Charities asked to give back

As Arthur Nadel was stealing from unsuspecting investors, he and his wife established themselves as respected citizens in their Sarasota community, creating a foundation that donated millions of dollars of the loot to worthy charities.

The Nadels' beneficence enhanced their reputation and standing - the Sarasota Opera Association named its concert hall lobby after the Guy-Nadel Foundation. Organizations showered the couple with accolades in recognition of their philanthropy.

But after Arthur Nadel's guilty plea on federal fraud charges in connection with an investment Ponzi scheme, about a dozen charities face the prospect of having to surrender the Nadels' donations to a court-appointed receiver.

The receiver, Burton Wiand, is pursuing the money to reimburse Nadel's hundreds of victims.

Wiand said he sent letters to any charity that received more than $20,000 from the foundation, asking the organizations to sign agreements waiving the statute of limitations to allow time for negotiations.

All but three of the charities signed the agreements. So Wiand sued those three: the opera association, which received $353,000 from the foundation between 2005 and 2008; the Diocese of Venice, which got $240,000 between 2006 and 2008; and the local Catholic Charities, which was given $40,000 in 2005.

"They received essentially stolen money for no consideration," Wiand said. The Guy-Nadel Foundation was financed with $2.85 million from Nadel's scheme.

Robert Reddy, spokesman for the diocese, said the money from the foundation has all been spent on programs such as food banks and financial assistance programs for people in emergency situations.

"In tough economic times, income's down," he said. "Any need to reimburse money will be a hardship."

Reddy, who said he also spoke on behalf of Catholic Charities, didn't want to comment on any ethical issues raised by the church taking stolen money, except to say the money was taken in good faith.

He said the diocese is also concerned about the legal precedent that might be set if the church were to return the money.

"In legal terms, when cases like this come up, the only money that would be asked for is the money donated within the previous year," he said. Otherwise, "it's assumed the money's been spent."

Wiand was seeking a waiver that went beyond that time frame, Reddy said.

"It's also a dangerous precedent that any money ever donated to a nonprofit like a church would be subject to lawsuits forever," he said.

Sarasota Opera marketing director Richard Russell said it would be "quite a hardship" for the opera to have to return $353,000. Beyond that, he said he couldn't discuss the lawsuit or the Nadel donations "on advice of counsel."

Wiand also sued a nature conservancy in North Carolina, which he said is refusing to return 147 acres Nadel donated. He said the land was bought with stolen money.

As a result of the donation, the Buncombe County Board of Commissioners and county Land Conservation Advisory Board in North Carolina inducted the Nadels into the county's Hall of Fame in recognition of their conservation efforts.