UNITED STATES DEPARTMENT OF TRANSPORTION 

FEDERAL AVIATION ADMINISTRATION 

WASHINGTON, D.C. 

VENICE JET CENTER, LLC, 

Complainant, FAA Docket No. 16-09-05 

CITY OF VENICE, PL, 

Respondent. 

EXHIBIT LIST TO: 

RESPONDENT CITY OF VENICE, FLORIDA'S ANSWER, MOTION TO DISMISS, 

AND MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF 

(Exhibits 1 through 18) 

Robert C. Anderson, Esq. 

City Attorney 

Hall & Anderson, P.A. 

1314 East Venice Ave., Suite E 

Venice, FL 34285 

Telephone: (941) 480-0999 

Facsimile: (941)480-1446 

Thomas R. Devine , Esq. 

W. Eric Pilsk, Esq. 

KAPLAN KIRSCH & ROCKWELL LLP 

1001 Connecticut Ave NW, Suite 905 

Washington, DC 20036 

Telephone: (202) 955-5600X568 

Facsimile: (202) 955-5616 

Arthur P. Berg 

KAPLAN KIRSCH & ROCKWELL LLP 

641 Lexington Ave. Suite 1409 

New York, NY 10022 

Telephone: (212) 328-9515 

Facsimile: (646)514-5440 

<:3 

" n 

Counsel for Respondent City of Venice, Fl^,; 

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•'" * ,"''. '"^"' '\ ' ' v , : ' ^ ,: ^ '-'.^tTIndictment, United States of America v. Arthur G. Nadel 

Receiver's Declaration in Support of the Unopposed Motion to Expand the Scope of the 

Receivership 

6/25/09 Letter from Receiver to R. Anderson, including Receiver's Second Interim 

Report, Filed 6/9/09 

7/1/09 Letter from Acting Associate Administrator for Airports Catherine M. Lang to 

Sen. Mel Martinez 

7/21/09 Letter from Receiver to R. Anderson 

6/16/08 Letter from E. G. Boone to City Clerk 

7/1/08 Letter from E. G. Boone to Mayor 

7/14/08 Email from N. Woodley to Venice Jet Center 

8/18/08 Letter from Venice Jet Center to Mayor 

11/7/08 Building Permit Applications for Hangars by VJC 

Excerpts of City Council Meeting Minutes 

2/4/09 Letter from R. Anderson to R. Henry, FAA ADO 

FAA Approved ALP 

Schematic of VJC Proposed Hangars overlaid on ALP Detail 

Ethics Commission Order 

Receiver's Third Interim Report, Filed on 8/17/08 

6/13/08 Letter from E. G. Boone to City Clerk 

6/23/08 Letter from M. Black to E. G. Boone 
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City Exhibit 1 

X 

INDICTMENT 

09 Cr. 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

-V. -

ARTHUR G. NADEL, 

Defendant. 

_ _ --____________x . 

COUNTS ONE THROUGH SIX 

(Securities Fraud) 

The Grand Jury charges: 

Relevant Entities eind Individuals 

1. At certain times relevant to this Indictment, Scoop 

Management, Inc., was a general partnership with its principal 

place of business in Sarasota, Florida. 

2. At certain times relevant to this Indictment, Scoop 

Capital LLC was a general partnership with its principal place of 

business in Sarasota, Florida. 

3. At certain times relevant to this Indictment, Scoop 

Capital LLC was the general partner of Victory IRA Fund Ltd., 

Scoop Real Estate LP, and Victory Fund Ltd. Victory IRA Fund Ltd. 

was a limited partnership with its principal place of business in 

Sarasota, Florida. Scoop Real Estate LP was a limited partnership 

with its principal place of business in Sarasota, Florida. 
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Victory Fund Ltd. was a limited partnership with its principal 

place of business in Sarasota, Florida. 

4. At certain times relevant to this Indictment, 

Valhalla Management, Inc., was a general partnership with its 

principal place of business in Sarasota, Florida. Valhalla 

Management, Inc., was the general partner of Valhalla Investment 

Partners, which was a limited partnership, with its principal 

place of business in Sarasota, Florida. 

