Arthur Nadel Investors Don't Want His Assets Unfrozen

A group of people who invested with accused <"">Florida Ponzi schemer Arthur Nadel are trying to block his efforts to have some of his assets unfrozen. According to, they have filed court papers asserting that funds Nadel is trying to access came from his alleged fraud.

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.

Nadel turned himself in to the FBI in Tampa two weeks later. His was charged with one count each of securities fraud and wire fraud, and his case was moved to federal court in Manhattan. Nadel is in jail, having been unable to meet the conditions of a $5 million bond. If convicted, Nadel could face a maximum of 20 years in prison on each charge. He also faces a Securities and Exchange Commission (SEC) civil suit.

As we reported earlier this week, Nadel’s criminal attorneys have filed a motion asking U.S. Court Judge Richard Lazzara to unfreeze some of Nadel’s assets so that he can pay his past and future legal fees. The law firm representing Nadel says the former hedge-fund manager owes it $93 million for services thus far. The firm has offered to represent him for a “deeply discounted” rate if the judge agrees. It is also expected that the same lawyers would represent Nadel in his SEC suit.

If Nadel cannot pay for his legal representation, his lawyers could drop him. One of the attorneys working on Nadel’s case told the that if the judge does not agree to unfreeze some assets, it could “force a re-evaluation of our position here.”

The request isn’t setting well with a group of 22 former Nadel investors. According to, their attorney filed a motion this week to intervene and oppose Nadel’s attempt to free any of the seized assets. “Nadel’s counsel fails to offer any evidence to show that the sources contain untainted assets,” the motion says.

One of the investors in the group is Louis Paolino Jr. As we’ve previously reported, 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 has also filed suit against Neil and Chris Moody, alleging the two committed fraudulent inducement, breach of fiduciary duty, unjust enrichment, constructive trust and conversion in their role as general partners in Scoop Management Inc.

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