Investors of accused Florida Ponzi schemer <"http://www.yourlawyer.com/topics/overview/Arthur_Nadel_Ponzi_Scheme">Arthur Nadel have been asked to return any “profits” they received as a result of investments in his hedge funds. According to the court appointed receiver charged with recovering Nadel’s assets, such payments constituted false profits because they were paid out of money deposited by new investors.
Arthur Nadel was president of Sarasota-based Scoop Management. The hedge 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 in late January. His alleged fraud is estimated to have cost his investors as much as $397 million.
Nadel has been unable to post a $5 million bond and is currently being held at the Manhattan Correctional Center in New York City. He faces charges of securities fraud and wire fraud, and if convicted could face a maximum of 20 years in prison on each charge.
According to CBS4 in Tampa, the court appointed receiver in Nadel’s case has identified 80 individuals who received profits from the scam. One investor has already agreed to return $10,000, the report said.
If investors do not return the money to the receiver, he could take legal action. Under the bankruptcy code, trustees may sue investors for any fictional profits and principal they withdrew in the six years before a fraud was exposed. Such proceedings are known as “claw back” lawsuits.
Meanwhile, Dow Jones News Services is reporting that Nadel finally has a lawyer for his criminal case. Last Wednesday U.S. Magistrate Judge Kevin N. Fox in Manhattan appointed Mark Gombiner, an attorney from the Federal Defenders of New York, Inc., to represent him.
Nadel owed the Florida law firm that had been representing him in his criminal case more than $93,000. The firm had asked U.S. District Judge Richard Lazzara to unfreeze $250,000 worth of Nadelâ€™s assets to pay his current and future legal bills. In return, the firm had offered to represent him for a â€œdeeply discountedâ€ rate. But Judge Lazzara refused, saying that doing so would be a â€œgross abuse of my discretion.â€
Following that decision, Nadel’s criminal attorneys dropped his case. He was given a continuance until April 29 to find new representation.
According to Dow Jones, Nadel is representing himself in a separate civil case filed by the U.S. Securities & Exchange Commission in Florida.