Fraud Season

Another day, another bailout? Nah. Try: Another day, another fraud. Bloomberg reports that Arthur Nadel, a 76-year-old Florida hedge-fund manager, has been MIA for four days, and investors (not to mention his business partner) are “concerned they may have lost hundreds of millions of dollars.” Nadel is the president of Scoop Management, which might have had as much as $350 million assets under management, “although ‘that may be high because performance results were exaggerated,’ Neil Moody, Nadel’s partner at Scoop, told Bloomberg. The site reports that Nadel was last seen by his wife at 8:45 a.m. on Jan. 14 when he left for work. He was reported missing that day after he called his stepson and instructed him to go to his house, where he had left a note. Bloomberg did not know what the note said but does explain that Moody “has sent notes to investors in his three funds alerting them to the possible missing funds.”

The New York Times nestles into the depths of Section A a story about how Ramalinga Raju, founder of Satyam Computer Services, “skimmed huge amounts of cash from the company, rather than padding its books as he has claimed.” According to the Times, investigators looking into the fraud, aptly dubbed “India’s Enron,” “have found a ‘maze’ of about 300 companies related to Mr. Raju that were used to ‘siphon’ as much as $1 billion in cash from Satyam.”

Online, the Wall Street Journal spotlights the New York Times, reporting that the New York Times Co. is in discussions with Mexican billionaire Carlos Slim about an investment to help ease its financial woes, which, like all print-based media, are many. “Under this scenario, the Times Co. would issue Mr. Slim preferred stock … in return for his investment,” the story said. The investment would be similar to a loan and would not come with any voting rights. It's still unknown how much Slim would be willing to invest, but it probably would be several hundred million dollars, according to anonymous insiders. Slim, said to be worth $60 billion, “already had a 6.4% stake [in the company] as of the end of September. The value of the investment has dropped by more than half since then and is now worth about $60 million,” the WSJ writes.

Bloomberg also reports that Russian Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Timoshenko have reached an agreement on natural gas supplies, allowing shipments from Russia to Europe to resume after almost two weeks of disruption. Speaking on Russian state TV following a meeting with Putin, Timoshenko said a package of documents covering prices and transit fees should be prepared by Monday.

CNN Money posted yesterday evening a feature about families in Minnesota’s Twin Cities swindled by chronically smirking hedge-fund manager, Bernard Madoff. Written in the first person by Minnesota native David Kansas, the article details the somber mood at the Cities’ predominately Jewish country club, where Madoff’s “method of preying on Jewish families and foundations was highly effective in this close-knit and long-established community.” In the region, losses from Madoff range from $300 million to $600 million. The numbers are especially shocking because “by a strange coincidence, just two months before the Madoff case broke open, the celebrated local tycoon Tom Petters was arrested and charged with 20 felony counts for his own alleged Ponzi scheme in which he took $3.5 billion from investors,” Kansas writes.

In fact, the recent slew of securities-fraud cases has lead to a jump in class-action lawsuits, reports the Washington Post. Although largely anecdotal, the story sites a study conducted by NERA Economic Consulting, which found that last year the number of federal-securities class-action lawsuit filings reached a six-year high: 267 filings, a 37 percent increase from 2007. “Of the 255 cases filed as of Dec. 14, almost half—110—were related to the credit crisis. In 2007, there were just 40 spurred by the crisis,” the WP reports, unintentionally reminding us just how long this mess has gone on.