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Former Hedge Fund Manager Arthur G. Nadel
Indicted on Fraud Charges
LEV L. DASSIN, the Acting United States Attorney for
the Southern District of New York, announced that ARTHUR G.
NADEL, 76, of Sarasota, Florida, was indicted today on
securities, mail, and wire fraud charges stemming from a ten-year
scheme to defraud investors out of millions of dollars. NADEL
previously was arrested in this case on January 27, 2009. As
alleged in the fifteen-count Indictment filed in Manhattan
federal court:
From 1999 through January 2009, NADEL perpetrated a
scheme to defraud investors in six different funds: (a) Victory
IRA Fund Ltd.; (b) Scoop Real Estate LP; (c) Victory Fund Ltd.;
(d) Valhalla Investment Partners; (e) Viking Fund, LLC; and
(f) Viking IRA Fund, LLC (collectively the "Funds").
NADEL solicited prospective clients to invest in the
Funds by making various misrepresentations about the performance
and value of the Funds, including that the net asset value of
each of the Funds was tens of millions of dollars. NADEL also
claimed to investors that his purchases and sales of securities
in the Funds had generated cumulatively more than $271 million in
gains. In truth, NADEL’s trading resulted in an overall net loss
in the Funds.
To further the scheme, NADEL created and caused others
to create false and fraudulent client account statements, among
other documents, that reflected fictitious positive returns
consistent with the returns NADEL represented to investors he had
achieved.
Based, in part, on NADEL's false statements, from 1999
through January 2009, more than 350 clients invested more than
$360 million with the Funds. NADEL received tens of millions of
dollars in management fees and performance incentive fees and,
moreover, transferred and caused to be transferred millions of
dollars in investor money in the Funds to accounts and entities
that he owned and/or controlled. The investors in the Funds did
not authorize NADEL to make these transfers, and NADEL failed to
disclose them.
NADEL is charged with six counts of securities fraud,
one count of mail fraud, and eight counts of wire fraud. Each
securities fraud count carries a maximum sentence of 20 years in
prison and a maximum fine of $5 million, or twice the gross gain
or loss from the offense. The mail fraud count carries a maximum
sentence of 20 years in prison and a maximum fine of $250,000, or
twice the gross gain or loss from the offense. Each wire fraud
count carries a maximum sentence of 20 years in prison and a
maximum fine of $250,000, or twice the gross gain or loss from
the offense. If found guilty on all counts, NADEL faces a
combined statutory maximum sentence of 280 years’ imprisonment.
NADEL is also subject to mandatory restitution. The Indictment
includes forfeiture allegations which would require NADEL to
forfeit the amount of money involved in the charged crimes.
NADEL is currently detained pending his meeting bail
conditions set by United States District Judge DENISE L. COTE
following NADEL's January arrest. NADEL is expected to be
arraigned on the Indictment by United States District Judge JOHN
G. KOELTL on April 30, 2009.
Mr. DASSIN praised the work of the Federal Bureau of
Investigation, and thanked the United States Securities and
Exchange Commission for its assistance. He added that the
investigation is continuing.
Assistant United States Attorneys REED M. BRODSKY,
MARIA E. DOUVAS, and JEFFREY ALBERTS are in charge of the
prosecution.
The charges contained in the Indictment are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
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