A U.S. court denied bail on Friday for Florida hedge fund manager Arthur Nadel, who surrendered to authorities this week to face securities and wire fraud charges, Reuters reported.
Nadel, 76, went missing on January 14 as investors in his Sarasota, Florida-based funds learned that their investments were nearly worthless. He turned himself in to the FBI in Tampa, Florida, on Tuesday.
U.S. Magistrate Mark Pizzo said he would try to issue a warrant of removal by Monday to send Nadel to New York, where he was charged. He rejected arguments by Nadel's lawyers that their client would not run and said he was not sure if Nadel might have money stashed away.
"These assets pose a significant risk that you'll flee," Pizzo said. "The risk of flight is out there."
Nadel's lawyers could ask the courts to reconsider bail, so it was not clear when he might be sent to New York.
A well-known philanthropist in Sarasota, Nadel was the head of two general partnerships he created, Scoop Management and Scoop Capital. He controlled six investment funds: Victory, Victory IRA, Scoop Real Estate, Viking, Viking IRA and Valhalla Investment Partners, according to investigators.
In a fraud complaint filed by the U.S. Securities and Exchange Commission last week, investigators said Nadel recently valued the funds at more than $300 million, when in reality they contained under $1 million.
Some investors told police they lost hundreds of thousands of dollars, their life savings.
Nadel fled after a partner in his firm told him the funds should hire an independent accountant to audit the books following the December arrest of accused swindler Bernard Madoff, the focus of an investigation into an alleged $50 billion Ponzi scheme.
Madoff was arrested on December 11 after allegedly confessing that his money management business was "one big lie." He was released on $10 million bail and is under 24-hour house arrest at his New York penthouse apartment.
Nadel appeared in court wearing a prison uniform and leg shackles. His lawyer, Barry Cohen, asked the court why Nadel could not get bail when it was granted to Madoff.
"He (Nadel) doesn't have any place to run. He's just a lost, pathetic soul," Cohen said. "He's depressed, and rightly so. He's not going anywhere."
Cohen said Nadel might not have long to live due to a heart condition and intended to cooperate with authorities to recoup as much money as possible.
"He wants to help these investors," he said.
Prosecutor Terry Zitek told the court there were no bail conditions that would ensure Nadel would turn up in New York to face the charges.
"The defendant cannot be trusted," he said, adding, "This defendant was stealing money in several different ways. He knew full well what he did was wrong."
Nadel faces a total of 40 years in prison -- 20 years on the securities fraud count and 20 years on the wire fraud count. He also faces possible fines of $5.25 million, or twice the gain or loss from the offense.