Jailed Florida fund manager to be sent to New York

TAMPA, Florida (Reuters) - A U.S. court on Monday ordered jailed Florida hedge fund manager Arthur Nadel sent to New York to face charges he bilked investors out of possibly hundreds of millions of dollars.

Arthur Nadel, 75, is shown in a photo provided by the Sarasota County Sheriff's Office released to Reuters January 20, 2009. REUTERS/Sarasota County Sheriff's Office/Handout

Nadel, a Sarasota, Florida-based investment adviser who managed six hedge funds, went missing on January 14 as investors learned their accounts were nearly worthless. He surrendered to FBI agents in Tampa last week and was ordered held without bail as a flight threat.

Magistrate Mark Pizzo signed a warrant of removal on Monday to send Nadel to New York, where he faces charges of securities fraud and wire fraud.

According to U.S. investigators, the funds Nadel said held more than $300 million actually had less than $1 million.

Nadel, 76, was a well-known philanthropist who headed two general partnerships he created, Scoop Management and Scoop Capital. He controlled six investment funds: Victory, Victory IRA, Scoop Real Estate, Viking, Viking IRA and Valhalla Investment Partners.

Nadel went missing after a partner in his firm told him the funds should hire an independent accountant to audit the books following the arrest of New York money manager Bernard Madoff, the central figure in an investigation into an alleged $50 billion Ponzi scheme.

Madoff was arrested on December 11 and was released on $10 million bail. He is under house arrest at his New York luxury apartment.

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In Nadel’s detention order, Pizzo said “much about Nadel’s assets remains cloudy.”

He noted that Nadel has said he has no assets, and that his lawyer said his client is ready to be candid about his finances.

Yet Nadel has told officials very little about his wealth, instead referring questions to his attorneys, the judge wrote.

By contrast, the receiver appointed for Nadel’s companies has detailed a 500-acre development in North Carolina, two private jets and over $1 million diverted from hedge funds to Nadel’s private accounts or cash in the past year.

“The contrast between what the defendant says he does not have and what the government says he took is too stark,” Pizzo wrote.

It was not immediately clear when Nadel would be sent to New York. He could face a total of 40 years in prison -- 20 years on the securities fraud count and 20 years on the wire fraud count -- plus millions of dollars in fines.

Editing by Jim Loney, Phil Berlowitz