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Nadel to enter not guilty plea

Arthur Nadel, the Sarasota hedge fund manager accused of defrauding hundreds of investors to the tune of more than $360million, will plead not guilty to charges against him when he is arraigned in New York federal court today, his attorney said.

Nadel was indicted Tuesday 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.

“At the arraignment he will be entering a plea of not guilty to each of the charges,” said Mark Gombiner, the federal defender appointed to Nadel’s case after his private attorneys’ fees were rejected by a federal judge. “I anticipate we will be setting a schedule for the government to provide us with more information about what they claim to be evidence in the case.”

Gombiner said he also will be seeking to renegotiate bail conditions for Nadel due to his client’s health condition.

Nadel, who is being held in a jail in New York City, was unable to meet his bond requirement of $5 million, backed by signatures of five financially responsible individuals, as well as $1 million in cash.

Larry Collier of Sarasota, who along with his wife, Leslie, lost $450,000 in retirement savings to Nadel’s alleged scheme, is pleased to see Nadel indicted. However, he doubts he and his wife will see much of their money returned.

“I hope he does spend some time in jail,” Collier said Wednesday. “But if I was him, I’d be singing Tammy Wynette — singing about where the money is and hoping he will get less time. I wouldn’t be surprised if we get some (money) back, but I don’t think it will be a great deal once the lawyers get done.”

As of Feb. 28, the receiver in the case, attorney Burton Wiand, had roughly $1.3 million on hand to pay creditors, according to the most recent interim report.

A Bird Key investor, who wished to remain anonymous, but whose identity was confirmed through police reports, said jailing Nadel will do nothing for an individual who lost his or her life’s savings to his investments.

“Unfortunately, locking him up only provides him with shelter and three square meals a day while the victims will be struggling to get by,” she said. “I still wonder where all the money is.”

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 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.

Sarasota attorney Drew Clayton, who represents investors to Nadel’s funds, was still in the process of informing his clients about Nadel’s indictment.

“I think it’s not a surprise that the indictment was issued,” Clayton said. “I’m sure our clients will be pleased to know that the government is continuing to pursue Mr. Nadel and others that are involved in this case. I am concerned about what money will be found from Mr. Nadel and his former business partners, but the receiver is continuing his search for assets and has already found some assets.”