U.S charges missing Florida fund manager with fraud

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U.S charges missing Florida fund manager with fraud

By Jim Loney

MIAMI, Jan 21 (Reuters) - The U.S. Securities and Exchange Commission charged missing Florida money manager Arthur Nadel with fraud on Wednesday and accused him of recently transferring more than $1 million to secret accounts he held.

The SEC complaint said the six hedge funds Nadel oversaw, which he valued at more than $300 million, actually contain less than $1 million. It obtained an emergency court order freezing Nadel's assets and appointing a receiver.

"Mr. Nadel's alleged actions deceived investors, and we are seeking to hold him accountable for that," David Nelson, director of the SEC's Miami office, said in a statement.

Nadel, the 76-year-old head of Sarasota, Florida-based Scoop Management, was reported missing by his family a week ago. He left behind a suicide note that expressed guilt for losing clients' money and said someone might try to kill him.

But police later found his car at an airport and tracked calls from Nadel's cellphone to various locations outside Florida, including New Orleans and Slidell, Louisiana.

Two days after his disappearance, investors began complaining to police that possibly hundreds of millions of dollars were missing from the funds he ran.

Nadel's disappearance came little more than a month after authorities arrested New York money manager Bernard Madoff, who is accused of running a $50 billion Ponzi scheme.
The Nadel case has been called a "mini-Madoff" in local media. Madoff recruited many of his investors through social circles in ultra-rich Palm Beach on Florida's east coast, while Nadel was a well-known philanthropist in Sarasota, a Florida west coast city that is home to many wealthy retirees.

The SEC charged Nadel and two companies he controls, Scoop Capital, LLC and Scoop Management, Inc., with defrauding investors at six hedge funds; Scoop Real Estate, Valhalla Investment Partners, Victory IRA Fund, Victory Fund, Viking IRA Fund and Viking Fund.

FALSE STATEMENTS

Nadel overstated the value of the funds by more than $300 million, providing bogus information on their returns and sending investors false statements, the SEC said. The actual value of the funds' holdings on Jan. 14, the day Nadel disappeared, was about $507,000, the agency said.

"Investors should be able to rely on the truthfulness of an account statement and offering materials," Nelson said.

The agency cited the case of an unnamed investor from Virginia whose November statements indicated he had $776,000 in two accounts in the Victory IRA Fund, when the total value of the entire fund was $2,938.86.

Offering materials for the Viking, Viking IRA and Victory funds said they generated returns of 10.97 percent to 11.82 percent between January and November last year, the agency said. Many U.S. equity funds were down 30 percent or more during that period.

"In fact, these claimed returns were utterly bogus," the SEC complaint said.

The complaint said Nadel recently transferred at least $1.25 million from two of the funds to secret bank accounts he controlled.
The Sarasota County Sheriff's Office closed its missing persons investigation because Nadel had disappeared voluntarily. The FBI has taken over the investigation.

"We felt there was no foul play involved," Sheriff's Office spokesman Lt. Chuck Lesaltato said. "We just closed it out." (Additional reporting by Karey Wutkowski; Editing by Cynthia Osterman)