Legal News

Bond Co-signer For Alleged Ponzi Schemer Is Outed, Then Renegs

By Amir Efrati

The last time we brought you the goings-on in U.S. v Arthur Nadel, the alleged Ponzi schemer was struggling to find legal counsel due to an asset freeze.

Now we've news of an interesting twist in his quest for bail in Manhattan, where he was charged earlier this year with bilking investors out more than $300 million. (For prior LB coverage of Nadel (pictured), click here, here and here.)

Nadel, for now, sits in a jail cell at the Metropolitan Correctional Center, the same place where Bernard Madoff is being kept until he is assigned to a federal prison.

On Thursday the Sarasota, Fla.-based Herald Tribune profiled a local musician and a friend of the 76-year-old Nadel who agreed to cosign a bond if Nadel's attorney could guarantee his anonymity.

“I said, ‘I would be willing to sign it, as long as I am not mentioned as part of this deal,’” the musician, Michael Royal, told the Herald-Trib.

Earlier this week Michael Royal, a jazz pianist, was miffed to learn that Nadel's attorney, federal defender Mark Gombiner, made Royal's name public in a document submitted to the court. Royal told the Herald-Trib he was afraid he wouldn’t be able to find employment because of his association with Nadel.

Royal was the only non-family member who agreed to sign for Nadel. Even Nadel's two sons refused to sign, according to the story. (Similarly, Madoff was initially required to find four co-signers for his bond but only managed to get his wife and brother.)

Gombiner declined to comment about Royal to the Herald-Trib. But he did say: “I think people in Sarasota ought to understand that signing a bond for someone is not like pinning a medal on the person,” he said.

Yesterday, Royal formally pulled out after telling the federal prosecutor on the case he had no money. At a bail hearing also held yesterday, District Judge John Koeltl told Nadel to get "better co-signers" but said he would grant bail that would include electronic monitoring, home detention and good-faith assistance to the government in locating assets, among other things, according to the Herald-Trib.

The granting of bail has been stayed until July 16, pending a decision by the U.S. attorney's office in Manhattan on whether to appeal the judge's ruling.

The prosecutor, Reed Brodsky, also criticized the other wannabe co-signers of the Nadel bond, his fifth wife Peg and his stepdaughter. He said Peg Nadel had obstructed the investigation on at least two occasions and that she “is a firsthand, at the very least, witness to Mr. Nadel’s frauds and at worst a participant. As for the stepdaughter, Brodsky said she has no assets.

Full post as published by Law Blog - WSJ.com on July 10, 2009 (boomark / email).