The receiver charged with recovering <"http://www.yourlawyer.com/topics/overview/Arthur_Nadel_Ponzi_Scheme">Arthur Nadel’s assets has reached an agreement with a second investor for the return of more than a quarter million dollars in false profits that were withdrawn from the accused Ponzi schemer’s failed hedge funds. According to the Sarasota Herald-Tribune, this is the second time receiver Burton Wiand has struck such an agreement with a Nadel investor.
Earlier this week, we reported that Wiand had identified 80 individuals who withdrew payouts from Nadel’s hedge funds in excess of their original investment. Wiand asserted that such payments constituted false profits because they were paid out of money deposited by new investors. Wiand has said he would accept a discounted amount of the false profits from investors who voluntarily return the money, according to Herald Tribune.
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 â€œclaw backâ€ lawsuits.
According to the Herald-Tribune, the Robert O. Chambers Trust, which withdrew over $300,000 in profits from Nadel’s hedge funds, has agreed to return just over $271,000 – 90% of the profit.
Last week investor David Monte became the first to settle with the receiver, agreeing to hand over $9,817, the Herald-Tribune said.
The attorney representing Wiand told the Herald-Tribune that similar agreements will likely be reached with other Nadel 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.