(Bloomberg) -- Florida money manager Arthur Nadel pleaded guilty to 15 fraud counts, 13 months after he disappeared for two weeks in January 2009 as state authorities began investigating investor complaints about missing money.
U.S. District Court Judge John Koeltl in Manhattan accepted the guilty pleas today. Nadel, 77, founder of Scoop Management Inc. in Sarasota, Florida, has been 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 U.S. District Court 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 today. “I am profoundly sorry for what I have done.”
Nadel said he fabricated net asset values for the hedge funds he once ran and illegally transferred money from them.
Each of the counts Nadel pleaded guilty to carry a maximum prison term of 20 years. The guidelines in the plea agreement call for a sentence of between 12 years and 7 months and 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 in assets.
Ponzi Scheme
“It was obviously 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 $350 million from 370 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 between 11 percent and 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 when, in fact, less than $125,000 was 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 case is U.S. v. Nadel, 1:09-cr-433, U.S. District Court, Southern District of New York (Manhattan).
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