TAMPA — Arthur G. Nadel, the 76-year-old hedge fund investor from Sarasota, poses a flight risk too large to release him from federal custody.
That's what U.S. Magistrate Judge Mark Pizzo decided Friday after hearing 3 1/2 hours of legal arguments.
A federal criminal complaint filed in New York accuses Nadel of deceiving more than 100 investors across the United States, exaggerating the value of their investments by almost $300 million. He is also charged with wire fraud, citing $1.25 million of transfers to secret accounts.
Pizzo said there is no condition under which he would feel assured that Nadel would show for his trial, expected to be in New York, if he were released.
"I find so much unexplained here … that these hidden assets or unexplained assets show a significant chance that you will flee," Pizzo said.
Attorneys on both sides cited the case of Bernard Madoff, the high-profile hedge fund investor from Palm Beach who is accused of operating a $50 billion Ponzi scheme.
Defense attorneys noted that even Madoff was granted house arrest. But prosecutors highlighted his strict bail requirement: Madoff had to post a $10 million secured bond.
Pizzo said that if he were going to entertain a bond for Nadel, it would start at $5 million But ultimately, he refused any bond at all.
Nadel was reported missing Jan. 14 after his wife found a letter telling her he thought people wanted to kill him and he intended to kill himself.
Federal prosecutor Terry Zitek told the court Friday that cell phone records indicated sometime during his two-week absence, Nadel might have been in Louisiana. His cell phone stopped being used Jan. 15.
Additionally, authorities say they found a second letter from Nadel to his wife in his office shredder instructing her on how to access accounts in his absence.
But defense attorneys Barry Cohen and Todd Foster painted a different picture of their client: that of a contrite, emotionally troubled, cash-strapped man who, at the end of his life, wants to make things right.
Cohen said he has no money to post bail, let alone pay for a legal defense. The prominent Tampa defense attorney said he is representing Nadel without pay.
When Nadel disappeared, there were no warrants for his arrest. He was distraught and needed to sort through suicidal thoughts, Cohen said.
Six days later, on Jan. 20, Cohen said he spoke to Nadel by phone and encouraged him to talk with a psychiatrist. Four days after that, Nadel flew to Tampa and checked into the Marriott under his own name, Cohen said.
"Where did he fly from?" Pizzo interrupted.
"I don't have that information," Cohen answered.
Cohen said when he met with Nadel on Sunday, his client told him he wanted to check into a mental health facility.
On Monday morning, Nadel went to see Tampa psychiatrist Robert Fernandez, then left to visit his family. Cohen said it was Monday when Nadel's family became concerned that federal authorities were searching for him.
So Cohen contacted the U.S. Attorney's Office and notified them Nadel would be turning himself in Tuesday morning.
"Mr. Nadel is humiliated about this whole experience being locked up in shackles, disgraced before his family," Cohen said.
But Zitek argued that Nadel did nothing to tell anyone he was all right, despite widespread media coverage of his disappearance.
"The letters that were written … very strongly suggest that he had planned this flight in advance," Zitek said. "He left his company, co-workers, everybody high and dry."
Before court adjourned at 5 p.m., Cohen indicated he'd likely file a motion asking the court to reconsider. Pizzo, meanwhile, is expected to enter his order in writing Monday, at which point Nadel could face extradition to New York.