoop Management's internal accountant, the six funds have between 500 and 600 investors nationwide. Earlier this month, many were told that the funds were empty. Sarasota investigators have been fielding inquiries from investors from around the country and as far away as France.
The SEC said Nadel's funds appeared to have assets totaling less than $1 million, while he claimed in sales materials for three of the funds that they had about $342 million in assets as of Nov. 30.
The materials also boasted of monthly returns of 11 to 12 percent for several of the funds last year, when they actually had negative results.
An investor in one fund received an account statement for November indicating her investment was worth almost $420,000. In reality, the entire fund had less than $100,000, according to the SEC.
The investigation came on the heels of two other high-profile financial fraud cases. Investigators say Wall Street's Bernard Madoff cost investors some $50 billion late last year in what may be the largest Ponzi scheme in history. And Indiana money manager Marcus Schrenker was apprehended in Florida earlier this month after allegedly trying to stage his death in a plane crash as investigators probed his businesses.
In the criminal complaint against Nadel unsealed Tuesday in New York, FBI Agent Kevin Riordan wrote that Nadel in the past several years had rejected a partner's requests that he hire an independent certified public accountant to audit the assets in his funds.
Riordan said the partner, identified in court papers only as "Partner-1," told Riordan that he told Nadel he had to hire an independent public accountant after the Madoff's early December arrest.
Riordan said the partner told him that Nadel agreed Jan. 8 to the independent audit and that a second partner sent a letter on Jan. 13 related to an independent audit.
Nadel vanished the next day.
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