Wednesday, January 21, 2009
It's hard keeping track of all the ponzi schemes that wealthy investors fell for, but you may recall that Sarasota Florida's Arthur Nadel, a hedge fund manager, vanished recently and so apparently did his clients' $350 million. NYDailyNews, Another Bernard Madoff? Hedge-fund manager Arthur Nadel vanishes with $350 million of clients' cash. Today the SEC went to court again to close the door after the horse was gone. According to its release, the SEC filed a civil injunctive action in the United States District Court for the Middle District of Florida charging Arthur Nadel with fraud in connection with six hedge funds (the "Funds") for which he acted as the principal investment advisor. According to the Commission's complaint, Nadel provided false and misleading information for dissemination to investors about the Funds' historical returns and falsely overstated the value of investments in the Funds by approximately $300 million. In contrast, the Funds appear to have total assets of less than $1 million. Nadel has been missing since January 14, 2009.
The Commission's complaint also alleges that defendant Nadel recently transferred at least $1.25 million from two of the funds to secret bank accounts that he controlled.
The complaint seeks a temporary restraining order, an asset freeze, and preliminary injunction against Nadel and preliminary injunctions and asset freezes against Scoop Capital and Scoop Management. In addition, the complaint seeks permanent injunctions, disgorgement plus prejudgment interest, and civil money penalties against all the defendants. Without admitting or denying the allegations of the complaint, defendants Scoop Capital and Scoop Management consented to the entry of, among other things, preliminary injunctions, asset freezes, and the appointment of a Receiver.
The complaint also names as relief defendants two investment management companies, Valhalla Management, Inc. and Viking Management, LLC, and the six Funds, Scoop Real Estate, L.P., Valhalla Investment Partners, L.P., Victory IRA Fund, Ltd., Victory Fund, Ltd, Viking IRA Fund, LLC, and Viking Fund, LLC. The complaint seeks disgorgement plus prejudgment interest against each of the relief defendants. Without admitting or denying the allegations of the complaint, the relief defendants consented to asset freezes and the appointment of a Receiver.
Also on January 21, United States District Judge Richard A. Lazzara granted all of the emergency relief requested by the SEC and appointed a Receiver.