Six more Nadel investors to return profits

Six more investors in Arthur G. Nadel's hedge funds agreed last week to turn over $262,500 in "false profits" they made in the alleged Ponzi scheme.

That brings the total amount of clawbacks to nearly $1.6 million from "profiteers" who earned more from the hedge funds than they invested.

Receiver Burton Wiand has now secured settlements from 20 of the 84 investors he has asked to return phantom profits from the scheme.

U.S. District Judge Richard A. Lazzara signed off on the latest six settlements last week. The amounts ranged from $29,331 to $66,586.

Investors who voluntarily turn over their excess profits are allowed to pay 90 percent of the total, a discount for saving the receivership the cost of litigation.

Some of the investors pay back the money right away, while others are allowed to pay in installments over a year or more.

Wiand, working in the U.S. Securities and Exchange Commission's case against Nadel, has identified $39 million in such profits. He has threatened to sue those who do not hand them over.

False profits represent returns to clients that exceed their original investment. The SEC claims Nadel ran a Ponzi-like scheme -- making payouts to early investors with the later investments of others -- so all profits to investors were actually generated from other investors, not from hedge fund earnings.

The hedge funds managed by Nadel and associates Neil and Christopher Moody attracted nearly $400 million from investors before collapsing in January as nearly worthless.

Nadel will be back in federal court Friday in New York City for a status conference on his upcoming trial. He has been charged with 15 fraud counts tied to the six hedge funds he ran in Sarasota.