5. At certain times relevant to this Indictment, 

Viking Management LLC was a limited liability company with its 

principal place of business in Sarasota, Florida. Viking 

Management LLC was the general partner of Viking Fund, LLC, and 

Viking IRA Fund, LLC, which were limited partnerships formed on or 

about March 15, 2001, with their principal places of business in 

Sarasota, Florida. 

6. At all times relevant to this Indictment, ARTHUR G. 

NADEL, the defendant, was responsible for the purchases and sales 

of securities in the following investment funds: (a) Victory IRA 

Fund Ltd.; (b) Scoop Real Estate LP; (c) Victory Fund Ltd.; 

(d) Valhalla Investment Partners; (e) Viking Fund, LLC; and 

(f) Viking IRA Fund, LLC (collectively the ^'Funds''). NADEL also 

controlled, operated, and managed Scoop Management, Inc., and 

Scoop Capital LLC. 
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7. From at least in or about 1999 through in or about 

January 2009, ARTHUR G. NADEL, the defendant, purchased and sold 

securities in the Funds through the New York, New York, office of 

a. broker-age firm ("Brokerage Firm"). At all times relevant to 

t::his Ind.ictment, NADEL executed trades based on an exchange traded 

fund listed on the National Association of Securities Dealers 

Automated Quotations ("NASDAQ") that was intended to track the 

NASDAQ index. 

The Scheme to Defraud 

8. From at least in or about 1999 through in or about 

January 2009, ARTHUR G. NADEL, the defendant, perpetrated a scheme 

t:o defraud the investors of the Funds by soliciting hundreds of 

millions of dollars of funds under false pretenses, failing to 

invest t:he money as promised, falsely claiming that his purchases 

and sales of securities resulted in high rates of returns, and 

misappropriating and converting investor funds for his own benefit 

and the benefit of others without the knowledge and authorization 

of investors. 

9. To execute the scheme, ARTHUR G. NADEL, the 

defendant, .solicited and caused others to solicit prospective 

clients to invest their money in the Funds based upon, among other 

things, his false statements that: (a) the investor funds would be 

used to purchase and sell securities; (b) the performance of each 

of the Funds was consistently positive; and (c) the net asset 
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value of each of the Funds was tens of millions of dollars. 

Based, in part, on these misrepresentations from in or about 1999 

through in or about January 2009, clients invested at least 

approximately $3 60 million into the Funds. 

10. In truth and in fact, as ARTHUR G. NADEL, the 

defendant, well knew, these representations were false. 

Notwithstanding NADEL's statements to the contrary, and 

notwithstanding false representations that NADEL made and caused 

t:.o be made on investor account statements and other documents sent 

t.hrough the United States Postal Service (the "Postal Service") to 

investors in the Funds throughout the operation of this scheme, 

NADEL misappropriated investor funds and converted them for 

personal use for NADEL, NADEL's family, and NADEL's businesses. 

Moreover, notwithstanding NADEL's statements to investors and 

others that each of the Funds had consistently positive rates of 

are turn of between approximately 18 percent and 48 percent each 

year, the performance of the Funds was not consistently positive 

and the rates of return were substantially and materially less. 

11. From at least in or about 1999 through in or about 

January 2009, ARTHUR G. NADEL, the defendant, also falsely 

represented to investors that his purchases and sales of 

securities in the Funds' had generated cumulatively more than $271 

million in gains. In truth and in fact, as NADEL well knew, 

during this period of time, NADEL's trading resulted in an overall 
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net loss in the Funds. For example, in or about September 2008, 

NADEL caused documents to be sent to clients that stated that 

there was approximately $70,500,000 in total assets in the 

Valhalla Investment Partners LP, approximately $75,200,000 in 

total assets in Victory Fund Ltd., and approximately $65,300,000 

in total assets in Viking Fund LLC. In truth and in fact, in or 

about September 2008, Valhalla Investment Partners LP, Victory 

Fund Ltd., and Viking Fund LLC held only a small fraction of that 

money on behalf of its clients. 

