Alleged $300 Million Fraudster Surrenders in Madoff-Style Scheme
Senate told Ponzi schemes are "increasing."
January 27, 2009— -- Arthur Nadel, who has been on the lam since Jan. 16 when he threatened to kill himself and vanished, surrendered to Florida authorities today in an alleged $300 million investor fraud case. Nadel, 76, now faces criminal charges in New York City, where a complaint against the fund manager was unsealed today.
According to the complaint, Nadel turned more than $120 million in net liquidating value of investor funds into a little over $125,000 in four years. His is the latest in a series of alleged investor fraud and Ponzi" target="_blank">Ponzi schemes that have come to light since the arrest of Bernard Madoff on Dec. 11, 2008 for allegedly running a $50 billion scheme " target="_blank">$50 billion investor fraud scheme.
As with Madoff, Nadel allegedly duped sophisticated investors, including at least one hedge fund that invested at least $13,600,000 with Nadel, according to the federal complaint.
In a Securities and Exchange Commission regulatory case brought against Nadel last week, he is alleged to have defrauded investors and overstated the value of his funds by more than $300 million in sales documents, when, in reality, the funds had less than about $1 million in assets.
At least several hundred investors in several funds controlled by Nadel were allegedly defrauded, according to the SEC charges and the criminal complaint, which charges Nadel with securities fraud and wire fraud.
According to FBI Agent Kevin Riordan's statements in the criminal complaint, two partners in Nadel's firm repeatedly pressed him to hire an independent accountant to audit the funds. He refused.
But after Madoff's arrest, Nadel's scheme unraveled, the complaint alleges, when his partner pressed him again and this time he complied. He then wrote a note to his wife, which employees later found in a shredder.
The letter, in part, read: "If you want to survive this mess, what follows is for your eyes only. I strongly suggest that you destroy it after reading."
