Business

Investor sues Nadel partners

An investor out more than $5.8 million from investments linked to Arthur Nadel’s hedge fund companies has sued two former partners in Scoop Management Inc. of Sarasota.

According to a suit filed in Sarasota civil court Wednesday, Louis Paolino is seeking a jury trial and alleges that Neil and Chris Moody, a father and son who were partners with Nadel and his Scoop Management, lied about returns on funds Paolina invested his money in.

Paolino states in the suit that he was induced into investing in the Viking Fund and was told that Viking and its managers consistently beat the market, when in fact they were losing money.

“Defendants created this perception by issuing false and misleading statements of account that reflected returns on equity much higher than the actual performance of the Viking Fund,” the suit states. “As a result of the false and misleading statements of account, Viking’s ability to outperform the market as an investment was grossly inflated. In fact, Viking’s actual total return on equity since its inception was roughly zero.”

The Moodys’ attorney, Todd Thomas of Ft. Lauderdale, did not immediately return a phone call seeking comment.

Paolino’s attorney, Morgan Bentley of Sarasota, could also not be reached for comment.

A lawsuit represents only one side of a dispute.

Paolino in his suit claims that the Moody’s continued to receive management fees on artificially inflated account amounts to the tune of more than $40 million.

They used these funds to purchase properties throughout Sarasota, according to the suit.

The Moodys have not been charged with a crime.

Nadel is charged with one count of wire fraud and one count of securities fraud. He has been transferred to New York to stand trial, because he used a New York City brokerage firm for his dealings.

Authorities say he artificially inflated returns on his hedge funds, bilking investors out of hundreds of millions of dollars.

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