UPDATE 3-Florida's "mini-Madoff" Nadel admits huge fraud
* Nadel accepts responsibility for decade-long fraud
* Scheme unraveled in financial crisis, post-Madoff
* Faces the rest of his life in prison (Adds details of scheme, Nadel comments on his former partners, sentencing date)
By Grant McCool
NEW YORK, Feb 24 (Reuters) - Arthur Nadel, a former Florida fund manager dubbed a "mini-Madoff" for running a decade-long investment fraud of nearly $400 million, pleaded guilty on Wednesday to criminal charges.
Nadel, 77, disappeared for two weeks before his arrest in January 2009. He had left a letter for his wife imploring her to use a trust fund for her benefit and "sell the Subaru if you need money," a reference to their motor vehicle.
The FBI arrested Sarasota, Florida-based Nadel in his home state, but the case was moved to New York because he traded through a brokerage in the city, Shoreline Trading, an affiliate of Goldman Sachs Group Inc (GS.N).
Nadel, who looked frail in court and remained seated throughout the proceeding, pleaded guilty to an indictment of 15 charges, including securities fraud, mail fraud and wire fraud before Manhattan federal court Judge John Koeltl.
"I understand the anger and rage of all of the people I let down so badly," Nadel told the court. "I want them all to know I will carry this burden for the rest of my life."
Nadel's funds, one of several swindles that unraveled during the financial meltdown and after the high-profile Bernard Madoff scandal, enriched him and defrauded hundreds of clients, prosecutors said.
The amounts prosecutors and regulators estimated to have been entrusted to Nadel by investors have ranged between $360 million and $397 million for which he received tens of millions in management and performance fees.
Nadel admitted to creating false and fraudulent account statements for his Scoop Management LLC funds. Nadel lost money and stole investor money to pay for several businesses, including real estate in North Carolina, his wife's flower shop and private planes, prosecutors said.
Nadel's guilty plea calls for him to forfeit $162 million.
In court, Nadel mentioned his former partners, Neil Moody and his son Christopher Moody, who reached a settlement last month with the U.S. Securities and Exchange Commission. The Moody's have not been criminally charged.
"I and the Moodys received tens of millions of dollars in fees," Nadel said in court. "We were not entitled to those fees."
Under the SEC settlement, the Moodys agreed to be barred from association with an investment firm for five years. They did not admit or deny the allegations by the SEC, which accused them of negligence rather than intentionally harming investors.
A spokesman for the Moodys declined to comment on Wednesday.
Nadel has been unable to make bail and will remain in jail until sentencing on June 11. Under the sentencing guidelines for his crimes, he can expect to spend the rest of his life in prison.
Parallels were drawn between Nadel and Madoff because they both ran Ponzi schemes in which early investors were paid with money from new clients, many of them Florida residents. Madoff is serving a 150-year prison sentence for orchestrating Wall Street's biggest investment fraud of as much as $65 billion.
The case is U.S. v. Nadel, U.S. District Court, Southern District of New York (Manhattan), No. 09-433. (Reporting by Grant McCool; editing by Maureen Bavdek, Andre Grenon and Bernard Orr)