Tuesday, January 20, 2009

A Madoff Flower

In Nadel case, warning signals

By John Hielscher, Anthony Cormier & Michael Pollick

Published: Tuesday, January 20, 2009 at 1:00 a.m.

Federal law enforcement agents have tracked missing hedge fund manager Arthur G. Nadel of Sarasota to Slidell, La., according to sources close to the investigation.

As the net tightens around Nadel, investors in the Sarasota-based hedge funds he managed say they saw warning signs weeks ago. ...

Finding Nadel, 76, is critical to discovering what happened to the $350 million that his partners say is gone from the hedge funds run by Scoop Management Inc.

While fund principals claim nothing appeared amiss until Nadel vanished Jan. 14, some investors were baffled by what they call an unusual delay in getting at their money.

They say that instead of obtaining routine withdrawals in early January, they were told they would have to wait until Jan. 15, which turned out to be the day after Nadel disappeared.

Some $50 million was supposed to be disbursed Jan. 15, Detective Jack Carter of the Sarasota Police Department confirmed. When Nadel went missing, "That set off the bells and whistles," Carter said.

Nadel left behind a note that prompted the family to file a missing person's report.

Two sources who have seen or been briefed on the note indicated Nadel told family members that he made a grave mistake and planned to kill himself. Once he spoke with family members by phone, however, the suicide fears dissipated and FBI agents began hunting him as a missing person.

...Then, two days before Nadel took off, the investor talked with Martin to make sure the distribution had been processed as he had requested in November and again in early January.

"He said the whole amount, $14,000, would be wired out on the 15th of January," McCandless said. That would mean he would have gotten his money last Thursday. "But on Wednesday, I got the call from this friend in Sarasota. Like 'whoops.'"

Others investors told of warning signs in early December.

One Bradenton client, who asked Dec. 3 for $50,000 of his money, found it "kind of strange" when fund managers said they would not write checks until Jan. 15. "It did sound odd to me to wait until the 15th, when I just usually drive down and pick up the check around the first of the month," said the investor, who asked not to be identified.

Another Manatee County investor asked to withdraw his entire $99,000 in early December and was told to wait until Jan. 15. He was puzzled by the reply from fund representative Martin.

"He said, 'Don't ask anybody else, and don't say anything to Art about it,'" said the investor, who also asked not to be named.

Moody, asked to comment, referred a reporter to his lawyers at the Hollywood law firm of Boies Shiller and Flexner. Messages to two different attorneys went unanswered.