Herald Staff Reports
Mace Security International, maker of Mace spray, filed a report with the Securities and Exchange Commission today stating it had lost more than $2 million to the Victory Fund, a short-term hedge fund investment linked to missing Sarasota fund manager Arthur 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.
The SEC document states:
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“On January 15, 2009, during a telephone conversation between the Corporation’s General Counsel and a representative of the hedge fund, the representative of the hedge fund stated that: (a) the deposits and other investments of the hedge funds managed by Arthur Nadel, including the Victory Fund cannot be located, (b) documents previously provided to the representative by Mr. Nadel have proven not to be authentic; and (c) the representative had reported the above events to the Securities and Exchange Commission and the authorities in the State of Florida. The Corporation is in the process of verifying the statements of the hedge fund representative.
“As previously disclosed, in the Corporation’s Form 10-Q for the quarter ended September 30, 2008, the Corporation requested redemption of the Victory Fund, Ltd., hedge fund investment, on June 18, 2008. Under the Limited Partnership Agreement with the hedge fund, the redemption request was timely for a return of the investment account balance as of September 30, 2008, payable ten business days after the end of the September 30, 2008 quarter. The hedge fund acknowledged that the redemption amount owed was $3,206,748; however, on October 15, 2008 the hedge fund asserted the right to withhold the redemption amount due to extraordinary market circumstances. After negotiations, the hedge fund and the Corporation entered into a written agreement to pay the redemption amount in two installments, one installment of $1,000,000, which was received on November 5, 2008, and a second installment of $2,206,748 which was to be received on January 15, 2009.”
The company said it will record a charge of $2.2 million for an investment loss.
Authorities with the SEC, the FBI and local police agencies are searching for Nadel, who disappeared last Wednesday. His car was found at the Sarasota-Bradenton International Airport and authorities believe he may be in Louisiana.
His Scoop Management, based in Sarasota, is believed to have lost at least $350 million for investors.