U.S. arrests and charges missing fund manager Nadel - Arthur Nadel

U.S. arrests and charges missing fund manager Nadel

NEW YORK (Reuters) - Florida fund manager Arthur Nadel, whose family reported him missing two weeks ago, turned himself in for arrest on Tuesday on a criminal charge of securities fraud, U.S. officials said.

Nadel fled after a partner in his firm told him that following the arrest of accused swindler Bernard Madoff in December, the funds should hire an independent accountant to audit the books, an FBI agent said in a court filing.

Nadel, head of Scoop Management overseeing six hedge funds he had valued at more than $300 million but may have less than $1 million according to authorities, is expected to make an initial appearance in a federal court in Tampa, Florida, later on Tuesday.

"Arthur Nadel surrendered in the company of two lawyers to FBI agents in Tampa," New York FBI spokeswoman Monica McLean said.

Nadel was charged with securities fraud in New York because he traded through a brokerage in the city. His attorney could not immediately be reached for comment.

The purported fraud is one of several that authorities have announced across the United States following the sharp decline in the fortunes of the financial industry.

The biggest by far is New York investment manager Madoff, who authorities said confessed to running a Ponzi scheme over many years with losses of $50 billion. A Ponzi scheme is one in which early investors are paid with the money of new clients.

A criminal complaint filed in U.S. District Court in Manhattan linked Nadel's decision to flee to the Madoff case.

FBI agent Kevin Riordan said that an unidentified partner of Nadel's "informed me that, following the arrest of Bernard L. Madoff by the FBI in New York and the subsequent publicity ... Partner I again told Nadel that (the funds) had to hire an independent certified public accountant to conduct an audit."

The document said that on January 8 Nadel agreed to the audit but by January 14 he was reported missing by his family after leaving a suicide note "reflecting that he was no longer going to be around."

Nadel was charged with securities fraud and wire fraud related to his funds from around 2004 until at least January 14 this year. Investors were located throughout the United States, the court document said. His assets have been frozen by court order.

The complaint contains excerpts of a handwritten letter from Nadel, 76, to his wife. It says the letter was found by Scoop employees in an office shredding machine.

"The avenues to money for you will likely be blocked soon," the letter quoted in an affidavit by Riordan said. "You must use the trust (yours) to your benefit as much and as soon as possible."

The complaint said Nadel of Sarasota, Florida, owned two general partnerships: Scoop Management and Scoop Capital LLC. An unidentified partner created two other partnerships called Valhalla Management and Viking Management LLC.

Nadel was the investment adviser for all of the funds under the partnerships and the only person with authority to trade the money, according to the court document.

One investor, Larry Collier of Sarasota, Florida, said he was "glad to hear" Nadel was in custody.

"At least we'll find out what happened to the money, whether it's a Ponzi scheme or he just lost it," said Collier, whose last statement indicated he had $670,000.

(Additional reporting by Jim Loney in Miami, editing by Matthew Lewis)