All language subtitles for American Greed s05e13 The Wizard of Sarasota

In this episode of American Greed, he's
called the Wizard of Sarasota. He was

literally the man behind the door.

Arthur Nadel conjures a $330 million
hedge fund that's all hocus pocus.

He was the number one subject in the
disappearance of hundreds of millions of

dollars. Nadel is charged with running
what's been described as a mini Madoff

scheme.

In the blink of an eye, Nadel disappears
without a trace, leaving clients

without their life savings.

You just question, how are you going to
make it happen?

January 14, 2009,

Sarasota, Florida.

The day begins like any other for 76
-year -old hedge fund manager Arthur

He packs his briefcase, loads into his
late model Subaru, and heads off to

When he left for the office that
morning, his wife had no reason to

anything was wrong.

However, when he didn't show up at his
regular time at the office before the

start of the trading day, people began
looking for him.

Nadel's family panics and calls police.

Soon, word of his disappearance makes
headlines.

CNBC has confirmed that Florida money
manager Art Nadel is missing.

Not only has Nadel vanished.

But it seems $330 million of his
client's money has disappeared right

him.

You had a lot of people that wanted more
answers, and it's not that we didn't

want to give it to him. We didn't know
either.

In a few short days, a nationwide
manhunt is underway for Nadel and the

he managed.

We didn't know if he was going to commit
suicide, where he was, what happened.

We knew nothing.

Arthur Nadel is born in New York City at
the height of the Great Depression.

New Year's Day, 1933.

He had a very difficult life as a child,
didn't have his father's love, you

know, all that kind of thing.

He's not only smart, but he's also a
talented musician.

He was initially a jazz piano player in
New York, put himself through NYU and

NYU Law School, and then after a short
period of time, he became a lawyer.

By the late 1970s, he's advising clients
on various real estate and security

investments.

And with his private life in shambles,
having already been divorced, Nadel is

desperate for success.

In 1978, Nadel represents a client who's
selling property to a buyer for $50

,000.

He had put some money for his client in
escrow, as required by law.

And at some point, that client claimed
to be in some kind of trouble, possibly

with loan sharks, and needed access to
that money.

But that money isn't Nadel's to take.

And in 1980, when the deal falls
through, the buyer asks to get his money

escrow. It appears that Nadel had
withdrawn nearly all of it, leaving only

$152 in the account.

Nadel's defense was that he gave the
money to help him out.

A year later, Nadel manages to repay the
buyer with interest.

But not before the New York State Bar
Association gets wind of the incident.

Finally, on March 11, 1982, Arthur Nadel
is disbarred for deceit,

misrepresentation, dishonesty, and
fraud.

Certainly, misappropriating money in an
escrow account is one of the most

serious charges a lawyer could face.

For the next few years, Nadel tries to
leave his past behind.

He relocates to Sarasota, Florida, where
he sets out to become a mover and a

shaker.

He bummed around looking for something
to do, looking for a deal to make. There

are a lot of people here looking for
deals to make.

His first bet is on a downtown landmark.

The Miramar Hotel was in downtown
Sarasota, built, I believe, back in the

30s. It had become decrepit and run
down, vacant, of course, and he and a

partner had a plan of restoring it.

Said they had the money to restore it to
its old grandeur and glory.

Nadel believes that the Miramar project
can catapult him to a whole new social

strata. That was a time when people were
trying to save a lot of these buildings

that had become vacant and run down.

He tried and tried and tried to get the
money to renovate and rebuild that and

failed. That was his first failure here.

In 1987, he reportedly embarks on yet
another losing venture with his third

wife, artist Virginia Hoffman.

It was a consignment gallery is
basically what it was.

The artists would bring in their work,
they would display the work, and then

when it was sold, they were supposed to
get the money back.

But what happened was art took the money
for some of the items, and the artists

were not paid for their work.

Nate Allen Hoffman divorced in 1991, and
it's not long before he marries for a

fourth time.

He was at a really, another one of his
low points in his life.

This marriage also fails.

And after three years, they have an
acrimonious divorce.

