Feds Win Detention for Disbarred Lawyer in Alleged Investment Scam

Feds Win Detention for Disbarred Lawyer in Alleged Investment Scam - 2/26/2009

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Feds Win Detention for Disbarred Lawyer in Alleged Investment Scam
Mark Hamblett

Law.com. February 26, 2009
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EXCERPT: The Bail Reform Act is getting a real workout during the latest spat of white-collar criminal prosecutions in the Southern District of New York. The government won the most recent round in a series of high-profile arguments over pretrial detention under the 1984 statute Wednesday when Judge Denise Cote set virtually unreachable bail conditions for Arthur Nadel, a disbarred lawyer turned hedge fund adviser accused of swindling tens of millions of dollars from investors. "If the defendant can't be trusted not to flee," Judge Cote said, "then the taxpayers have provided a mechanism to deal with that situation. That's detention." Nadel surrendered to authorities in Florida on Jan. 27 after two weeks on the run. His flight was prompted when a partner in his business, concerned about revelations in the Bernard Madoff alleged multibillion-dollar Ponzi scheme case, suggested an outside audit of Nadel's finances. Madoff's name, and that of attorney Marc S. Dreier, who is charged in a $400 million fraud, were invoked during the two-hour bail hearing before Cote. Both Madoff and Dreier are out on bail, although confined to their apartments, and both have been the subject of drawn-out bail battles between defense lawyers and prosecutors over the meaning of Bail Reform Act, 18 U.S.C. 3142(e). Nadel's attorney, Todd Foster of Cohen, Jayson & Foster in Tampa, Fla., tried to draw comparisons with the Madoff and Dreier cases, but to no avail. One similarity among the three cases is that there has been no time wasted on protestations of innocence. And Nadel, like Dreier and Madoff before him, has promised to assist prosecutors and the Securities and Exchange Commission track down the missing funds. Madoff was initially allowed to stay out of jail pretrial because prosecutors needed his cooperation in finding out where the money went, and, hopefully, who else was involved. The government later tried to have his bail revoked because he and his wife mailed more than $1 million in jewelry and watches to family and friends but Magistrate Judge Ronald Ellis, and then Judge Lawrence McKenna, read the Bail Reform Act as allowing Madoff to stay out.

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