According to an article from Bloomberg:
Florida money manager Arthur Nadel pleaded guilty to fraud 13 months after he disappeared for two weeks in January 2009 as state authorities began investigating investor complaints about missing money.
U.S. District Judge John Koeltl in New York accepted the guilty plea today. Nadel, 77, founder of Scoop Management Inc. in Sarasota, Florida, has been in custody since he surrendered in Tampa more than a year ago following his disappearance.
In April, prosecutors unsealed a 15-count indictment in New York alleging securities fraud, wire fraud and mail fraud. Nadel previously pleaded not guilty.
“I fabricated inflated rates of return for my trading activities,” Nadel told Koeltl in pleading guilty to all 15 counts. “I am profoundly sorry for what I have done.”
Nadel said he invented net asset values for the hedge funds he once ran and illegally
transferred money from them.
Each of the counts carries a maximum prison term of 20 years. Guidelines in the plea agreement call for a sentence of 12 years and 7 months to 24 years and 5 months, Koeltl said. The judge set a sentencing date of June 11. Nadel will remain in custody.
Nadel also agreed to forfeit $162 million, the amount his investors lost, according to
“It was obvious that Mr. Nadel was very remorseful for what he did,” Mark B. Gombiner, his lawyer with the Federal Defenders of New York Inc., said after the hearing. “He accepted responsibility for what he did.”
Nadel allegedly raised more than $397 million from almost 250 investors during a 10-year period starting in 1999 in a classic Ponzi scheme. Withdrawals were covered by new money coming in, according to a lawsuit against investors brought by the funds’ receiver.
Nadel falsely told existing and potential investors that the funds were yielding from 11 percent to 55 percent a year, when in fact the returns were usually negative, according to court documents.
Investors were told the funds’ accounts had more than $360 million while less than $125,000 was actually available when the scheme collapsed, according to prosecutors. Nadel took in $63.9 million in fees and trading profits, including $45 million from 2005 to 2007, they said.
The money supported Nadel’s lavish lifestyle and allowed him to invest in businesses, including a real-estate project in North Carolina and his wife’s flower shop, prosecutors said.
Click here for the Wall Street Journal Law Blog article and here for the Bloomberg story. You can also read the plea agreement here.