Jan. 27 (Bloomberg) -- Arthur Nadel, the Florida hedge-fund adviser who disappeared 13 days ago, was arrested and charged with defrauding investors of tens of millions of dollars.

Nadel, 76, surrendered to the Federal Bureau of Investigation today in Tampa, Florida, said Monica McLean, an agency spokeswoman. U.S. regulators last week accused Nadel, who lives in Sarasota, Florida, of defrauding clients while overstating six funds’ investments by $300 million.

The fraud may have been uncovered because of the unrelated arrest on Dec. 11 of fund manager Bernard Madoff for duping investors out of $50 billion, the FBI said in a criminal complaint that was unsealed today in Manhattan federal court.

After years of rebuffing requests from an unnamed partner for an independent audit of his funds, Nadel agreed to one on Jan. 8, FBI agent Kevin Riordan said in the complaint. Nadel fled six days later after telling his wife how to survive financially without him, Riordan said.

“The avenues to money for you will likely be blocked soon,” Nadel wrote to his wife in a note that employees found Jan. 15 in a shredding machine, according to the complaint. “Withdraw as much cash as you can,” he said, adding that he would send further instructions.

“Sell the Subaru if you need money,” the FBI quoted him as writing. Nadel’s wife’s name wasn’t cited in the complaint.

August Transfer

At a hearing in Tampa, U.S. Magistrate Judge Mark Pizzo denied Nadel’s request that he be released on his own recognizance. Nadel appeared in court in shackles.

“The money in this matter is not small change,” Pizzo said.

Beginning in August, Nadel, who was adviser for six funds, transferred at least $1.25 million from two funds to a secret bank account, prosecutors said. His funds’ total assets are now less than $125,000, prosecutors said.

Nadel told his partner that he graduated from New York University School of Law and was later disbarred, according to the complaint. A law school spokesman said he got his degree in 1957. Nadel told investors that he had provided 20 percent returns from 1999 to 2007, the complaint says.

The FBI cited five unnamed victims who lost money.

Three Funds

Two invested a combined $28.6 million in Nadel’s funds, the agency said. Nadel told one of them, who sought to withdraw funds, that there was more than $200 million in the victim’s account and the money would be available by March, Riordan said in the complaint.

Nadel traded for three funds established by partnerships Valhalla Management and Viking Management and three funds established by Scoop Management and Scoop Capital LLC. Scoop was created by Nadel himself. Viking and Valhalla were created by unnamed partners. More than 100 investors gave money to the funds, the SEC said.

Nadel is charged with one count each of securities fraud and wire fraud, both of which carry maximum prison sentences of 20 years in prison.

In his note, Nadel said he left a package for his wife.

“Look at all the recently paid bills in the ‘package’ to see where they stand,” he wrote. “Also in the package are enough documents that I think will do the trick to give you complete control and ownership of what is left, and even documentation for divorce.”

Emotional Problems

In court, defense lawyer Barry Cohen didn’t explain where Nadel had been since his disappearance. Nadel had emotional problems and planned to check himself into a hospital until he learned of a warrant for his arrest, Cohen said.

Separately, U.S. District Judge Richard Lazzara in Tampa today ordered two of Nadel’s businesses, Venice Jet Center LLC and Tradewind LLC, into receivership. Tampa lawyer Burton Wiand, who was appointed by the judge as receiver for Nadel’s funds, said in a court filing that the businesses were bought with fraudulently obtained money.

Venice Jet Center, which provides charter services and a flight school, “is a viable business with potential to generate assets for the receivership,” Wiand said. Tradewind owns and controls at least five aircraft and owns airport hangars at the Newnan-Coweta County Airport in Georgia.

Investor David Walters, 75, was relying on funds he had with Nadel. “I thought I had accumulated $670,000-plus” in one fund, Walters, of Ocala, Florida, said in an interview. Walters said he lost most of his pension from Bethlehem Steel. “My wife and I are just shocked.”

The SEC case is Securities and Exchange Commission v. Nadel, 09-cv-00087, U.S. District Court, Middle District of Florida (Tampa). The criminal case is U.S.A. v. Nadel, 09-mag-169, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: David Glovin in U.S. District Court in New York at dglovin@bloomberg.net.

Last Updated: January 27, 2009 16:51 EST