12. ARTHUR G. NADEL, the defendant, accepted hundreds 

of millions of dollars of investor money, cumulatively, from 

individual investors, charitable organizations, trusts, and hedge 

funds that invested in the Funds. From at least in or about 1999 

through in or about January 2009, the Funds had over 350 

investors. From the outset of the scheme, and continuing 

throughout its operation, NADEL obtained investor funds through 

interstate wire transfers from financial institutions located in 

the Southern District of New York and elsewhere and through 

mailings delivered by the Postal Service. 

13. In connection with this scheme, ARTHUR G. NADEL, 

the defendant, created and caused to be created false and 

fraudulent documents including, but not limited to, client account 

statements that reflected fictitious positive returns consistent 

with the returns that had been promised to investors in the Funds. 
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14. To execute the scheme, ARTHUR G. NADEL, the 

defendant, represented and caused others to represent to investors 

t::hat each of the Funds was operated and managed separately. In 

ti^ruth and in fact, as NADEL well knew, NADEL managed, purchased 

and sold securities within, and treated the Funds as, a single 

a.ccount regardless of the Fund in which clients had invested. 

15. ARTHUR G. NADEL, the defendant, received a 

management fee of one percent of the net asset value of each of 

tshe Funds and a performance incentive fee of 12.5 percent of all 

of the profits, after subtraction of fees and expenses, earned 

from the investments in the Funds. From at least in or about 1999 

up through and including at least in or about 2008, as a result of 

UADEL's false representations regarding the performance of each of 

the Funds and the net asset value in each of the Funds, NADEL 

fraudulently received tens of millions of dollars in management 

fees and performance incentive fees that did not reflect the 

actual performance, or the net asset values of, the Funds. 

16. In addition to receiving a management fee and a 

performance incentive fee, ARTHUR G. NADEL, the defendant, 

transferred and caused to be transferred millions of dollars of 

investor money in the Funds to accounts and entities owned and/or 

controlled by NADEL. The investors in the Funds did not authorize 

NADEL to make these transfers, and NADEL failed to disclose the 
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transfer of these funds to accounts and entities that he owned 

and/or controlled to investors. 

Statutory Allegation 

17. On or about the dates set forth below, in the 

Southern District of New York and elsewhere, ARTHUR G. NADEL, the 

defendant, unlawfully, willfully, and knowingly, directly and 

indirectly, by the use of means and instrumentalities of 

interstate commerce, and of the mails, and of facilities of 

national securities exchanges, in connection with the purchase and 

sale of securities, did use and employ mcinipulative and deceptive 

devices and contrivances, in violation of Title 17, Code of 

Federal Regulations, Section 240.10b-5, by: (a) employing devices, 

schemes, and artifices to defraud; (b) making untrue statements of 

material facts and omitting to state material facts necessary in 

order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and (c) engaging in 

transactions, acts, practices, and courses of business which 

operated and would operate as a fraud and deceit upon persons, to 

wit, NADEL made false and misleading statements that induced 

investors to invest their money in the Funds listed below: 

COUNT 

ONE 

TWO 

APPROXIMATE DATES 

From at least in or about 2003 

through in or about January 2009 

From at least in or about 2004 

through in or about January 2009 

FUND 

Victory IRA Fund 

Ltd. 

Scoop Real Estate LP 
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THREE 

FOUR 

FIVE 

SIX 

From at least in or about 2001 

through in or about January 2009 

From at least in or about 1999 

through in or about January 2009 

From at least in or about 2001 

through in or about January 2009 

From at least in or about 2001 

through in or about January 2009 

Victory Fund Ltd. 

Valhalla Investment 

Partners 

Viking Fund, LLC 

Viking IRA Fund, T,T,C 

(Title 15, United States Code, Sections 78j(b) and 78ff; 

Title 17, Code of Federal Regulations, Section 240.10b-5; 

Title 18, United States Code, Section 2.) 

