A federal judge Thursday night approved a request by former Sarasota hedge fund manager Arthur Nadel to lower his bond by removing the $1 million cash security.
Nadel, who is being held in a jail in New York City, had been unable to meet his bond requirement of $5 million, backed by signatures of five financially responsible individuals, as well as $1 million in cash.
U.S. District Judge John G. Koeltl set, instead of the cash bond, a $1 million personal recognizance bond, and stayed the order until next Thursday pending a U.S. attorneys office decision on whether to appeal.
The government alleges that Nadel, through his former Sarasota company Scoop Management, purported to operate several hedge funds that were producing market-beating returns when exactly the opposite was happening. More than 350 clients invested more than $360 million with the funds, according to the government. In earlier court documents, Nadel’s attorney Mark Gombiner described his client as a “sick, old man” who posed no flight risk or danger to the community in court papers arguing for modification of his bond. Gombiner also placed much of the blame for misappropriated funds on Nadel’s former fund management partners, Neil and Chris Moody. The Moodys oversaw the Viking and Valhalla funds operated under Scoop Management. “The facts will show that they actively solicited investors for their funds; made many of the investment decisions; and received at least half of the fees and profits generated by the six funds identified in the indictment,” Gombiner wrote in the court document. The Moodys have not been charged with a crime.
Their attorney, David Knight of Tampa, has said the father and son have cooperated with investigators and have no involvement in any wrongdoing. Nadel was indicted on charges that he used fraudulent client account statements that reflected “fictitious positive returns” in order to keep clients invested and investing in his funds.
He faces six counts of securities fraud, one count of mail fraud and eight counts of wire fraud. If found guilty on all charges, the 76-year-old faces a combined statutory sentence of 280 years in prison. In addition to charging management and performance fees to clients, Nadel also shifted money from their investments to accounts and entities owned by him without his clients’ knowledge, according to the indictment.
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