Fund Manager Nadel Unable to Secure Legal Defense Team

4/17/2009 8:24:00 PM

Despite repeated requests, U.S. District Judge Richard Lazzara recently denied the motion for payment of attorneys fees filed by Tampa lawyers Cohen and Foster.

Nadel's lawyers drop his case

DANIEL WALLACE | Times (01/27/2009 Tampa) Attorney Barry A. Cohen

So much for Art Nadel's high-profile legal team.

Nadel, the Sarasota money manager charged with running a $400 million investment scam, is now represented by a federal public defender after his private attorneys dropped him on Wednesday.

Prominent Tampa attorneys Barry Cohen and Todd Foster had defended Nadel against criminal charges since he turned himself in to the FBI on Jan. 27, two weeks after he left Sarasota as his hedge funds imploded.

But the attorneys were unable to convince a federal judge last month to unfreeze some of Nadel's assets so he could pay their legal fees.

Foster said Thursday that is why they are no longer defending him.

Nadel ran up more than $93,000 in legal bills as of March 11. "We got paid a small amount of money for expenses," Foster said.

At a Wednesday hearing in U.S. District Court in New York, Magistrate Judge Kevin Nathaniel Fox released Cohen and Foster from representing Nadel.

The judge assigned Mark Gombiner from the Federal Defender's Office to handle Nadel's case.

Gombiner has been a trial attorney in the office since 1997. His previous clients include Alan Bond, a prominent New York money manager convicted in 2002 of fraud for cheating pension funds out of millions.

He did not return a call Thursday to discuss Nadel's case.

Nadel, 76, faces two counts of securities fraud and wire fraud. He remains in a maximum security lockup in New York City -- in the same jail as Ponzi schemer Bernard Madoff -- unable to post $5 million bail.

Prosecutors say Nadel and his hedge fund associates took in $397 million from investors, but those funds were valued at less than $1 million when Nadel skipped town.

He has yet to be formally indicted, twice waiving his right to a speedy trial. Federal prosecutors now have until April 29 to obtain a grand jury indictment or take Nadel before a federal judge for a formal hearing, although more extensions can be granted.

Nadel, a disbarred lawyer, is defending himself in the civil fraud case brought by the U.S. Securities and Exchange Commission. Unlike criminal cases, defendants in civil cases do not get public defenders if they are indigent.

Cohen and Foster are criminal defense attorneys known for taking splashy cases. Cohen won a $2.9 million malicious prosecution award from the federal government for its investigation and ultimately dropped charges against Steven and Marlene Aisenberg, whose 5-month-old baby, Sabrina, vanished from their Valrico home in 1997.

Foster last month said they might be unable to continue representing Nadel without pay. He and Cohen had offered to bill at what he called a "deeply discounted" rate of $300 per hour.

Peg Nadel, Arthur Nadel's wife, did assign to the law firm a note and mortgage for a Sarasota condo with a $124,637 balance. Foster has said the condo was purchased by Peg Nadel's independent funds, even though the check came from her husband's Scoop Capital. The firm has not tried to collect any money from the mortgage or note, Foster said.

Related story on this topic from the Wall Street Journal: Arthur Nadel (Housemate of Bernie), Runs into Allen Stanford Conundrum

Staff writer Michael Pollick contributed to this report. http://www.heraldtribune.com/article/20090417/ARTICLE/904171018/2055/NEWS?Title=Nadel-s-lawyers-drop-his-case

Nadel News Links:  Nadel hires heavy hitting lawyers  Latest SEC News: http://www.heraldtribune.com/article/20090307/ARTICLE/903070336  Latest Bond Hearing news: http://www.tampalawfirm.com/NadelBondHearing.htm  SARASOTA HERALD-TRIBUNE: http://www.heraldtribune.com/article/20090226/ARTICLE/902260339  REUTERS: http://www.reuters.com/article/domesticNews/idUSTRE51C6SI20090213  CNBC: http://www.cnbc.com/id/29189006&ct=ga&cd=ueg07XftKCk&usg=AFQjCNH2pSMFmFVgN4uCfn54sqBkUQfxeA> " 29189006&ct="ga&cd=ueg07XftKCk&usg=AFQjCNH2pSMFmFVgN4uCfn54sqBkUQfxeA"">"href_cetemp="http:// www.cnbc.com/id/29189006&ct=ga&cd=ueg07XftKCk&usg=AFQjCNH2pSMFmFVgN4uCfn54sqBkUQfxeA> ">http://www.cnbc.com/id/29189006&ct=ga&cd=ueg07XftKCk&usg=AFQjCNH2pSMFmFVgN4uCfn54sqBkU QfxeA>  FOX 13 NEWS: http://www.myfoxtampabay.com/myfox/pages/News/Detail?contentId=8316238&version=2&locale=EN- US&layoutCode=TSTY&pageId=3.2.1  BAY NEWS 9: http://www.baynews9.com/content/9/2009/1/28/430950.html?title=FBI:+Money+manager+fled+as+outside+a udit+loomed++++  TAMPABAY BUSINESS JOURNAL: http://tampabay.bizjournals.com/tampabay/stories/2009/01/26/daily27.html  SARASOTA HERALD-TRIBUNE: http://www.heraldtribune.com/article/20090128/ARTICLE/901280300/2055/NEWS?Title=Fugitive_financier_N adel_surrenders_to_FBI_in_Tampa  SAINT PETERSBURG TIMES/TAMPABAY.COM: http://www.tampabay.com/news/business/article970950.ece

John Hielscher

Bradenton Herald