Missing fund manager arrested
Florida hedge-fund manager Arthur Nadel faces fraud charges.
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(CNN) -- A missing Florida fund manager has been arrested in Tampa on charges of securities and wires fraud, according to a complaint filed in a Manhattan federal court on Tuesday.
Arthur Nadel, 76, of Sarasota, was arrested following his surrender to the FBI on Tuesday and was expected to go before a U.S. magistrate in Tampa federal court. He went missing on January 14.
Documents provided by the Securities and Exchange Commission show that more than 100 investors put their money into six funds in which Nadel served as the investment adviser, according to a statement from the U.S. attorney in the Southern District of New York.
While Nadel was based in Sarasota, he traded for all of the funds through a New York broker.
Information sent to one investor "falsely indicated" that three of the funds "had a total of $210 million in assets, divided approximately equally among them."
And, records obtained from fund custodians show more than $60 million invested in other funds by the end of 2005. "However, those records also show that, at as of the end of 2008, there was in fact less than $125,000 in net liquidating value in all of the funds combined."
The attorney's office said a $900,000 wire transfer made from one of the funds in August "based on a wire request with the signature of 'Art Nadel,'" was not authorized.
The charges come amid the fallout of Bernard Madoff's Ponzi scheme and subsequent investigations targeting money managers. One of the fund partners said Nadel resisted hiring "an independent certified public accountant to audit the funds" until Madoff was arrested.
On Jan. 13, a partner sent Nadel a letter regarding hiring a CPA for this purpose. The next day, Nadel's relatives told local police he left a note "reflecting that he was no longer going to be around."
On January 21, the Securities and Exchange Commission filed a suit in U.S. District Court in Tampa charging Nadel with fraud in connection with six hedge funds in which he was the principal investment adviser.
"Nadel provided false and misleading information for dissemination to investors about the funds' historical returns and falsely overstated the value of investments in the funds by approximately $300 million. In contrast, the funds appear to have total assets of less than $1 million," the complaint said.
That suit also said Nadel "recently transferred at least $1.25 million from two of the funds to secret bank accounts that he controlled."
Accompanied by two defense lawyers, Nadel appeared at the Tampa FBI field office and was taken into custody around 9:45 a.m. on Tuesday, FBI spokesman David Couvertier told CNN.