Arthur Nadel's Ponzi Scheme and Investor Impact

Arthur Nadel's Ponzi Scheme was a massive financial scandal that left investors reeling in 2009. He was arrested on January 16, 2009, and charged with running a $1.6 billion Ponzi scheme.

Nadel's scheme targeted high-net-worth individuals, including investors in his hedge fund, Scoop Capital Management. He promised unusually high returns to his investors, which he claimed were generated through a combination of stock market investments and private equity deals.

The scheme unraveled when Nadel's investors began to withdraw their funds, but he was unable to meet their demands. This led to a series of lawsuits and investigations that ultimately exposed the Ponzi scheme.

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Arthur Nadel was a successful commodities trader.

He founded a hedge fund called Scoop Capital Management, which was based in Sarasota, Florida.

Nadel's fund managed over $300 million in assets.

He was known for his conservative investment approach.

Nadel's downfall began when he was accused of running a Ponzi scheme in 2009.

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Arthur Nadel worked his way through New York University, graduating from New York University Law School in 1957.

He played piano in Manhattan to support himself during his studies.

Nadel never actively practiced law, but was disbarred in 1982 due to dishonesty, fraud, deceit, and misrepresentation.

He moved to Sarasota around 1978, where he allegedly took $50,000 from an escrow account to help a friend in debt.

Nadel had already repaid the money with interest by 1981, but the incident would later raise questions about his business ethics.

He had already been married and divorced twice by the time he moved to Sarasota.

Nadel had several children from his previous marriages.

In the 1970s, he served as CEO of a public company that built health care facilities.

Nadel and others tried to convert the historic Mira Mar Hotel into condominiums in 1978, but the plan fell through.

After the hotel project failed, Nadel played in piano bars, befriending local artists and musicians.

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In 1987, he married his third wife, Virginia "Jennifer" Hoffman, an artist 22 years his junior.

Nadel attempted to expand an interior decorating business, the Sarasota Design Gallery, by attracting investors, but claimed destitution when the business failed.

From 1994 to 1997, Nadel worked as a piano player at Homestyle Harmony restaurant in Sarasota, where he performed for guests in a parlor show.

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Arthur Nadel's business ventures were quite extensive, and one of his notable endeavors was Venice Jet Center LLC. This company was ordered into receivership by a Tampa U.S. District Judge in 2009.

Venice Jet Center provides charter services and operates a flight school. It's worth noting that the business has potential to generate assets for the receivership.

In addition to Venice Jet Center, Nadel was also involved with Tradewind LLC, which owns and controls at least five aircraft. These planes are based at the Newnan-Coweta County Airport in suburban Atlanta, Georgia.

Tradewind Aviation, run by Nadel's son Chris, is a notable aspect of this business. Chris has an airline pilot's license, which is a great asset to the company.

Here's a breakdown of the aircraft owned by Tradewind:

Nadel's business interests also extended to Summer Place Development Corp., a company he was a director, secretary, and treasurer of. This company owns a 6.5-acre undeveloped parcel in Manatee County, Florida.

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Arthur Nadel was charged with securities and wire fraud by the Securities and Exchange Commission (SEC).

The SEC says Nadel transferred at least $1.25 million from two of the hedge funds to secret bank accounts that he controlled.

A complaint filed in a Manhattan federal court on Tuesday charged Nadel with securities and wire fraud.

More than 100 investors put their money into six funds in which Nadel served as the investment adviser.

The funds had a total of $210 million in assets, but records show there was less than $125,000 in net liquidating value by the end of 2008.

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A $900,000 wire transfer made from one of the funds in August was not authorized.

The SEC filed a suit in U.S. District Court in Tampa charging Nadel with fraud in connection with six hedge funds.

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.

The SEC case is Securities and Exchange Commission v. Nadel, 09-cv-00087, U.S. District Court, Middle District of Florida (Tampa).

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Arthur Nadel's Ponzi scheme was a massive one, with investors losing around $168 million. He pleaded guilty to multiple fraud counts and was sentenced to 14 years in a North Carolina federal prison.

Nadel's scheme was dubbed a "mini-Madoff", and he was accused of cheating his elderly and unwitting victims out of their retirement savings and consigning others to poverty. He was also ordered to forfeit $162 million, as well as his real estate in Florida, Georgia, and North Carolina, five airplanes, and one helicopter.

