WASHINGTON - Federal regulators are charging a missing hedge fund manager with fraud, saying he misled investors and overstated the value of investments in the six funds by about $300 million.
The Securities and Exchange Commission won a court order Wednesday freezing the assets of Arthur G. Nadel of Sarasota and other defendants in the case.
Nadel, who owed investors a $50 million payout, told his wife in a note he felt guilty and threatened to kill himself, according to the Sarasota County Sheriff's Office. The authorities believe that Nadel, 76, planned his Jan. 14 disappearance.
The SEC says Nadel recently transferred at least $1.25 million from two of the hedge funds to secret bank accounts that he controlled.
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At least 45 investors, some from as far away as France, have contacted authorities to say they have lost funds linked to missing hedge fund manager Arthur Nadel of Sarasota.
And the calls continue to come in.
“I just got one guy calling me from the Cayman Islands,” Sarasota Police Capt. William Spitler said Tuesday evening.
Investors locally include Richard Bennett of Cortez, according to police reports made public Tuesday.
“I don’t really want to discuss it with anyone and I really don’t want it to be out in public,” Bennett said, when contacted at his home.
The FBI has taken over the investigation in the case of Nadel and the millions of dollars he is alleged to have lost for his investors.
“This will be a federal investigation and we will be assisting them any way that they need,” Spitler said Tuesday afternoon.
Initial reports indicate that as much as $350 million may have been tied up in the fund.
Nadel, 75, went missing last Wednesday and his car was found the following day at Sarasota-Bradenton International Airport.
The day Nadel disappeared, he was expected to deliver a $50 million redemption to investors in the six hedge funds he managed, said Michael Zucker, an internal accountant for Scoop Management Inc., where Nadel traded. Nothing in documents indicated the funds weren’t turning a profit, he said.
“Mind you, this was a lot, but it was still, we thought, very easily done,” Zucker said in an interview with The Associated Press.
The payment was set to be made after the funds, which had about 600 investors from across the country, suffered losses in October, Zucker said.
But if Nadel was nervous, he didn’t show it: He often was seen around the office smiling and seemed on top of things.
“He felt that he was turning the whole thing around,” Zucker said.
Nadel had what some have characterized as a mathematical formula to his investments, which even investors failed to fully comprehend. According to Zucker, Nadel traded through Goldman Sachs and primarily in the Nasdaq 100.
Another victim emerged Tuesday — this one a corporation.
Mace Security International, maker of Mace defense spray, filed a report with the Securities and Exchange Commission stating it had lost more than $2 million to the Victory Fund, a short-term hedge fund investment linked to Nadel.
The company stated in its filing that it had requested redemption of its funds on June 18 and expected payment by Sept. 30, but was unable to get its money back.
Company officials said a net charge of $2.2 million will be recorded for an investment loss.
News reports have stated that authorities believe Nadel may be in Slidell, La., near New Orleans.
Spitler could not confirm that.
“Everybody in the world says he’s in New Orleans,” Spitler said. “No one has told me that for sure.”
The Sarasota County Sheriff’s Office announced Tuesday that it had officially closed its missing person investigation and detectives with the agency believe he voluntarily left the area.
FBI officials did not immediately return calls seeking comment.
Spitler said those who had investments with Nadel’s firm and want to file a report can call (813) 253-1000, or e-mail Tampa.Division@ic.fbi.gov.
Staff Writer Brian Neill contributed to this report.