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Robert Trigaux

Ponzi schemer Art Nadel of Sarasota in his own words: How I scammed so many investors

3

March

ArtnadelWake u p and good morning. Ponzi schemer Art Nadel

( photo, in happier times) pleaded guilty and will avoid a trial on multiple counts of securities fraud and other charges. The 77-year-old appeared before a judge in Manhattan court on Feb. 24. He's giving up just about all his assets except for his Sarasota home ( shown below, photo by Susan Taylor Martin of the St. Petersburg Times), valued at about $320,000, where wife Peg lives.

Nadel had prepared a written statement that the judge asked him to read. The Sarasota Herald Tribune obtained a court transcript. Here it is in full, but what follows is the portion in which Nadel reads out loud what he did. How often do you hear such details from the horse's mouth? I've highlighted portions of his remarks in bold for emphasis.Here goes:

Artnadelsarasotahomesusantaylormartin "Beginning in about 2002, I was a general partner and owner of Victory Fund Limited, Scoop Real Estate LP and Victory IRA Fund Limited. I also was a trading partner for Valhalla Investment Partners, Viking Funds LLC and the Viking Ira Fund. These latter funds were owned by Neil Moody and Chris Moody. All of the funds are headquartered in Sarasota Florida

"All of the above six funds obtained money from investors to be invested in publicly traded securities and/or real estate. Acting as a trader, I purchased and sold securities for the funds. Most of the trades were made through the New York, New York offices of Shoreline Trading Company, an affiliate of Goldman Sachs. Most of my trades involved buying and selling an exchange traded fund listed on the National Association of Securities Dealers Automated Quotations that was intended to track the NASDAQ index. Neil Moody, Chris Moody and myself were paid a percentage of the money that the investors had in the fund as a management fee. We were also paid performance incentive fees based on the purported profit turned by the funds.

"Beginning in about 2002 and continuing to January 2009, I engaged in knowingly and willfully fraudulent activity for the purpose of obtaining money from investors in the funds and converting the investors' money to my own use. To do so, I fabricated inflated rates of return from my trading activities and fabricated the net asset value of each of the funds. Using these fabricated numbers, I repeatedly communicated to investors and prospective investors that the funds had consistent and extremely positive performances and rates of return and that the net asset value of each of the funds was in the tens of millions of dollars. These communications were knowingly and willfully false and made for the purpose of inducing investors to invest and keep their money in the funds.

"As a result of my fabrications regarding the performance and value of the funds, I and the Moodys received tens of millions of dollars in management fees and performance incentive fees that did not reflect the actual performance, or the actual net asset value of the funds. We were not entitled to these fees. I also defrauded the investors in the funds by transferring millions of dollars in the funds to accounts and entities that I owned and controlled. These transfers were not disclosed to and/or authorized by the investors. All of the above conduct took place with respect to each of the funds named in Counts 1 through 6 of the indictment.

"With respect to Count 7, from about 2002 to 2009, I used the United States mails to mail to investors and prospective investors the fraudulent statements and valuations I have just described. These mailings were sent from Sarasota, Florida to other locations outside of Florida, including New York, New York. With respect to Counts 8 through 15, I sent faxes on the dates alleged in each count to Shoreline Trading in New York, New York requesting that money be wired from various accounts I had at Shoreline to other accounts that I controlled. Pursuant to my requests, Shoreline wired money to the various accounts in Florida. All of these wire transfers were made for the purpose of facilitating and concealing the scheme to defraud that I have just described.

"At all times, I knew that all of the fraudulent activities I just admitted to were wrong and illegal. I am profoundly sorry for what I have done. And I am adding at this time a statement that about a year ago and before I was arrested I sent certain communications to my family. I wish to reiterate the regret and sorrow I felt a year ago and conveyed in those statements and continue to feel more and more every day. I can also add my understanding of the anger and rage on the part of all of the people I let down so badly after they placed their faith and hope with me. I want them all to know I will carry this burden with me every day for the rest of my life. Thank you."

A rare confession. Here's the Herald Tribune story based on the court transcript.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:27pm]

    

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