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The receiver in the Nadel case has distributed around $68 million to about 400 victims, bringing their total recovery to 52 percent of what they lost. However, it's unclear how much more money will be recovered, as most of the litigation has been completed and further proceeds will come from the liquidation of remaining assets.

Here's a breakdown of the distribution:

Nadel's scheme was notable for its longevity, lasting from 1999 to January 2009, and for the fact that he used some of the money to fund his own businesses, including his wife's flower shop and a North Carolina real estate project.

Arthur Nadel, a Florida hedge-fund manager, was arrested in 2009 on charges of securities and wires fraud. He was accused of providing false and misleading information to investors about the funds' historical returns and overstating the value of investments by approximately $300 million.

Nadel's scheme was uncovered during the fallout of Bernard Madoff's Ponzi scheme. Madoff's arrest led to increased scrutiny of money managers, and Nadel's partner had even suggested hiring an independent accountant to audit the funds, but Nadel resisted.

Nadel's Ponzi scheme lasted from 1999 to 2009 and raised over $330 million from approximately 390 investors in six different funds. He used some of the money to fund his own businesses, including his wife's flower shop and a North Carolina real estate project.

Nadel was sentenced to 14 years in prison and ordered to forfeit $162 million, as well as his real estate and several aircraft. He was also given three years of supervised release after his prison time was served.

Here's a summary of the key facts about Nadel's scheme:

Nadel Ponzi victims just got another $5 million back, bringing their total recovery to 52% of what they lost.

This distribution marks the seventh time investors have received funds from the receivership, totaling $68 million.

The receivership funds held $6.75 million before the latest distribution, including a $2.9 million tax refund from the IRS.

Most of the litigation in the receivership has been completed, and further proceeds will come from liquidating the remaining assets held by the receiver.

Arthur Nadel, the mastermind behind the scheme, pleaded guilty to multiple fraud counts and was sentenced to 14 years in prison.

He died in 2012 at the age of 79 while serving his sentence.

The receivership has seized and sold assets owned by Nadel and the Moodys, and collected "false profits" from investors who took more money out of the hedge funds than they put in.

Over $131 million in claims were allowed in the receivership, with investors incurring actual losses of about $168 million.

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Arthur Nadel's investment schemes had devastating effects on many investors. Investors lost a total of $168.7 million, with some individuals losing millions of dollars.

Neil V. Moody, one of Nadel's business partners, estimated that the total investor losses may be inflated due to Nadel's own overstating of his fund's success. The actual losses may be closer to $350 million, but this figure is still a staggering amount.

Some notable investors who lost significant amounts include David Walters of Ocala, Florida, who lost over $670,000, and Louis Paolino, Jr., who lost more than $5.8 million of personal funds in the Viking Fund LLC.

Nadel's scheme also had a ripple effect, with investors like Sullivan and Dr. Brad Lerner losing significant amounts.

Investor losses were staggering, with more than 371 investors losing a total of $397 million. Neil V. Moody, a business partner of Nadel's, estimated that investors' out-of-pocket losses were around $168.7 million.

Some investors lost significant amounts of money, including David Walters of Ocala, Florida, who lost over $670,000, his entire pension from Bethlehem Steel. Dr. Brad Lerner of Sarasota invested $500,000, but the outcome is not specified.

Dennis Raefield, president and CEO of Mace Security International Inc., claims that Nadel's Victory Fund failed to pay $2.2 million as promised, the day after Nadel vanished on January 15, 2009.

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Louis Paolino, Jr., a former executive officer of Mace Security, lost more than $5.8 million of personal funds in the Viking Fund LLC. His lawsuit claims that the Moodys took fraudulently obtained money from investors in Scoop's funds and bought homes with part of the proceeds.

Investors' losses varied, but the total impact was substantial.

The most consistent returns I've seen in my research were allegedly achieved by Nadel's funds, which purportedly returned 21.6% in 2002 and 19.8% in 2001.

These returns were exceptionally high, especially considering the S&P 500 returned -23.3% and -13.0% respectively in those years.

Nadel's funds were touted as having the "best track record and most consistent returns" by Donald H. Rowe, Chairman of Carnegie Asset Management.

Rowe's glowing recommendation was published in an article that included contact information for the funds, making it easy for potential investors to get involved.

However, it's worth noting that Carnegie Asset Management was affiliated with The Wall Street Digest, Inc., and received monetary compensation for referrals to Nadel Moody Group.

This affiliation raises questions about the objectivity of Rowe's endorsement and the potential for conflicts of interest.

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