Wednesday, June 20, 2018
Business

Receiver in Nadel Ponzi scheme sues Wells Fargo

SARASOTA — The receiver in the Ponzi scheme of Arthur Nadel, a former hedge fund manager from Sarasota, filed a lawsuit Thursday against Wells Fargo, seeking millions of dollars from the nation's fourth-largest bank over its involvement in the scheme that defrauded hundreds of investors.

The lawsuit from receiver Burton Wiand contends Wachovia Bank — now owned by Wells Fargo — played an "essential" role in the fraud by allowing Nadel, now serving a 14-year prison sentence in North Carolina, to siphon funds into shadow bank accounts.

The lawsuit seeks monetary damages from Wells Fargo, but the exact amount is unclear. Investors lost $168 million in the scheme, and attorney Terry Smiljanich said he will pursue a sum equal to that amount, less what the receivership recovers from others.

"The bank turned its back on its responsibility under the law and allowed Nadel free rein to steal this money," Smiljanich said. "He robbed these innocent victims blind, in some cases taking their entire life savings."

Nadel's relationship with Wachovia was so cozy, the bank invested $550,000 in two of his hedge funds, cashing out more than $425,000 in profits two months before the scheme imploded in January 2009, the lawsuit said. The bank later returned those "false profits" to the receivership.

Wells Fargo declined comment.

The lawsuit, filed in Sarasota Circuit Court, also names Timothy Ryan Best, a former vice president with Wachovia's Private Banking Group in Tampa who left Wells Fargo in October.

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Published: 06/20/18