The court records of this divorce really
showed Art was unemployable. He

couldn't get a job, even as a piano
player anymore. He'd lost all his

credibility in town.

Doubt and out, again.

Nadel argues that with no job, he can't
afford to pay the $68 ,000 divorce

settlement. He even fights to hold on to
their garden statue.

It's pathetic, but I think that it goes
along with not paying the artist. You

don't pay the artist in the previous
marriage. Now you're in this marriage

you're fighting over the garden
ornaments. It's very illustrative of

of personality we're talking about.

But as he's done so often in the past,
Nadel dusts himself off and begins

working his magic once again.

In 1997, he meets 62 -year -old Peg
Quisenberry, a regular in Sarasota's

philanthropic circles.

Peg was an ex -Vogue model, tall, very
attractive, a very lovely woman.

They certainly looked physically like an
odd match.

I don't know why women were attracted to
him, but he got five of them.

He must have had something.

With her connections and his hustle,
they start a day trading club.

All over America, little old ladies and
retirees and school teachers were

getting together and reading finance
manuals about how to beat the market and

then pooling their money together to
form these investment clubs. This was

on everywhere. This was like a
sociological phenomenon.

The Nadel's Investment Club quickly
becomes a hit.

Suddenly it went from not even a mom and
pop, it was just some friends having

drinks and deciding how they're going to
invest, to a business, a big business,

a multi -million dollar business.

When American Greed returns,

Nadel tries to leave his shady past
behind to strike it rich.

But will he finally find his place in
the sun?

No one checked into Art Nadel's
background.

Anyone could have found out he was a
disbarred attorney. It doesn't take much

work to do that.

Sarasota, Florida.

It's the second home to some of the
country's elite.

It's also known as the state's cultural
coast.

Very popular spot for retirees. Most of
them are affluent retirees, bringing a

lot of wealth into the community, which
helps support some of those activities

on the cultural side.

By 1997, 64 -year -old day trader Arthur
Nadel has come to be known for his

successful investment club.

It's only natural, then, that Nadel
would consider day trading full -time.

His club was achieving these great
results, and over time they began

others. Through the groups that he was a
member of, through friends and family,

word spread that Nadel had formed a
fund.

Nadel calls his new venture Scoop
Management, and he opens a storefront

on Main Street.

Soon, Nadel meets Neil Moody, a 30 -year
Wall Street veteran who worked for

financial giants Kidder Peabody and
Payne Webber.

Moody was much more of a tall, handsome,
country club kind of guy.

If he talked to you, you kind of
believed him because he had all the

he was a player.

He's been successful at raising money
pretty much at every turn, and that's

he's good at. That's his gift.

With Moody as his rainmaker, Nadel's
little business begins attracting big

money.

And in 1999, Moody opens Valhalla, the
first fund under the Scoop umbrella.

At that point, it was night and day. One
day it's just us, and the next day it's

Neil and Art, and they're off to the
races.

The law firm of Holland and Knight
prepares an offering memorandum for

If you want to avoid registering
security, then you can do a private

memorandum. And it goes to every
investor, and it lays out what the

the fund is, what the term is, if
there's going to be a term, how you get

how you get out.

The memorandum names Neil Moody and his
son Chris as the managing members of the

fund.

But it leaves out one crucial bit of
information, that Arthur Nadel, a

attorney, will be making every last
trade.

which might scare off potential
investors who drop $100 ,000 to get into

fund.

Nadel's trading strategy, however, puts
them at ease.

His funds traded in the QQQs, the NASDAQ
index that tracked technology stocks.

It was a simple approach. He told
investors that he liquidated at night,

he wasn't invested overnight, and that
he would trade in and out of the QQQs

throughout the day.

Soon, Nadel begins hiring inexperienced
administrative staff, like

doe -eyed 28 -year -old Shelly Bell.

We were all new to the business.

None of us knew anything about
investments or trading or financials or

like that.

Bell grew up in Sarasota and worked as a
bookkeeper for her family's cabinetry

business.

I've always just had a knack for
numbers.

I've always been very good at crunching
numbers, analyzing them, figuring things

out. It's kind of like an investigator
thing in me to make sure everything

balances and trying to find where the
problem is.

