TALLAHASSEE – A Florida investment manager who disappeared with what could be hundreds of millions of dollars of other people's money remained missing on Sunday, as the investigation into his dealings widened.
The FBI and the U.S. Securities and Exchange Commission have joined the search and investigation for Arthur Nadel, president of Scoop Management Inc, whose reported disappearance Wednesday was followed two days later by complaints from investors who said that funds invested by and through Nadel had disappeared along with him.
Sarasota police said the investigation began on Friday and federal agencies were informed after they received complaints from at least five possible victims, many of whom appeared to have lost more than $500,000.
"What has allegedly gone on also includes federal and other regulatory violations," Capt. William Spitler, spokesman for the Sarasota Police Department, said. "That's why it was important for us to get all the agencies together."
Nadel, 75, left a note for his family that was characterized by a local newspaper as a suicide note.
Police would not disclose its contents but said his family believed he was "distraught" at the time of his disappearance.
Nadel's car was found Thursday afternoon in the parking lot of the Sarasota-Bradenton International Airport. On Saturday, an associate told Reuters that it was believed Nadel was still alive.
On Sunday, Sarasota County Sheriff's Office spokesman Lt. Chuck Lesaltato said the investigation was ongoing and the department could not comment on whether Nadel had left the state or the country. The sheriff's office and the FBI are conducting the missing persons portion of the investigation.
Nadel and his wife Peg were prominent philanthropists and socialites in Sarasota, an upscale community south of Tampa, Florida. The couple was involved in many community organizations including Habitat for Humanity.
Investors can do little but wait to find out what happened to the funds they entrusted with Nadel and companies he associated with.
The YMCA Foundation of Sarasota has about $1.1 million invested in securities handled by Nadel.
"We're like everyone else," YMCA Foundation of Sarasota President Karin Gustafson said. "We're just reading about what's going on and waiting until they find him."
Gustafson said the nonprofit agency invested in a fund managed by Valhalla Management Inc based on the recommendation of Neil Moody, Valhalla founder and Nadel associate who was an executive on the foundation's board of directors.
Moody resigned after news broke on Friday that the funds were gone.
"We based our decision on our trust in Mr. Moody," Gustafson said. "He guaranteed us personally a 10 percent return if the fund did not perform."
In a statement issued on Saturday, Valhalla Management said: "It appears, however, that (Nadel) is likely still at large. It also appears that he has engaged in improper and unauthorized activities.
"The owners of Valhalla Management, who had contracted with Scoop Management to invest substantially all of Valhalla and related fund's assets, are cooperating with all local and federal authorities to determine exactly what happened," the statement said.
Other disgruntled investors, who spoke to the Sarasota Herald-Tribune, were shocked by the developments.
"I feel abused. I feel beaten. I don't know who to believe," Dr. Brad Lerner, who expects to lose nearly $730,000 in an IRA fund, told the newspaper.
One investor, who asked not to be named, told the newspaper that he had learned about the hedge fund from a glowing report in the Wall Street Digest, a Sarasota-based investment publication.
In a 2003 report Donald Rowe, publisher of the Wall Street Digest, said Nadel's computerized investment program has produced the best track record and most consistent returns he had ever seen.
"His (Nadel's) proprietary program, combined with screening for stock fundamentals, has consistently produced a profit month after month in both up and down markets," said Rowe in the report.
Rowe, whose Web site states he is Wall Street's most widely read investment adviser, was not immediately available for comment.
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