COUNT SEVEN 

(Mail Fraud) 

The Grand Jury further charges: 

18. The allegations contained in paragraphs 1 through 

16, above, are hereby repeated, realleged, and incorporated by 

reference as if fully set forth herein. 

19. From in or about 2002 through in or about December 

2008, in the Southern District of New York and elsewhere, ARTHUR 

G. NADEL, the defendant, unlawfully, willfully, and knowingly, 

having devised and intending to devise a scheme and artifice to 

defraud, and for obtaining money and property by means of false 

and fraudulent pretenses, representations, and promises, for the 

purpose of executing such scheme and artifice and attempting to do 

so, did place in post offices and authorized depositories for mail 

matter, matters and things to be sent and delivered by the Postal 

Service, and did deposit and cause to be deposited matters and 
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things to be sent and delivered by private and commercial 

interstate carriers, and did take and receive therefrom such 

matters and things, and did knowingly cause to be delivered, by 

mail and such carriers according to the directions thereon, and at 

the. places at which they were directed to be delivered by the 

persons to whom they were addressed, such matters and things, to 

wit, as part of a scheme to defraud the investors in the Funds, 

NADEL sent and caused to be sent and delivered via the Postal 

Service false and fraudulent account statements from the Funds to 

investors, some of whom were located in New York, New York. 

(Title 18, United States Code, Sections 1341 and 2.) 

COUNTS EIGHT THROUGH FIFTEEN 

(Wire Fraud) 

The Grand Jury further charges: 

20. The allegations contained in paragraphs 1 through 

16, above, are hereby repeated, realleged, and incorporated by 

reference as if fully set forth herein. 

21. On or about the dates set forth below, in the 

Southern District of New York and elsewhere, ARTHUR G. NADEL, the 

defendant, unlawfully, willfully, and knowingly, having devised 

and intending to devise a scheme and artifice to defraud, and for 

obtaining money and property by means of false and fraudulent 

pretenses, representations and promises, did transmit arid cause to 

t>e transmitted by means of wire, radio, and television 
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communication in interstate and foreign commerce, writings, signs, 

signals, pictures, and sounds for the purpose of executing such 

scheme and artifice, to wit, NADEL caused money to be transferred 

by wire from New York, New York, to bank accounts located outside 

New York for the purpose of executing the scheme to defraud the 

investors in the Funds, as set forth below: 

COUNT 

EIGHT 

NINE 

TEN 

ELEVEN 

TWELVE 

THIRTEEN 

FOURTEEN 

FIFTEEN 

APPROXIMATE 

DATES 

03/25/08 

04/02/08 

06/24/08 

07/02/08 

08/22/08 

11/06/08 

12/02/08 

01/05/09 

DESCRIPTION OF TRANSFER 

Wire transfer of approximately 

$200,000 from New York, New York, to 

a bank account in Florida 

Wire transfer of approximately 

$100,000 from New York, New York, to 

a bank account in Florida 

Wire transfer of approximately 

$400,000 from New York, New York, to 

a bank account in Florida 

Wire transfer of approximately 

$50,000 from New York, New York, to a 

bank account in Florida 

Wire transfer of approximately 

$900,000 from New York, New York, to 

a bank account in Florida 

Wire transfer of approximately 

$75,000 from New York, New York, to a 

bank account in Florida 

Wire transfer of approximately 

$350,000 from New York, New York, to 

a bank account in Florida 

Wire transfer of approximately 

$179,000 from New York, New York, to 

a bank account in Florida 

(Title 18, United States Code, Sections 1343 and 2.) 