But Bell doesn't know what she's getting
herself into.

You see NASDAQ and stock trading ticker
symbols and everything else, but I had

no idea what it meant.

So I thought, you know, here's another
opportunity to get into an industry that

seemed to be intriguing to me.

Nadel devises a workflow that purposely
keeps her in the dark.

Nadel kept a very tight rein on the
brokerage account statements.

They came in through the mail.

and everyone in the office understood
that they were going to be given

to Mr. Nadell.

When those statements came in, we just
put them in Art's inbox.

No one thought, let's open it, let's
analyze it, let's look at it.

The volume was so large that it would be
easier if Art just summarized it for me

and gave me the synopsis of the trading
activity, and I would just put that

number in the program.

In 1999, Nadel reports gains of about
$959 ,000,

a 36 % return.

He'd be in there for the entire trading
day, and he would come out from time to

time and say, here's my report, and they
would just come from him. There would

be no corroboration, there would be no
backup, there would be no one saying,

did you arrive at these figures?

But the actual gains are only $36 ,000.

$923 ,000 less than what Nadell had
reported.

Nadell's trading would be personally
entered by Mr. Nadell onto a spreadsheet

using pencil and paper. The numbers on
that spreadsheet were completely

fabricated.

When American greed returns, the
technology bubble bursts, and the tech

NASDAQ loses more than half of its
value.

But Nadell's hedge fund seems to be on a
roll.

I think the investors may have just
thought they found the goose that could

the golden egg for them.

In late 2000, Sarasota, Florida, fund
manager Arthur Nadel continues to

unbelievable returns.

despite the NASDAQ crash.

But in reality, Nadel loses a whopping
91%, though he stealthily reports a

55 % gain.

I felt very fortunate to have this
opportunity to work for someone that had

an amazing ability, saw a desire and a
dream to open a business like this, and

became so successful in doing it, he
made it look very easy.

Nadell's partner, Neil Moody, brings in
a range of clients, from institutional

investors to regular folk looking to
grow their life savings.

Neil was able to take a picture that was
painted by Art Nadell and turn it

around to anybody who would listen and
say, isn't this fantastic?

In 2001 and 2002, years when the S &P
500 index is down double digits,

Nadel says the Valhalla Fund's returns
are more than 19 and 21 percent,

respectively.

The returns were terrific. People
weren't making money on Wall Street. But

hedge funds were all making money for
folks, and the investors loved it.

These improbable numbers reach Don Rowe,
publisher of the popular Wall Street

Digest newsletter.

Rowe publishes a rave review of what he
calls the Nadel Moody Funds. He called

them America's best money manager. He
said their profits were so much better

their techniques so much more performing
than others.

He urged his clients to invest in them,
and many of them did.

Aerospace engineer Tony Hagar reads the
digest.

And decides to invest $100 ,000.

That was the real trigger that convinced
me to invest in the Nadel Fund.

And his reason to invest?

I was an older father with a young
family, so my interest was really in

to understand what I might be able to do
to secure my future more financially,

make it more solid.

I don't think I would have done that at
all if it hadn't been.

for that Wall Street Digest.

You see somebody say, this is the best
fund I've ever seen. Do you ever check

out that author?

No. And so people did the same thing
with Don Rowe. Here's a guy who's been

writing about these things for decades
and knows what he's doing and says it's

the best fund. This gives me
reassurance.

But Rowe's newsletter is not an
objective source.

Its fine print says it's really an
advertorial.

He had a huge conflict of interest
because he was being paid for getting

to invest in the funds.

But Hagar is so pleased with what he
sees on his statements that he plans to

invest his entire life savings, $894
,000.

Maybe it's just naivete. You know,
you're brought up to be trusting people.

My discussions with some of the people
there, I had a good feeling about it.

By 2004, Nadel and Moody have opened six
funds, traded by Nadel under the Scoop

umbrella.

Nadel is listed as the managing member
of Scoop Real Estate, Victory, and the

Victory IRA funds.

