TAMPA — A federal judge Friday ordered that Sarasota hedge fund manager Arthur Nadel remain behind bars without bond, finding the risk is too high that he would try to flee prosecution.
“He had access to millions and millions and millions of dollars,” U.S. Middle District of Florida Magistrate Mark A. Pizzo said following a more than three hour bail hearing in Tampa. “There is no explanation of the money trail, and the risk of flight is out there.”
Federal prosecutors and the Securities and Exchange Commission have charged Nadel, 76, with securities and wire fraud. He is accused of fleecing more than 600 investors nationwide who invested hundreds of millions of dollars in several hedge funds he managed. Investigators are calling it a Ponzi scheme.
During the hearing, federal Prosecutor Terry Zitek had argued that Nadel — who turned himself on a warrant in Tampa on Wednesday, more than two weeks after he disappeared — should remain in jail without bond while awaiting trial.
“He already fled once rather than face the consequences of his actions,” said Assistant U.S. Attorney Terry Zitek.
Zitek said Nadel has access to private airplanes as he invested $3 million from the funds in Sarasota aviation business Venice Jet Center and Trade Winds.
He also said he should remain incarcerated because at his age, any prison term would amount to a life sentence.
His most emphasized point: millions and millions of dollars are unaccounted for.
“Where they are, we don’t know,” Zitek said.
Tampa-based defense attorneys Todd Foster and Barry Cohen argued Nadel should be allowed to be released on his own recognizance, claiming his client is broke and does not have access to any money for a bond.
“He doesn’t have a bunch of money somewhere,” Foster said.
Cohen, who said his client’s wife had no knowledge of the fund issues, read aloud portions of a note Nadel left for his wife, Peg.
She and her daughter sat in the courtroom, occasionally glancing at Nadel, who sat in handcuffs huddled next to his lawyers.
Police found the note at his office near a shredding machine. In it, he instructed her to use money from her personal trust fund or to sell their 2006 Subaru to get by.
The note added that he felt guilty about losing other people’s money and threatened to kill himself.
“Why would he tell his wife in a confidential note if he is no longer around that there is nothing left,” Cohen said.
Cohen said his client did not learn about the warrant until Jan. 26.
“His spirit is broken,” said Cohen, who added his client has been seeing Tampa-based psychologist Robert Fernandez. “He didn’t intend to do this.
“His intent is to cooperate with the authorities and do everything he can to help these investors recoup as much money as possible,” Cohen added. “Whatever life he has left at 76, whatever sentence he gets, his life will end in the federal penitentiary but he wants to help these investors so he can close his eyes and say he did the right thing.”
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