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Robert Trigaux

Sarasota's Nadel faces up to 280 years in jail

29

April

Artnadelvalhalla Wake up and good morning. The legal noose is tightening around alleged Sarasota Ponzi schemer/money manager Art Nadel. He was indicted Tuesday on 15 fraud counts, accused of running a 10-year scheme that bilked investors out of hundreds of millions of dollars. Federal prosecutors say Nadel, 76, as a founder of Scoop Management in downtown Sarasota raised at least $360 million from more than 350 investors in the six hedge funds. Nadel claimed they were wildly profitable, but in fact were big money losers, federal prosecutors said.

As reported on today's front page of the Sarasota Herald Tribune, Nadel ran the scheme from 1999 through January, at one point claiming the funds had generated more than $271 million in gains with annual profits ranging from 18 percent to 48 percent. If convicted, he faces a combined 280 years in prison and the loss of his Sarasota home, bank accounts and other property he amassed with money from the alleged scam. Nadel will be arraigned at noon tomorrow in Manhattan, where he has been held since he was arrested in January, at which time he can enter a plea.

Each count of securities fraud carries a maximum sentence of 20 years in prison and a $5 million fine, or twice the gross gain or loss from the crime. The mail fraud count carries a maximum sentence of 20 years and a $250,000 fine. Each wire fraud count carries 20 years maximum and a $250,000 fine.

Barrycohenkenhelle Prominent Tampa attorneys Barry Cohen and Todd Foster had defended Nadel against criminal charges after he turned himself in to the FBI, but the attorneys were unable to convince a federal judge last month to unfreeze some of Nadel's assets so he could pay their legal fees. (Cohen photo by Ken Helle of the St. Petersburg Times.)

No dough, no go. Cohen and Foster dropped the case. Nadel is now represented by Mark Gombiner, a federal defender in New York. Gombiner, who says Nadel will plead not guilty, told the Wall Street Journal: "It's a much more complex story than the indictment may suggest. We're going to be evaluating what our defenses are." And Reuters added this Gombiner remark: "Mr. Nadel is a quite elderly man with very serious health concerns, and I anticipate asking the court to reconsider his bail conditions."

Nadel told clients "that his purchases and sales of securities in funds had generated cumulatively more than $271 million in gains," Acting U.S. Attorney Lev Dassin said. "In truth, Nadel’s trading resulted in an overall net loss."

Unable to post $5 million bail, Nadel remains in a federal lockup in New York City. It's the same jail housing Ponzi schemer extraordinaire Bernard Madoff -- ironic since Nadel's been dubbed "Mini-Madoff" by some in the media.

Nadel also faces civil charges in Tampa brought by the U.S. Securities and Exchange Commission. A court-appointed receiver -- Burton Wiand of the Tampa law firm Fowler White Boggs -- is also pursuing Nadel's assets, including some excess profits from investors, for later disbursement to all investors who lost money. According to an AP report, Wiand has identified more than 80 so far who made "false profits" in Nadel's hedge fund.

-- Robert Trigaux, Times Business Columnist

[Last modified: Tuesday, June 1, 2010 12:24pm]

    

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