Neil Moody brings in his son Chris to co
-manage the Viking, Viking IRA, and

Valhalla Fund.

I knew Chris had a financial background.
I knew he was educated.

So I thought this was a great
opportunity to have someone in the

an education and that could maybe assist
the rest of us in some due diligence.

At years in, Nadel claims the six funds
averaged 33 % returns.

But really...

He makes about a third of that, still a
respectable 14%. The next year, in 2005,

Nadel reports a 28 % average return
across the funds, numbers he magically

arrives at using his own imagination.

The problem was is that no one ever went
back and said, show me the backup, show

me the trades, show me the accounts
where you made... this trade and it made

this much money, and then you made this
trade and it made this much money, and

this is how you got to that number at
the bottom.

Even skeptics like Sarasota doctor Brad
Lerner eventually invest with Neil

Moody. I wouldn't consider myself a
savvy investor, but I didn't think of

as a naive investor either.

It takes Moody five years to sell the
doctor on his funds.

I found it hard to believe that anybody
could get the kind of returns that he

was getting compared to the market,
which is why it took me a long time

finally invested with him.

In all, Lerner pours more than $500 ,000
into the fund.

This was all retirement money, so my
goal was to just let it grow as much as

could grow so that one day when I
retire, there would be a significant sum

money there.

Arthur Nadel's magic touch keeps
investors happy.

But an unprecedented crash is just
around the corner.

When American Greed returns, Nadel's
carefully crafted illusions are no match

for the harsh reality of the market.

The minute the calls start and they say,
I want my money, if the number of calls

saying I want my money exceed the number
of calls saying I want to invest,

you're done.

By 2005, Arthur Nadel, the Wizard of
Sarasota, seems to defy market odds,

conjuring outsized returns even in down
markets.

Though actually investing clients'
money, Nadel grossly overstates the

performance of his $275 million fund.

And he uses new investor money to cover
his incompetence.

Still, Nadel and his partners, Neil and
Chris Moody, are compensated based on

the fund's report. Reported success.

They had an annual percentage management
fee, and then they received another

larger percentage of the annual profits.

In their first six years in business,
together Nadel and the Moody's pay

themselves upwards of $35 million.

But they're not the only beneficiaries
of Nadel's purported success.

The fund also rewards its administrative
staff with six -figure salaries and big

bonuses.

Three or four hundred thousand dollars
for a bookkeeper is a lot of money.

For the first five or six years, this
was probably the best place I could

I could ever work for.

I called Peg Mama Peg, and I called Art
Master Art, because he just, there

wasn't anything that man couldn't do.

He was an amazing person.

Or so I thought.

With his newfound wealth, Nadel becomes
a fixture in Sarasota's charity scene.

They would go to a not -for -profit and
they would say, I'm going to give you

$250 ,000, but I'd like you to keep that
$250 ,000 in our management

firm. Well, that means that the money
didn't actually change hands.

And though he lives modestly in his $250
,000 home, Nadell spends heavily on

other business ventures.

Art invested in a lot of businesses
around town and out of state.

The Venice Jet Center, he bought
airplanes and helicopters here and in

where he had another jet center
operation.

He had purchased a large development in
North Carolina that he wanted to

develop, about 400 acres.

and other small businesses that he was
putting money into.

Nadel's trading was a losing
proposition. His investments in real

generally losing propositions, and he
was not making money.

In 2006, Nadel reports a gain of about
$50 million, but he actually loses

about $18 million, a $68 million
discrepancy that he works hard to cover

He bridges the gap with new money from
new investors.

And by 2008, with about $330 million
under management, Scoop appears

to be flush with cash.

The lifeblood of any Ponzi scheme is the
inflow of new money to pay off existing

investors. As long as that new money was
coming in from new investors, existing

investors were being paid off and
satisfied.

But the market takes a dramatic turn for
the worse, knocking Nadel for a loop.

He was trying not to meet with investors
who might come in just to chat and say

how things are going.

I think the pressure was definitely
building. He knew it was collapsing.

Nadel has been losing around $20 million
a year since 2001, and his losses are

just now starting to catch up with him.

The story Mr.

