Nadel Pleads Guilty, Implicates Moodys

Feb 25 2010 | 12:55pm ET

Arthur Nadel admitted to running a decade-long Ponzi scheme, ripping investors in his six hedge funds off to the tune of $162 million.

The Scoop Management founder pleaded guilty to 15 counts of securities, wire and mail fraud yesterday. While conviction on those counts could have sent him to prison for 300 years, Nadel’s plea deal with prosecutors calls for a sentence of between 12 years and 7 months and 24 years and five months. U.S. District Judge John Koeltl, who accepted the 77-year-old’s plea, will be sentenced on June 11.

At yesterday’s hearing, Nadel implicated Neil and Christopher Moody, who turned the management of their three hedge funds over to Nadel.

“I and the Moodys received tens of millions of dollars in management fees and performance fees which did not reflect the actual performance of the funds,” Nadel said.

The Moodys have not been charged criminally for their alleged role in Nadel’s scam, though they do face a Securities and Exchange Commission lawsuit. Both have proclaimed their ignorance of Nadel’s scheme and their innocence of any wrongdoing.

Nadel admitted to cooking up phony net asset values for his hedge funds, as well as wildly overstating the funds’ performance. As part of the plea deal, he has agreed to forfeit $162 million.

“I am profoundly sorry for what I have done,” he told the judge.


In Depth

Exotic Assets: Investing In Rare Violins

Jan 17 2017 | 4:43pm ET

By definition, alternative investments include exotic assets far beyond your typical...

Lifestyle

'Tis the Season: Wall Street Holiday Parties Back In Fashion

Dec 22 2016 | 9:23pm ET

Spending on Wall Street holiday parties has largely returned to pre-2008 levels...

Guest Contributor

The Trump Administration: What It Could Mean for Carried Interest

Jan 19 2017 | 5:25pm ET

The arrival of the Trump administration brings the potential for a repeal of the...

 

From the current issue of

As initial anxiety over Donald Trump’s victory gave way to market euphoria in the days following the election, there was a casualty. Gold prices.