Lawsuits target newsletter publisher Don Rowe as "chief salesman" of Art Nadel's Ponzi scam
Wake up and good morning. The circle of Sarasota's Art Nadel's helpers in his Ponzi scheme grows. Now a prominent newsletter publisher, Don Rowe of the Wall Street Digest, faces a lawsuit alleging his presumed, dispassionate third-party assessment of Nadel's (in photo) investing prowess was simply a hypester pitch influenced by alleged under-the-table payments.
When will investors catch on that so many of these specialty newsletters touting obscure penny stock companies or investment schemes are no more than paid hucksters operating under a veneer of objectivity?
Sarasota's Herald Tribune reports that the Formica family in New Jersey relied on Rowe and his Sarasota-based Wall Street Digest for advice on how to invest millions of dollars. Rowe had gained the family's trust to give them expert, impartial counsel in what became a "close, adviser-advisee relationship" that included frequent telephone conversations, the newspaper states.
After Nadel's Ponzi scheme blew up in Sarasota last year, the Formicas say they realized the advice was a sham -- that Rowe was secretly paid hefty fees to recommend certain investments. The family's lawsuit says Rowe never told them that he pocketed referral fees to promote not only the Nadel hedge funds, but also several other investment funds. Family loss? More than $6 million.
And this is not the only lawsuit aimed at Rose as an enabler of Nadel's scheme. The paper notes that Sarasota attorney Drew Clayton sued Rowe on behalf of six other investors, claiming Rowe and funds managed by Nadel had a partnership arrangement. "In our review, we learned that Mr. Rowe was getting paid substantial monies to promote the hedge funds or to not say anything bad about them," Clayton said.
And Rowe also is being sued for $8.6 million by the court-appointed receiver, Tampa attorney Burton Wiand (photo, left), in the Securities and Exchange Commission's case against Nadel. Wiand recently called Rowe "the primary salesman for this venture," the story states.
Indeed, in the July 2009 issue of Sarasota Magazine, a story headlined "Scam" on Nadel points out that "genial publisher" Rowe recommended Nadel's funds in a number of articles between 2001 and 2004 and steered investors to the funds for a fee. Here's that story.
Rowe, says the magazine, named Nadel "America's Top-Ranked Money Manager" and wrote that he had paid a "due diligence visit to the offices" of Nadel and his partners. "After 26 years of reviewing the track records of over 11,000 mutual funds, 6,000 money managers and 5,800 hedge funds, Nadel's computerized investment program has produced the best track record and most consistent returns I have ever seen," Rowe declared.
Rowe's attorney, Tampa attorney Edward Savitz (photo, right), is quoted in the Herald Tribune saying the allegations in the Formica family lawsuit cannot be proven. He says, responding to the Clayton lawsuit brought by investors, that Rowe, now 75 and no longer active in the newsletter, is not responsible for their decisions on where they placed their money. Rowe's newsletter was part of his Carnegie Asset Management firm, which still operates in Sarasota.
Stated Savitz, who seeks to dismiss the suit:
"All the plaintiffs can allege is that the Wall Street Digestmade statements between 2000 and 2004 about the Nadel-Moody funds and that in January 2009, five years after the last publication by the WSD regarding any of these funds, the Nadel-Moody funds were worthless."
Here is the complete Sarasota Herald Tribune story.
-- Robert Trigaux, Times Business Columnist