Nadel told himself year after year was,
I really am a wizard.

I am a great trader. If I can just keep
doing this, I will make all the

money back.

I didn't notice Art panicking. I didn't
notice him retracting.

Even Neil and Chris Moody, Nadel's
partners, claim they have no idea of

happening. You would have to be blind or
stupid not to have seen that there were

major issues happening.

And I think they themselves would admit
they were starting to ask the questions.

That September, Nadel and the Moody's
send investors letters to bolster

confidence in the funds.

One thing I noticed about the
performance of the funds, they were not

well. And I had the same sense about the
market in general.

The markets were not yielding as much as
they had been in the past.

That didn't particularly surprise me. It
just seemed reasonable.

Incredibly, investor statements also
continue to show gains, despite the

decline in the market.

It showed my value being approximately
$730 ,000.

So it was my belief that my $500 ,000 at
that point was worth $730 ,000.

Not bad.

Since 1999, the Moody's have left Nadal
to his own devices.

But by October 2008, with the market
tanking, they realized they need

independent confirmation of Nadal's
trading performance.

There had never been, all those years,
an independent audit of these hedge

funds. Investors apparently hadn't asked
for them.

But they were pushing for one now.

But Nadel is adamantly opposed to an
audit that could uncloak the tricks of

trades. It was a bad day.

He didn't see a reason why he didn't
want it. He didn't want to think of it

hear about it.

And he ended that conversation.

The fact that he didn't get him back
right away should have been a major red

flag for the Moody's. It should have
been, whoa, stop everything, hold the

presses, do not pass go.

I want him right now.

And if I don't get them, I want to know
why.

Next on American Greed, Nadell's
investors panic and there's a run on his

It was a situation that kind of
snowballed on him.

But where is Art Nadell?

His green Subaru station wagon was left
at the Sarasota airport and his

whereabouts was unknown to the people
closest to him.

By December 2008, the economy is thrust
into a recession.

The largest Ponzi scheme in American
history is revealed.

Bernie Madoff will learn his fate
tomorrow for running an elaborate Ponzi

that defrauded investors of $65 billion.

News of Madoff's fraud makes headlines
in Sarasota, Florida, triggering a wave

of panic.

And Arthur Nadel's clients line up to
get their money back, requesting some

million in redemptions, which are due
January 15, 2009.

That was the crack that opened the dam.
They simply didn't have that money to

make the redemptions.

Arthur Nadel reluctantly agrees to an
audit.

And on January 14,

The 76 -year -old wakes up knowing he
owes investors $50 million the next day.

It was a situation that kind of
snowballed on him. His trading was not

in gains. However, he was reporting
positive returns to investors.

And in order to maintain the gig, he had
to continue to report positive returns

to generate additional inflow of new
invested money.

Instead of dragging himself into the
office, Nadel writes his family a

note and leaves town.

His green Subaru station wagon was left
at the Sarasota airport, and his

whereabouts was unknown to the people
closest to him.

I called in to let them know I was on
the way, and the receptionist told me

Peg was kind of in a state of panic
because Art had not been in.

She was calling hospitals. She was
calling the police.

She didn't know where he was.

Later that afternoon, Nadel's wife, Peg,
makes a fateful announcement.

We all met in the conference room, and
Peg had told us that she got a phone

from Art that afternoon telling her to
go home. There was a note for her there

and informed us that all the money was
gone, and Art has disappeared.

And we were all just in a state of
disbelief.

Even Nadel's partners, Neal and Chris
Moody, say they don't know the extent of

the damage.

Somebody had to give us authority to
access the accounts because the only

that was on there was Arts.

So even Chris and Neal were struggling
with, what's in here? We need to know.

He's gone. We need answers.

Bell returns to Scoop the next day,
hoping to find some answers.

We went into Art's office to try and
find the statements, and there was

in there.

I went into the shredder, and I could
tell that there were documents that he

written because I recognized his
handwriting.

Bell bags up the shredded papers and
takes them home. She methodically pieces

them together with thumbtacks and tape.

one shred at a time.

