LawFuel – Legal Newswire – LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, and JOSEPH M. DEMAREST, JR., the Assistant Director-in-Charge of the New York Field Office of
the Federal Bureau of Investigation (“FBI”), announced today that
ARTHUR G. NADEL, 76, of Sarasota, Florida, was arrested this
morning on securities and wire fraud charges. As alleged in the
two-count Complaint unsealed today in Manhattan federal court:
NADEL was the investment adviser for six funds.
Three of the funds (referred to in the Complaint as the “Group I
funds”) — Viking IRA Fund LLC, Viking Fund LLC, and Valhalla
Investment Partners LP — had been established by Valhalla
Management and Viking Management, general partnerships that had
been created by two individuals identified in the Complaint as
Partner-1 and Partner-2. The other three funds (referred to in
the Complaint as the “Group II funds”) — Victory IRA Fund Ltd.,
Victory Fund Ltd., and Scoop Real Estate LP — were established
by Scoop Management and Scoop Capital LLC, general partnerships
that NADEL himself had created. NADEL, who was based in
Sarasota, Florida, traded for all of these funds through a broker
in New York City.
Documents provided by the SEC indicate that over one
hundred investors, located throughout the United States, invested
in these various funds. As late as September 2008, documents
sent to one investor falsely indicated that the Valhalla and
Viking funds (“Group I”) had a total of $210 million in assets,
divided approximately equally among them. Records recently
obtained from the fund custodians show that, as of the end of
2005, over $60 million had been invested in the Group II funds.
However, those records also show that, at as of end 2008, there
was in fact less than $125,000 in net liquidating value in all of
the funds combined. Partner-2 has also advised that one $900,000
wire transfer made from the Valhalla Investment Partners LP fund
in August 2008, based on a wire request with the signature of
“Art Nadel,” was not authorized. Partner-1 has advised that
NADEL had also, for years, resisted hiring an independent
certified public accountant to audit the funds, and only agreed
to do so after the arrest of BERNARD MADOFF.
On January 13, 2009, Partner-2 sent NADEL a letter relating to hiring an
independent certified public accountant for this purpose. The
next day relatives of NADEL reported to Sarasota police that
NADEL had left a note reflecting that he was no longer going to
be around. In addition, what appears to be a handwritten letter
from NADEL to his wife was discovered in a shredding machine at
his offices in Sarasota; that letter states in part that “[t]he
avenues to money for you will likely be blocked soon.”
NADEL was arrested following his surrender to the FBI
this morning and is expected to be presented before a United
States Magistrate Judge in Tampa federal court at 3 p.m. today.
NADEL is charged with one count of securities fraud and
one count of wire fraud. The 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
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.
Mr. DASSIN praised the work of the FBI in the
investigation of this case, 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 Complaint are merely
accusations, and the defendant is presumed innocent unless and
until proven guilty.
09-011 ###
