Legal News

Arthur Nadel (Housemate of Bernie), Runs into Allen Stanford Conundrum

By Ashby Jones

We blogged recently on the strange situation going on in the Allen Stanford matter. As of a couple weeks ago, Stanford — caught up in an SEC lawsuit in which he’s accused of widespread fraud — couldn’t afford a defense lawyer because his assets had been frozen. A lawyer close to the situation told us he thought it was "totally unfair" for a judge to authorize the freezing of money without allowing Stanford access to money to pay a lawyer.

At the time, we thought of this as an unusual situation. But after reading today’s newspapers, we’ve realized it’s maybe not as unusual as we might have believed.

According to a report in the Sarasota Herald-Tribune, Sarasota hedge fund operator Arthur G. Nadel, accused of fraud both by federal prosecutors and the DOJ, could soon find himself without his defense team. (Click here and here for earlier WSJ coverage on the Nadel situation.)

U.S. District Judge Richard Lazzara recently denied the motion for payment of attorneys fees filed by Tampa lawyers Todd Foster and Barry Cohen. Nadel and his attorneys had hoped that Judge Lazzara would unfreeze some of Nadel’s assets to pay for his defense.

Foster has said his firm may be unable to continue representing Nadel if he cannot pay. The firm had tallied more than $93,000 in legal fees and expenses as of March 11, billing attorney time at what Foster called a “deeply discounted” rate of $300 per hour.

Unlike Stanford, who has not been criminally charged, Nadel can invoke his Sixth Amendment right to counsel and get a lawyer appointed for him. That said, it might not the lawyer of his choice. Nadel could wind up with the federal public defender.

The SEC opposed releasing any assets, saying all of Nadel’s money and property came from his hedge fund scheme.

“Nadel has no right to lift the asset freeze, to which he consented only six weeks ago, in order to spend victims’ money on his own defense,” said Scott Masel, a lawyer with the SEC.

Nadel remains in a maximum security lockup in New York City, unable to post $5 million bail. Nadel is in the same Metropolitan Correctional Center as Bernard Madoff.

Full post as published by Law Blog - WSJ.com on March 26, 2009 (boomark / email).