I just think about the night I put these
all together, not knowing the content,

just matching up each line, and then as
it all came out, reading it was like I

was in a nightmare, I was in a dream.

There's no way this is actually what I'm
reading.

There's no way this is actually
happening right now.

After hours of painstaking work, by
dawn, Bell has pieced the documents

together, and she makes a shocking
revelation.

The documents are rough drafts of two
letters written by Nadal, one to

and one to his wife, Peg.

If you want to survive this mess, what
follows is for your eyes only. I

suggest that you destroy it after
reading. Try to find a lawyer right

The avenues to money for you will likely
be blocked soon. You must use the

trust, yours, to your benefit as much
and as soon as possible.

Soon, calls from investors looking for
their redemption start to pour in.

They were screaming. They were crying.
We had people come to the office

threatening us. I can't blame them. You
know, they're angry.

We were angry.

Dr. Brad Lerner says Neil Moody and his
wife Sharon break the news to him in

person at his office.

We came into my office and behind closed
doors.

Mr. Moody told me directly, face -to
-face, that his partner, Nadel, had

disappeared, that the value of all the
funds was zero, and that my investment

was gone.

I was startled. I was shaken.

I was angry.

I was shocked.

Lerner says before Moody leaves the
office, he asks him for a favor.

Neil showed me this magnificent diamond
ring that Sharon was wearing. I've never

seen anything like that in my life.

Two seconds after telling me my
retirement money was gone, they had the

ask if I would like to buy that ring,
that they were short in cash.

I only wish now I had taken the ring as
collateral, but I didn't.

Lerner calls local police and the FBI
before turning to John Hilscher, a

at the Sarasota Herald -Tribune.

It was leading news here, and within a
few days, it was news across the

Tony Hager's wife spots the headline in
their local paper the next day.

I couldn't believe it. I thought, oh,
there's something wrong here.

We'll get the money back if, you know,
okay, there's something screwed here,

it shouldn't be a problem.

Hager calls Scoop, expecting to be
reassured.

I called this one individual and talked
to him on the phone. He was in tears.

He said that basically everything's
gone.

I got dizzy when that happened, and I
told my wife, and we broke down.

Hager loses his entire life savings of
$578 ,000.

You realize that you're 68 years old.
You have a daughter who's in college or

just graduated from college.

You have a son that you have to put
through college. You have a mortgage

you have to pay for.

Your wife is not in particularly best of
health.

And so you... Sorry.

You just question, how are you going to
make it happen?

Up next, the one -time wizard of
Sarasota has magically disappeared,

great mystery in his wake.

He realized it's over.

He decided to run and leave the rest of
us to explain for you.

He's a coward.

I still don't fully understand why I did
what I did, because it is totally

unlike me.

I'll spend the rest of my remaining few
years trying to find the answer to how

that irresistible delusion took hold of
me.

By January 18, 2009, the FBI and the SEC
have joined the investigation.

into hedge fund manager Arthur Nadel.

Within days, the feds cordoned off his
Main Street, Sarasota office.

The office was a crime scene. No one was
allowed in. No one was allowed to touch

anything, move anything, do anything.

FBI agents think they're on to Nadel
when they track his cell phone to

Louisiana.

His cell phone was pinged in Louisiana.

near New Orleans, apparently through a
conversation with Peg Nadel.

After that, the cell phone went silent.

Agents worked feverishly to find him.

In the meantime, the SEC freezes Nadel's
assets, and they uncover shocking

financial fraud.

From the inception of the first fund
through 2008, Nadel paid himself and his

partners, Neal and Chris Moody, more
than $97 million in fees.

Payments the funds could never support.

Clearly, you couldn't maintain an
investment fund losing that kind of

especially when you're paying yourself
and your partners very high commissions

and fees.

Finally, on January 27, 2009, nearly two
weeks after his disappearance,

Arthur Nadel turns himself in to the FBI
in Tampa.

Nadel tells Special Agent Mark Munster
that he was on vacation in Louisiana,

Texas, and California.

He appears somewhat relieved when he
surrendered that this manhunt that had

taken place over a couple of weeks was
finally over.

