Securities and Exchange Commission charged a missing hedge fund manager with fraud

Securities and Exchange Commission charged a missing hedge fund manager with fraud on Wednesday, saying he misled investors and overstated the value of investments in six of his funds by at least $300 million.The six funds appear to have total assets of less than $1 million, the S.E.C. said in a civil lawsuit filed in Federal District Court in Tampa, Fla. It said the fund manager, Arthur Nadel of Sarasota, Fla., had recently transferred at least $1.25 million from two funds to a secret bank account he controlled.Mr. Nadel disappeared on Jan. 14 and authorities say he fled Florida. In a suicide note left at his home, Mr. Nadel admitted that he lost clients’ money and feared they would want to kill him, The Sarasota Herald-Tribune reported.On Wednesday the S.E.C. obtained a court order freezing Mr. Nadel’s assets and those of other defendants in the case.“Mr. Nadel’s alleged actions deceived investors, and we are seeking to hold him accountable for that misconduct,” David Nelson, director of the S.E.C.’s Miami regional office, said in a statement.
Two investment companies controlled by Mr. Nadel, Scoop Capital and Scoop Management, consented in a settlement with the S.E.C. to injunctions, asset freezes and the appointment of a receiver. They neither admitted nor denied wrongdoing.
The S.E.C. also is seeking restitution plus interest from several so-called relief defendants: the investment advisers Valhalla Management and Viking Management, and the hedge funds Scoop Real Estate, Valhalla Investment Partners, Victory IRA Fund, Victory Fund, Viking IRA Fund and Viking Fund.Those defendants consented to an asset freeze, also without admitting or denying the allegations.

The S.E.C. said Mr. Nadel claimed in offering materials that three of the funds had about $342 million in assets as of Nov. 30. The offering materials for several of the funds also claimed monthly returns of 11 to 12 percent last year, when they actually had negative results, the agency said.

In his suicide note, Mr. Nadel described the “extreme guilt he was feeling over business actions that he had taken which resulted in the loss of other people’s money,” a Sarasota County sheriff’s deputy wrote in a report, according to The Herald-Tribune.Mr. Nadel’s note stated “there are those that would like to kill him, but that he will do it himself.”Federal law enforcement authorities have tracked Mr. Nadel to Slidell, La., the newspaper said. No criminal charges have yet been filed against him and there is no warrant for his arrest.