Lead attorney at Wiand Guerra King P.L., Burton Wiand, who was appointed receiver for various entities associated with Arthur Nadel’s Ponzi scheme, has reached a settlement with hedge fund law firms Holland & Knight LLP (H&K) and Scott MacLeod.
The two firms provided legal services to Nadel and the hedge funds associated with his scheme. H&K and MacLeod will pay $25,000,000 to the receivership estate in exchange for a broad release of claims. The 25 million is about 30% of the $162 million lost in the Ponzi scheme.
“H&K prepared various Private Placement Memoranda (PPMs) used to sell interests in the hedge funds and that H&K represented, as well as Nadel’s management companies.” Wiand Guerra King P.L., said in a statement, “The Receiver concluded that H&K failed to appropriately respond to certain “red flags” that could, upon further inquiry, have revealed Nadel’s scheme. The investigation also revealed that H&K breached certain duties to the hedge funds and allowed conflicts of interest to go unresolved.”
Nadel was indicted on 15 counts including six counts of securities fraud, eight counts of wire fraud and one count of mail fraud in a federal court. Arrested in January 2009, Nadel was held in the Metropolitan Correctional Center in Manhattan, the same facility where Madoff was sent to. Nadel died in custody at the age of 80, April 16, 2012.
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