10 
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FORFEITURE ALLEGATION 

22. As a result of committing one or more of the 

foregoing securities fraud offenses, in violation of Title 15, 

United States Code, Sections 78j(b) and 78ff, Title 18, United 

States Code, Section 371, and Title 17, Code of Federal 

Regulations, Section 24 0.10b-5, as alleged in Counts One through 

Six of this Indictment, and the mail fraud offense, in violation 

of Title 18, United States Code, Section 1341, as alleged in Count 

Seven of this Indictment, and the wire fraud offenses, in 

violation of Title 18, United States Code, Section 1343, as 

alleged in Counts Eight through Fifteen of this Indictment, ARTHUR 

G. NADEL, the defendant, shall forfeit to the United States 

pursuant to Title 18, United States Code, Section 981(a) (1) (C) , 

and Title 28, United States Code, Section 24 61, all property, real 

and personal, that constitutes or is derived from proceeds 

traceable to the commission of the fraud offenses, including, but 

not limited to, the following: 

a. At least approximately $360 million in United 

States currency, in that such sum in aggregate is property 

representing the amount of proceeds obtained as a result of the 

charged securities fraud, mail fraud, and wire fraud offenses; 

11 
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2840109316 held in the name of Marguerite J. Nadel Revocable Trust 

at Northern Trust, N.A. ; 

c. The real property and appurtenances known and 

described as 3966 Country View Drive, Sarasota, Florida; 

d. The real property and appurtenances known and 

described as 15576 Fruitville Road, Sarasota, Florida; 

e. The real property and appurtenances known and 

described 131 Garren Creek Road, Fairview, North Carolina; 

f. The real property and appurtenances known and 

described as approximately acres and forty-five lots in the name 

of Scoop Capital, LLC, in Thomasville, Georgia; 

g. The real property and appurtenances known and 

described as approximately thirty-seven acres in the name of Scoop 

Capital, LLC, in Grady County, Georgia; 

h. All right, title, and interest in the entity 

known and described as the Venice Jet Center located in Venice, 

Florida; 

i. All right, title, and interest in the entities 

known and described as Laurel Mountain Preserve, LLC, Laurel 

Preserve, LLC, and Laurel Moiintain Preserve Homeowners 

Association, Inc., including, but not limited to, 420 acres in 

Buncombe County and McDowell County, North Carolina; 

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j. All right, title, and interest in the entity 

known and described as Tradewind, LLC, including, but not limited 

to, five airplanes, one helicopter, and thirty-one airport 

hangars, located in Newnan-Coweta County Airport, Georgia; and 

k. All right, title, and interest in the entity 

known and described as the Guy-Nadel Foundation, Inc. 

Sxabstitute Assets Provision 

23. If any of the above-described forfeitable property, 

as a result of any act or omission of the defendant: 

a. cannot be located upon the exercise of due 

diligence; 

b. has been transferred or sold to, or deposited 

•with, a third party; 

c. has been placed beyond the jurisdiction of the 

court; 

d. has been substantially diminished in value; or 

e. has been commingled with other property which 

cannot be divided without difficulty; 

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it is the intent of the United States, pursuant to Title 21, 

United States Code, Section 853(p), to seek forfeiture of any 

other property of the defendant up to the value of the forfeitable 

property described above. 

(Title 15, United States Code, Sections 78j(b) and 78ff; 

Title 17, Code of Federal Regulations, 

Section 240.10b-5; Title 18, United States Code, 

Sections 981(a)(1)(C), 1341, and 1343; 

Title 21, United States Code, Section 853(p); and 

Title 28, United States Code, Section 2461.) 

FOREPERSO )REPERSON N JJl / LEV L. DASSIN 

Acting United States Attorney 

14 
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Form No. USA-33S-274 (Ed. 9-25-58) 

UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF NEW YORK 

UNITED STATES OF AMERICA 

-V. -

ARTHUR G. NADEL, 

Defendant. 

INDICTMENT 

09 Cr. 

(Title 15, United States Code, 

Sections 78j(b) and 78ff; 

Title 17, Code of Federal Regulations, 

Sections 240.10b-5; and 

Title 18, United States Code, Sections 2, 

371, 1341, and 1343.) 

LEV L. DASSIN 

Acting United States Attorney. 

A TRUE BILL 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 1 of 12 

City Exhibit 2 

UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

V. 