The 76 -year -old faces six counts of
securities fraud, one count of mail

and eight counts of wire fraud.

All carry maximum sentences of 20 years
in prison.

The judge also puts the scoop funds into
receivership.

Attorney Burton Wyant is the receiver
working to recoup the cash.

But that involves contentious clawbacks.

And here's how it works.

If you put $100 ,000 in and you took
$130 ,000 out, I will sue you for $30

Wyand takes a hard line to get the money
back, going after any recipient of

Nadel's false profits.

If Art Nadel gave $300 ,000 to Catholic
Charities, Wyand wants that back from

Catholic Charities.

If he gave $250 ,000 to the YMCA or the
Sarasota Opera, he wants that money

back.

In February 2009, the cases moved to New
York.

where Nadel pleads guilty to a 15 -count
indictment.

Nadel, who suffers from a heart ailment,
is sentenced to 14 years in a North

Carolina federal prison, the same prison
where Bernie Madoff will spend the rest

of his life.

Some people feel like it should have
been longer, but given his age, it's

effectively he will never get out of
prison. And so, you know, how much more

you sentence a guy?

But that hasn't happened for Chris and
Neil Moody.

The Moody's, Nadel's partners, maintain
they had no prior knowledge of the

scheme.

I don't think anybody could be that
deeply involved for that many years and

be that blind.

The Moody's have settled a civil
complaint filed by the SEC.

The father and son have not been
criminally charged.

They were making millions of dollars in
compensation from these funds. What did

they do to justify those millions of
dollars that they took?

Apparently watching out for their
clients' money was not one of them.

To some of Nadel's investors and
employees, his disbarment years earlier

comes as a major surprise.

People don't give their money to people
who are piano players who have been

disbarred. They just don't.

Litigation is pending against Holland &
Knight, the law firm that drafted the

private placement memorandums that make
no mention of Nadel or his disbarment.

Sarasota attorney Morgan Bentley
represents 36 clients who were defrauded

Nadel.

If this type of litigation were to
succeed, it would put enormous pressure

the lawyers preparing private placement
memorandums.

which up until this point have been able
to say, I don't have an independent

duty to investigate.

There are people who never met Art
Nadel, who only knew Chris and Neil

only invested with Chris and Neil Moody,
only ever heard from Chris and Neil

Moody, and would not know Art Nadel if
he came in and slapped him in the face.

Holland and Knight issued a statement
saying the firm is, quote, vigorously

defending itself in court.

against unfounded allegations that it is
at fault for Arthur Nadel's fraud.

In all, Nadel swindled some 390
investors, many of whom may

never recover.

The net that I lost amounted to $578
,000, give or take. I have

to work the rest of my life until I, you
know, until the end.

Could I have done better due diligence
and research?

Sure. But when I get on an airplane, I
trust the pilot knows how to fly and I

don't check his credentials.

And when I invest, I trusted in Neil
Moody as a person and I left it at that.

The ripple effect of the crime can still
be felt in Sarasota today.

If you have 390 people who were
supporting all these not -for -profits

were wiped out, those donations...

They were gone.

In an ironic twist, a seeing -eye dog
organization now occupies the main

offices of Scoop.

The blind leading the blind.

If enough people assume it's all okay,
that it will all work out, then this is

what happens.

It wouldn't have taken much for anyone
at the fund to have discovered that

wasn't $350 million in the account.
There was merely a few hundred thousand

dollars by simply making a phone call.

And though Shelly Bell understands
victims' anger, she says she's also a

She says she lost $300 ,000 and now her
house is in foreclosure.

It's just about starting over, you know,
trying to...

figure out what I can do now to at least
get to a place financially where I can

just be comfortable.

From prison, Nadel maintains that he did
not set out to create a Ponzi scheme,

that his crime was not a crime of greed.

Rather, it was a crime of pride.

I think the best lesson that I learned
from this is that pride in the hands of

stubborn person.

is a much more powerful and dangerous
motivator than greed.

On April 17, 2012, while serving his
sentence at Butner Federal Correctional

Complex, Arthur Nadel dies.

He was 80 years old.