To pay off loan sharks, New York attorney Arthur G. Nadel violated a basic tenet of legal ethics — he dipped into an escrow account and took $50,000 that did not belong to him.
That was in the late 1970s, and Nadel was subsequently disbarred for "dishonesty, fraud, deceit and misrepresentation."
But in 2004 by which time Nadel was living in Sarasota he never disclosed his legal disgrace to investors in his Scoop Real Estate Limited Partnership. Thus, many were blindsided last week when the 75-year-old Nadel vanished, along with an estimated $350-million managed by him and his companies.
Had prospective investors known of Nadel's past, they might have been far more wary about entrusting their money to a man who promised unusually high, steady returns even as the stock market tanked. And should Nadel ever turn up, he, his partners and even Holland & Knight, the law firm for Scoop Real Estate, could be held liable by investors claiming they were misled about Nadel's background.
"Absolutely," Lizabeth Moody, former dean of Stetson University College of Law, said when asked if Nadel's disbarment for fraud and dishonesty should have been disclosed. "You have to decide if this is something a reasonable investor would consider in making a decision, and in my estimation it certainly is."
In a case strikingly similar to that of Bernard Madoff — accused of bilking clients out of $50-billion in history's biggest Ponzi scheme — dozens of investors and non-profit groups been left wondering how $350-million managed by Nadel could seemingly evaporate overnight.
According to records obtained by the St. Petersburg Times, Nadel in 1978 represented CCN Realty Corp. and its president, Richard Sanchez, in the sale of CCN property to a hospital. After the two parties entered into a contract, Nadel put the hospital's $50,000 deposit into an escrow account.
The deal fell through, and in May, 1980, the hospital asked for its money back. But Nadel was unable to return it because all but $152 had been spent "in connection with loan-shark transactions and related events and circumstances with his client (Sanchez)," New York Supreme Court records show. "(Nadel) further stated that he shared in the problems and concerns of Sanchez."
HOW NYC MOB LOAN SHARKS OPERATE...November 10, 2006 -- Three alleged Bonanno crime-family loan sharks threatened to put a woman "in the trunk of a car" - mob code for being killed - for not repaying a loan, unaware that her mobster husband was cooperating with the feds, prosecutors revealed yesterday. Alleged Bonanno soldier Michael "Mike the Butcher" Virtuoso and alleged Bonanno associates Agostino Accardo and Michael Cassese were arraigned in Brooklyn federal court yesterday and held at the Metropolitan Detention Center on the extortion charges. According to court papers, Virtuoso and Accardo loaned the unidentified woman $100,000 last year. When she failed to pay up, Cassese allegedly began threatening her husband - another Bonanno associate who was cooperating with the feds.For "professional misconduct of such a serious nature," Art Nadel was disbarred on March 11, 1982. In 2004, Nadel began soliciting investors for his Scoop Real Estate Limited Partnership, which planned to buy income-producing residential and commercial properties. A "private placement memorandum" given to prospective investors included biographical data about Nadel, noting that he had a law degree from New York University. The memorandum says nothing about Nadel's disbarment.
Hugh Culverhouse Jr., an attorney who has spoken with several Scoop Real Estate investors, says Nadel's charitable activities apparently kept people from looking too closely at his background. "You've got to really do some bad things to be totally disbarred," Culverhouse says. "But nobody did any research."
Looks like somebody, at some time, who was investing millions of dollars should have hired a private investigator to look into the background of one Arthur G. Nadel in Sarasota Fl. Art Nadel's NYC activity with the Mob loan sharks caused him to take his clients $50,000, he didn't want to be put "in the trunk of a car" - mob code for being killed - for not repaying a loan.
WBI Inc Private Detective Agency