MANHATTAN (CN) - Federal prosecutors unsealed a criminal complaint against Arthur Nadel, the Florida investment adviser who disappeared on Jan. 14, allegedly leaving his customers $320 million short. The unsealed complaint is a 10-page deposition from an FBI agent who seeks an arrest warrant. Although media have reported that Nadel left a "suicide note," the FBI agent says a shredded letter Nadel left his wife was pieced together, and in it, Nadel wrote, "I will send you a letter in a day or so".
The FBI agent accuses Nadel of securities fraud and wire fraud.
SEC sued Nadel last week.
In the unsealed complaint, USA v Arthur G. Nadel, the FBI agent refers to Partner 1 and Partner 2, people in whom Nadel allegedly confided.
The following story is taken from the FBI agent's deposition.
Nadel allegedly made money disappear, or simply lost it, from a variety of his businesses, including Scoop Management, Scoop Capital, Victory IRA Fund, Victory Fund Ltd. and Scoop Real Estate. Like Nadel, they were based in Sarasota, Fla.
Victim 1 allegedly lost $13.6 million. After he asked for the money back, in October 2008, he says, Nadel promised to return it to him in March this year.
"Victim 1 was informed through documents sent from Nadel's office that, as of September 2008, there was approximately $70,500,000 in Valhalla Investment Partners LP, approximately $75,200,000 in total assets in Victory Fund Ltd., and approximately $65,300,000 in total assets in Viking Fund LLC. ... (T)he representations regarding the returns on the investments and the value of the total assets in these funds were false."
Victim 2 allegedly lost $15 million.
The FBI agent says SEC officials informed him of other victims. He says that according to his sources, "on or about January 14, 2009, family members of Arthur G. Nadel, the defendant, reported to the police in Sarasota, Florida, that Nadel had left a note reflecting that he was no longer going to be around, and that Nadel's whereabouts were unknown."
The agent claims that on or about Jan. 15, "certain employees who worked for Arthur G. Nadel, the defendant, found several pieces of paper in a shredding machine at Nadel's office in Sarasota, Florida. Partner 2 further informed me that the employees put together several of the shredded pieces of paper and turned them over to law enforcement officers. According to Partner 2, the shredded documents appeared to be several pages of a handwritten letter from Nadel to his wife."
The FBI agent says he saw the letter, which stated, in part: "If you want to survive this mess, what follows is for your eyes only. I strongly suggest that you destroy it after reading. ... The avenues to money for you will likely be blocked soon. You must use the trust (yours) to your benefit as much and as soon as possible. Please look for the [Bank] credit card account and you will see a large credit balance that can be used in the usual way or to withdraw cash. Withdraw as much cash as you can, as this account might also become blocked. ... I have deposited enough in the Scoop Management acc[ount] for about a month; the same with Tradewind [and] Home Front Homes as well as Laurel Mtn. The Jet Center is self supporting, as you know. ... Look at all the recently paid bills in the 'package' to see where they stand. Also in the package are enough documents that I think will do the trick to give you complete control and ownership of what is left, and even documentation for divorce. Sell the Subaru if you need money. I will send you a letter in a day or so to tell you. ..."
(All parenthetical and bracketed remarks appear in the unsealed complaint.)
The agent concludes by asking Chief U.S. Magistrate Judge Henry Pitman to issue an arrest warrant for Nadel.
Here is Courthouse News' Jan. 22 story on the SEC complaint against Nadel.
SEC Sues Vanished Hedge Fund Manager, Says
$320M is Missing from Arthur Nadel's Accounts
TAMPA (CN) - The SEC sued Arthur Nadel, the 76-year-old hedge fund manager who disappeared on Jan. 14 with $320 million missing from his hedge funds, and froze what was left of his assets. Just before disappearing, Nadel transferred $1.25 million to "one of the secret accounts" he controlled, the SEC says.
Defendants in the federal action include Scoop Capital and Scoop Management, which "advised" the hedge funds Nadel controlled, and Scoop Real Estate, Valhalla Investment Partners, Valhalla Management, Victory IRA Fund, Victory Fund, Viking IRA Fund, Viking Fund, and Viking Management.
Nadel allegedly left a suicide note before leaving home on Jan. 14, then called his stepson and informed him of the note, the Sarasota Herald-Tribune reported. He has not been seen since. Sarasota police are said to have been investigating Nadel since the collapse of Bernard Madoff's alleged $50 billion Ponzi scheme became public. Nadel was a real estate developer in the 1960s and, like Madoff, was prominent on the charity circuit.
The SEC complaint states that Nadel and his companied "massively overstated the Hedge Funds' historical investment returns and the value of their assets in account statements provided to investors."
Nadel claimed that six of his hedge funds were worth more than $300 million, but the SEC says only $506,000 is left in them - $15,215 in securities, and the rest in "cash on hand."
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