Like Madoff-lite
By Martha Entwistle
Updated Tue January 27, 2009
A curious story came across my desk because of it's relationship to Mace: The company lost $2.2 million to a 76-year-old hedge fund manager who lost $350 million and then faked his own suicide before being caught today by the FBI.
Here's the initial story. The paper got a hold of the suicide note:
Nadel's note stated "there are those that would like to kill him, but that he will do it himself."
Well, I don't think Dennis Raefield rolls that way, but he's not happy about getting fleeced.
In another development, the company that makes the Mace pepper spray acknowledged it lost $2.2 million in the Sarasota hedge funds operated by Nadel.
Mace Security International Inc. said the Victory Fund failed to pay the money as promised on Jan. 15, the day after Nadel vanished.
The $2.2 million is the largest amount of money any investor has publicly acknowledged losing in the funds operated by Nadel. The company also said it was stymied in its effort to withdraw its money as far back as October.
"We have already filed a report with the authorities, and we intend to take all possible legal action against the Victory Fund," said Dennis Raefield, Mace's president and chief executive.
Apparently, though, Nadel was either just trying to skip town or chickened out, since he turned himself in to the FBI today. This part of the story doesn't look good for Mace getting its money back:
The SEC said Nadel's funds appeared to have assets totaling less than $1 million, while he claimed in sales materials for three of the funds that they had about $342 million in assets as of Nov. 30.
The materials also boasted of monthly returns of 11 to 12 percent for several of the funds last year, when they actually had negative results.
An investor in one fund received an account statement for November indicating her investment was worth almost $420,000. In reality, the entire fund had less than $100,000, according to the SEC.
Unbelievable.
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