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Nadel, who faces fraud charges, surrenders

TAMPA — Sarasota money manager Arthur G. Nadel turned himself in to FBI agents and was arrested Tuesday, two weeks after he disappeared and left instructions for his wife to quickly access bank accounts because "the avenues to money for you will likely be blocked soon."

A federal criminal complaint filed in New York charges Nadel with one count of securities fraud for deceiving more than 100 investors throughout the United States, and one count of wire fraud for transferring $1.25 million to secret accounts. Each count carries a maximum of 20 years in prison.

Accompanied by defense attorney Barry Cohen and two other lawyers, the 76-year-old Nadel made his first appearance in a federal courtroom in Tampa on Tuesday afternoon, dressed in a blue and gray cardigan, loose-fitting trousers and looking all of his 76 years. His wife, Peg, dabbed at her eyes with tissue.

Assistant U.S. Attorney Terry Zitek said he had received the case from New York only that morning and was granted a three-day continuance to prepare for a full hearing. Magistrate Judge Mark Pizzo also granted Zitek's request that Nadel be detained until Friday, despite Cohen's insistence that a defendant who fled the state in mid January and owns several planes posed no flight risk.

"He's shown good faith, he's here," Cohen said. "He had planes he could have flown out on. He didn't. Three days is a long time to be locked up in a cage."

For Nadel, a native New Yorker, the criminal charges bring his life full circle. Almost three decades after he was disbarred in New York for fraud, the U.S. Attorney's Office in Manhattan says he used a New York City brokerage firm to make trades that defrauded investors out of millions of dollars.

Nadel, who once supported himself by playing piano in Sarasota restaurants, claimed that the six funds he managed averaged returns as high as 20 percent when the funds' total value had plunged from $125 million to less than $125,000 by the end of last year, the complaint says.

According to FBI Special Agent Kevin Riordan, Nadel was the only person authorized to trade money in the funds — three created by Nadel and three by a person identified only as Partner 1. However, all three of those funds are known to have been started by Sarasota entrepreneur Neil Moody, who could not be reached for comment Tuesday.

Moody's son Chris said he was "absolutely elated" by Nadel's arrest. The Moodys themselves reportedly have lost $10 million.

The complaint says Partner 1 repeatedly asked Nadel over the years to hire an independent certified public accountant to audit of the funds' assets. Nadel finally agreed on Jan. 8 but disappeared a week later, leaving his Subaru at the Sarasota-Bradenton airport and an apparent letter to Peg Nadel, his fifth wife, in a shredding machine at their Sarasota office. Pieced together by employees and turned over to law enforcement authorities, it read in part:

"If you want to survive this mess, what follows is for your eyes only. I strongly suggest that you destroy it after reading.

"The avenues to money for you will likely be blocked soon. You must use the trust (yours) to your benefit as soon as possible. Please look for the (bank) credit card account and you will se a large credit balance. … Withdraw as much cash as you can, as this account might also become blocked."

The letter goes on to say that Nadel had deposited temporary operating funds for three of his businesses, including Tradewind, a general aviation facility run by his son Chris at a suburban Atlanta airport. The letter said another Nadel business, the Venice Jet Center, "is self-supporting, as you know."

A federal judge this week allowed a court-appointed receiver in a separate civil case against Nadel to take over Tradewind, the Jet Center and other assets that might be sold to partially repay investors.

Referring to the contents of a package, the letter said it contained "documents that I think will do the trick to give you complete ownership of what is left, and even documentation for divorce. Sell the Subaru if you need money. I will send you a letter in a day or so to tell you." The complaint contains no more of the letter.

In arguing against Nadel's detention, Cohen told the magistrate Tuesday that the frail, bespectacled figure in wrist chains was not a threat.

"This is not a violent person who was out shooting people, out killing people," Cohen said. "This is white collar."

Susan Taylor Martin can be contacted at susan@sptimes.com.

Nadel, who faces fraud charges, surrenders 01/28/09 [Last modified: Thursday, January 29, 2009 9:53am]

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