Art Nadel went from rags to riches to who knows where

SARASOTA — 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.

"He has no assets, no liquidity, no money in the bank and no resources of any kind,'' Nadel's lawyer wrote a judge in 1995, asking that Nadel be spared from paying alimony. "The husband is financially impoverished.''

Yet in just nine years Nadel went from down-and-out musician — fired from playing the piano at the Homestyle Harmony restaurant — to hedge fund manager responsible for a reputed $350-million.

Today, that money is missing and so is the 76-year-old. He skipped town on Jan. 14, telling his fifth wife in a note that he felt guilty and feared he might be killed.

Federal regulators, who have charged Nadel with fraud, say he misled investors by vastly overstating the value of assets. Two of his companies have agreed to a freeze on whatever is left while the FBI hunts Nadel, thought to have fled at least temporarily to Louisiana.

But if his whereabouts are a mystery, so is this: Why did so many smart people — doctors, lawyers, corporate executives — entrust their fortunes to a man with such a questionable past?

The Piano Man arrives

Arthur Geoffrey Nadel, a tailor's son, was born in New York on Jan. 1, 1933, in the depths of the Depression. Brilliant and musically blessed, he paid his way through New York University's undergraduate and law schools by playing piano in Manhattan clubs.

Acquaintances say Nadel never actively practiced law, instead serving as adviser to a small group of associates. In 1982 he was disbarred for taking $50,000 from an escrow account to help Richard Sanchez, a friend and real estate company president who was deeply in debt to loan sharks.

Beyond that, Nadel's years between law school and disbarment are murky. He married twice, had several children and divorced twice.

In a prospectus for one of his hedge funds, he said he spent the 1960s as a "real estate developer and securities investor'' followed by a stint in the '70s as CEO of a public company that built health care facilities. He did not identify the company.

Around 1978, for reasons unclear, Nadel moved to Sarasota, where he, Sanchez and others tried to convert the historic but rundown Mira Mar hotel to condominiums. The plan flopped, and the hotel was razed.

For a time, Nadel played in piano bars, hanging out with local artists and musicians who found him an unassuming Woody Allen type with a wry sense of humor. In 1987, he married his third wife, Jennifer Hoffman, an artist 22 years his junior.

Nadel's next venture was the Sarasota Design Gallery, which catered to the interior decorating trade with unusual furnishings and original art. He tried to expand the business by attracting investors — claiming in a "confidential'' prospectus that the gallery had a healthy profit — but court records show several judgments against him for unpaid bills.

As Hoffman's artist friends began complaining that he had sold their works but never paid them, the couple's relationship grew strained. They divorced in 1991.

Concrete bulldog

While still running the gallery, Nadel met the woman who would soon be his fourth wife, Emelie Painter Zack. That, too, was a short-lived union, with Zack claiming in 1995 divorce papers that Nadel had physically abused her and borrowed so much money that she was "leaving the marriage in severe financial distress.''

In response to her request for $68,000, Nadel said he had lost a piano-playing job and had zero income and $129,075 in liabilities. After a two-day trial, he was ordered to pay Zack just a few hundred dollars, although the judge noted that Nadel's "poor reputation in the community, along with (his) responses under cross-examination, all lead this court to disbelieve (his) position.''

Nadel and Zack wrangled over personal property for the next two years. Among other things, he demanded that he be allowed to retrieve from their home a Polaroid camera and a concrete lawn statue of a bulldog.

"The dog really went with Nadel,'' Zack tersely responded.

Trading up

Then 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.

As the money rolled into their unprepossessing office on Main Street, the Nadels dramatically upped their social and philanthropic profile. Their Guy-Nadel Foundation made more than $1-million in donations, including $200,000 to Catholic churches, $100,000 to the Sarasota Opera and $75,000 to a local theater group.

"They were very caring, generous and committed to making a difference in young girls' lives,'' says Stephania Feltz, executive director of Girls Inc. It received $100,000, enough to fund a year's worth of services for 33 girls.

In 2005, the Nadels bought 430 acres near Asheville, N.C., and offered lots for up to $525,000 in a proposed development called Laurel Mountain Preserve, later featured in a New York Times piece on getaway "havens.'' The project stalled when prices collapsed, and the Nadels donated four lots to their foundation as a hefty tax writeoff.

Nadel also bought two general aviation facilities: the Venice Jet Center, where some of the Sept. 11 hijackers trained under different ownership, and Tradewind Aviation, based at a suburban Atlanta airport and run by his son Chris, who has an airline pilot's license. Federal records show Tradewind owns a Cessna business jet, a helicopter and two other aircraft.

Once, on a Cessna flight home from North Carolina, the Nadels gave a ride to the daughter of Sarasota jazz buff Wes Bearden. The two men became friends, and the Nadels later sponsored some Sarasota Jazz Club events.

"He's just a very pleasant and interesting guy,'' Bearden says. "And Peg, she's a real pretty gal, sharp and well-spoken.''

The Nadel-Moody hedge funds seemed to do well for a time; the YMCA of Sarasota received several thousand dollars in cash returns each year on an endowment managed by Nadel. But as the stock market fell, his bets, or "hedges'' that stocks would perform in a certain way, apparently led to disastrous drops in the funds' value.

People began to notice a dramatic change in Nadel, too. His face was ghostly pale and his 5-9 frame looked gaunt.

Disappearing act

On Jan. 14, with a large quarterly distribution to investors about to come due, Peg Nadel said she found a note from her husband saying that he thought people wanted to kill him and that he would do it himself. Authorities discovered his green Subaru at the Sarasota airport. They now think he planned his disappearance, noting that he had transferred at least $1.25-million to a secret bank account.

Left behind were hundreds of stunned investors like Illinois entrepreneur Michael Sullivan.

On the recommendation of his neighbor, an 80-year-old lawyer who invested $15-million, Sullivan put $250,000 into Nadel's Scoop Management three years ago. Encouraged by returns averaging 15 percent a year — at least on paper — he invested an additional $1.4-million shortly before Nadel vanished.

"I don't understand what I did, throwing money at a moron like this,'' Sullivan says.

Jennifer Hoffman Meketon, Nadel's third wife, who has since remarried, finds it even harder to understand why so many Sarasota residents aware of his checkered past still trusted him with their money.

"There is no excuse,'' she says. "People who knew about Arthur just didn't want to accept it."

Peg Nadel, Neil Moody and their partners have kept a low profile in recent days. All is quiet at the Nadels' $320,000 south Sarasota home, attractive but nothing like the luxury waterfront condos where many of their investors live.

Outside the house sits a concrete bulldog — the same lawn statue Nadel was so determined to keep when he was flat broke.

Times researcher Carolyn Edds contributed to this report. Susan Taylor Martin can be reached at susan@sptimes.com.

Art Nadel went from rags to riches to who knows where 01/26/09 [Last modified: Tuesday, January 27, 2009 10:12am]

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