NY judge sets $5M bail for Fla. hedge manager

NEW YORK (AP) -- A Florida hedge fund manager who disappeared for two weeks as investigators closed in on him can be freed on $5 million bail after being accused of ripping off investors of as much as $350 million, a judge said Wednesday.

U.S. District Court Judge Denise Cote rejected a prosecutor's arguments that no release conditions could ensure that Arthur Nadel would not flee.

Defense lawyer Todd Foster, however, said Nadel does not have the $1 million in cash that Cote requires, so Nadel likely will remain behind bars unless the bail requirements are reduced.

The judge also said four financially secure people must sign Nadel's bond before he can go home, where he would be subject to electronic monitoring.

Foster said Nadel's friends are "very, very afraid to come and assist Mr. Nadel" because of bad publicity and inaccuracies they have heard about the case.

Assistant U.S. Attorney Maria Douvas said Nadel might have the financial ability to flee since the government could not locate more than $30 million of the money Nadel was believed to have pocketed from the fraud.

"We think conviction is certain in this case," she said.

Nadel, 76, is charged with one count of securities fraud. If convicted, he could face life in prison.

Prosecutors have said Nadel defrauded hundreds of investors by spending millions of dollars of their money on his own lavish lifestyle. The scheme unraveled last year when the economy plunged and Nadel's business colleagues demanded an independent audit of the fund's investments, according to prosecutors.

Authorities said Nadel disappeared on a two-week jaunt across the country before turning himself in on Jan. 27.

While setting bail, the judge said Nadel took off once it became clear "that the entire fraud was going to be discovered."

Cote said notes Nadel wrote to his family while he was traveling across the country, sometimes changing hotels in the same cities, did not reflect a person who had fled because he was emotionally distraught.

She said the letters instead indicated "someone who was composed, who had a full understanding of what was happening."

She also said it was "telling that people who know him the best, his friends and neighbors, are unwilling to sign bonds on his behalf."

Cote added: "None of them are willing to put their names and assets on the line."

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