Venture

Robert Trigaux

Nadel arrested, Tampa lawyers start probe

27

January

NADEL UPDATE TUESDAY MORNING, 11:40 a.m.: Arthur Nadel, the Sarasota hedge fund manager who disappeared two weeks ago, was arrested this morning after turning himself in to FBI officials in Tampa. An FBI spokeswoman in New York said Nadel turned himself in at 9:45 a.m. Early details here.

Wake up and good morning. Nope, they haven't found missing Sarasota money manager Art Nadel yet. But a fresh crop of Tampa lawyers has sprung up to begin the legal dissection of Nadel's business and potentially criminal activities. As the Sarasota Herald-Tribune notes in today's story: For the first time, officials investigating the missing $342 million managed by Arthur G. Nadel are calling it a Ponzi scheme.

Burtwiand Burton Wiand of Tampa's Fowler White Boggs is the court-appointed receiver in the Nadel case. Wiand says Nadel has been defrauding investors since at least 2003, "and in all likelihood before then." According to CNBC, in a court filing late Monday, Wiand said Nadel's hedge funds were never worth anything close to what he was telling investors. Yet Nadel collected millions of dollars in fees -- including as much as $20 million in 2005, and nearly $16 million last year. In addition, the filing says, "a significant sum of the proceeds of Nadel's scheme made its way into other accounts controlled by Nadel and/or his wife," as well as financing other businesses Nadel controlled.

Wiand has gained control over two of those businesses seeking assets to share with investors. Those businesses include a private jet facility at the Venice airport south of Sarasota, and a company called Tradewind Aviation, which controls at least five planes at the Newman-Coweta County Airport in Georgia. Tradewind is run by Nadel's son Chris, who has an airline pilot's license. Federal records show Tradewind owns a Cessna business jet, a helicopter and two other aircraft.

Carlnelsonfowlerwhite Another Fowler White attorney, Carl Nelson, is serving as trial counsel for court-appointed receiver Wiand. Nelson told the Sarasota paper that "preliminarily" the facts point to Nadel operating a long-running scam. "It appears that it looks like a Ponzi scheme," Nelson said. The first sign of a Ponzi scheme was in the statements to investors, the Herald-Tribune reports, who were told they had large balances in hedge funds that actually held small amounts of money. "This goes on for a long time," Nelson said. But Nadel does not appear to have lost the money in trading activities, he said.

What's most astonishing about the Nadel caper is his lengthy and not-well-hidden history of bad business decisions, rip-offs and poor life decisions. In a fine story by colleague and senior reporter Susan Martin of the St. Petersburg Times, Nadel's long trail of business deals gone bad, plus his five marriages, raise serious questions. For instance: Why didn't anyone look more closely at Nadel's sorry background before giving him millions to invest? Writes Martin:

"Before he traveled by private jet, before he became a philanthropist, before he managed huge sums of money for investors throughout the United States, Arthur G. Nadel was so broke he drove a 16-year-old Ford and argued with an ex-wife over a $100 camera."

Artnadelin1984 Martin's story includes this photo taken of Nadel in 1984. He is now 76. According to Martin, in his 60s and "not readily employable,'' as his lawyer put it, Nadel moved on to day trading — buying and selling stocks and other financial instruments with the goal of making quick profits. In 1997, he and Peg Quisenberry, who would become Wife No. 5, started a day-trading club and developed a computer-based investment and trading system.

The couple teamed up with Neil Moody, a Sarasota entrepreneur, and began managing money for clients in Moody's Valhalla, Victor and Viking funds. The companies attracted scores of investors, lured by the promise of high returns. The rest is pretty well known by now. Nadel's skipped town and Sarasota's trying to pick up the pieces, along with investors across the country who were taken in by Nadel.

Sarasota lawyers are busy. Drew Clayton, a Sarasota securities lawyer with Johnson Browning & Clayton, has clients claiming $17 million in losses. And attorney Morgan Bentley at the Williams Parker law firm is handling claims from three dozen investors with losses approaching $50 million.

In Boulder, Colo., Mo Siegel, founder of tea manufacturer Celestial Seasonings Inc., told Bloomberg News that he had invested $2 million in a fund run by New York investing firm ThinkStrategy, which in turn had invested with Nadel. "I'm just sick," Siegel, 59, told Bloomberg News. "I feel like I've been robbed. I feel so personally violated."

(Photos of Burt Wiand and Carl Nelson courtesy of Fowler White Boggs. Art Nadel photo is special to the St. Petersburg Times.)

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:23pm]

    

Join the discussion: Click to view comments, add yours

Loading...