Friday, January 16, 2009

Friday Night Ponzi: Another One on the Loose; Getting Silly Now

While this is not quite as dramatic as Schrenker's insane plane-crash stunt, or at least not yet, the new Ponzi runaway story is all over the news. This time it is Art Nadel, a potentially demented, statistical arbitrage whiz-kid. While at first glance this seems to be an isolated case of a 75 year old guy who had likely misplaced his dentures, but who nonetheless had been running a "prize winning black box" fund, we fully expect to find a connection to Madoff, Madoff's extended family, Dreier, Schrenker and all the brothers and sisters of Kappa Beta Phi.

What is known so far:
  • Art Nadel, 75, money manager for Sarasota, FL, based Valhalla Management is under investigation for investment and asset theft.
    Art disappeared on Wednesday afternoon; his disappearance was reported by his wife Peg who had last seen him at 8:45am on Wednesday. Two days later the police launch an investigation.
  • Nadel left a note that was recovered after his disappearance. Contents of said note have not been released by authorities.
  • Wife Peg Nadel and son Geoff Quisenberry said they would not comment on the assets under management, the number of clients, how much had been lost or whether it is even accurate to call it a hedge fund.
  • Nadel is fleeing in a green Subaru.
  • Detective Bill Splitter says "We're dealing with a substantial amount of money that has reportedly been taken from many investors".
  • Among the high-profile Sarasota victims are the Sarasota YMCA foundation, and at this point they have been told their money is gone.
  • Valhalla investors had been told their investments in the fund had earned over 8% as of November.
  • In addition to Valhalla, other umbrella funds implicated are Viking and Scoop management.
  • Neil V. Moody, 70, who is president of Viking Management, released a statement to investors on Thursday confirming funds had disappeared: "Unfortunately, just yesterday afternoon we became aware of an extremely serious situation suggesting that the funds may have virtually no remaining value".
  • Moody is telling clients that Nadel did all the fund trading, and that Moody had no idea anything was wrong until this week.
  • The duo operated under the name Scoop Management Inc. in a double storefront at 1618 Main Street in Sarasota.
  • Moody, who lives part time in Evergreen, Colorado has told investors the funds value totalled $350 million.
  • Among the recipients of gifts and pledges from the Nadels are Habitat for Humanity, Jewish Family and Children's Services and Girls Inc.
  • Scoop had announced that it could not meet year-end demand for $50 million in redemptions.
  • Moody has admitted to an investor that "Nadel was missing with all the money".
  • In a 2003 report, Sarasota-based The Wall Street Digest lauded Nadel's and Moody's experience, especially Nadel's "black box" computer program (you reading AQR?).
  • Valhalla's phone number is listed as (941) 366-0975.
  • Valhalla was incorporated in 1999; the Nadels and others started a firm two-years earlier that used computer generated investment and trading programs, according to Valhalla marketing docs.
  • Nadel is a grad of NYU, and in the 1960's was a realestate developer.

The photo below is of a store front of Scoop Management Inc. from Google Street View. No green Subaru can be spotted. As more news unwind in this developing story, we will keep you posted.

Photo of the Art Nadel's wife, Peg, and borg-collective fan son, Geoff:

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