TBO.com - TBO is Tampa Bay Online

SEC Sues Missing Fund Manager

ADVERTISEMENT

By ELAINE SILVESTRINI

esilvestrini@tampatrib.com

Published: January 22, 2009

TAMPA - The Securities and Exchange Commission filed suit in federal court against missing Sarasota hedge fund manager Arthur Nadel and his business entities, accusing Nadel of deceiving investors and funneling their money into secret bank accounts.

A federal judge granted emergency motions from the SEC, appointing a receiver, freezing Nadel's assets and imposing a restraining order to stop the fraudulent activity. A hearing was scheduled for Feb. 4.

Nadel, 76, recently transferred $1.25 million from the investment funds into a secret bank account, the SEC complaint states.

According to the SEC filing, Nadel and his companies have "materially misrepresented" the value of the hedge fund assets. "For example," the complaint states, "the Hedge Funds' internal books and records - used to provide false account statements to investors - indicate the value of their assets exceeds $300 million. In fact, the actual value of the Hedge Funds' assets is only about $506,000."

The complaint states the values of the funds were misrepresented to investors in false account statements directed by Nadel.

One Virginia investor who invested in the Victory IRA Fund, the complaint states, received a statement in October that valued his investment at $599,551.55, and the next month's statement valued his investment at $602,965.39. The investor made a second investment through another account with the same fund and received October and November statements valuing that investment at $172,354.07 and $173,335.45.

The actual total value of the entire Victory Fund's holdings was $2,938.86 at the end of October and in November, according to the SEC filing.

The same investor and his wife made other investments through Nadel's holdings, according the complaint, which states those values were also misstated.

U.S. District Judge Richard Lazzara wrote in an order that the SEC had established "a reasonable likelihood Nadel will harm the investing public by continuing to violate federal securities laws unless immediately restrained." He also found "good cause to believe that unless immediately restrained and enjoined by order of this court, Nadel will continue to dissipate, conceal or transfer" his fund assets.

Share this:

Loading Comments...

Email Print

ADVERTISEMENT