Hedge fund fugitive comes in from the cold

Florida hedge fund manager Arthur Nadel has come out of hiding and turned himself in yesterday to the Federal Bureau of Investigations in Tampa, Fla. He was arrested and charged with defrauding investors of his Sarasota, Fla.-based Scoop Management Inc. of tens of millions of dollars, published reports say. Mr. Nadel will remain in custody until at least Friday, when another hearing is scheduled to decide if he will be moved to New York, where the criminal charges were filed. According to reports, Mr. Nadel claimed that six hedge funds were worth over $300 million dollars; in reality, their value amounts to about $500,000. Mr. Nadel appeared in court Tuesday, where he was charged with one count each of securities fraud and wire fraud, both of which carry maximum prison sentences of 20 years. The Securities and Exchange Commission has also charged Mr. Nadel with a civil count of fraud and has frozen his assets. Suspicion about Mr. Nadel’s activities began when, six days after agreeing to an independent audit of his funds, he disappeared from his home. Investors in Scoop became concerned that he may have fled with their assets, which prompted the FBI and SEC to mount a search for Mr. Nadel. The FBI recovered a shredded note Mr. Nadel left for his wife that described the actions she should take to ensure financial security, including selling their car and quickly withdrawing as much money as she could, according to published reports. He also took measures to protect his money by transferring $1.25 million from two of his funds into a secret bank account, published reports say. The FBI has not provided details concerning Mr. Nadel’s whereabouts for the past two weeks.