ARTHUR NADEL, 

SCOOP CAPITAL, LLC, 

SCOOP MANAGEMENT, INC., 

Defendants, 

SCOOP REAL ESTATE, L.P., 

VALHALLA INVESTMENT PARTNERS, L.P. 

VALHALLA MANAGEMENT, INC., 

VICTORY FUND, LTD, 

VIKING IRA FUND, LLC, 

VIKING FUND, LLC, AND 

VIKING MANAGEMENT, LLC. 

Relief Defendants. 

/ 

CASE NO,: 8:09-cv-0087-T-26TBM 

RECEIVER'S DECLARATION IN SUPPORT OF THE 

UNOPPOSED MOTION TO EXPAND THE SCOPE OF RECEIVERSHIP 

Burton W. Wiand declares as follows: 

1. I am an attorney with Fowler White Boggs P.A. ("Fowler White") in Tampa, 

Florida. 

2. In the Januaiy 21, 2009, Order Appointing Receiver (Doc. 8), the Court 

appointed me Receiver over (a) defendants Scoop Capital, LLC ("Scoop Capital") and Scoop 

Management, Inc. ("Scoop Management") and (b) relief defendants Scoop Real Estate, L.P., 

Valhalla Investment Partners, L.P.; Valhalla Management, Inc.; Victory IRA Fund, Ltd.; 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 2 of 12 

Victory Fund, Ltd.; Viking IRA Fund, LLC; Viking Fund, LLC; and Viking Management 

(collectively, the "Receivership Entities;" and Scoop Real Estate, Valhalla Investment, 

Victory IRA, Victory Fund, Viking IRA, and Viking Fund are collectively refen-ed to as the 

"Hedge Funds"). 

3. By early afternoon on January 21, 2009,1 had entered and obtained control of 

the offices of the Receivership Entities (located at 1618 Main Street, Sarasota, FL 34236) and 

had begun my investigation into the affairs of the Receivership Entities. Those offices also 

were used by Arthur Nadel ("Nadel") as the headquarters for administering his control of 

other businesses (I refer to those offices as the "Office"). 

4. I have been assisted in my investigation by my attorneys, an accountant, and 

infonnation technology experts. Since I obtained control of the Receivership Entities, I, my 

attorneys, and/or my accountant have had discussions - including continuing discussions -

with a number of people associated with Nadel and/or the Receivership Entities, including 

officers of some of the Receivership Entities and persons responsible for maintaining the 

financial books of the Receivership Entities and of other businesses controlled by Nadel, for 

operating other businesses controlled by Nadel, for performing accounting services, and for 

administering the Hedge Funds. 

5. We have also reviewed documents located in the Office, documents obtained 

from the accountant for the Receiver.ship Entities, information stored on the Receivership 

Entities' computer network, documents obtained from other businesses controlled by Nadel, 

and information available in the public record. 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 3 of 12 

6. Our investigation has revealed infonnation showing that additional businesses 

controlled by Nadel and in which he had a full or partial interest were purchased and/or 

funded with money derived from Nadel's fraudulent investment scheme (the "scheme"). 

7. In Plaintiffs Emergency Motion and Memorandum oi' Law in Support of 

Temporary Restraining Order and Other Emergency Relief (the "SEC's Emergency Motion") 

(Doc. 2) and supporting papers, the Securities and Exchange Commission (the "SEC") 

presented evidence showing that Nadel defrauded investors in the six Hedge Funds from at 

least January 2008 until the time he fled the jurisdiction by "massively overstating the value 

of investors' interests in them." SEC Emcrg. Mot. at 2, 6. 

8. As shown by the SEC, Nadel defrauded investors through his control of the 

Hedge Funds' advisers and managers. Scoop Capital and Scoop Management, which are now 

in receivership. Id. at 4-6. Through those entities, Nadel was ultimately responsible for 

controlling the investments funds' investment activities. 

9. As noted above, the SEC presented evidence showing that Nadel defrauded 

investors since at least January 2008. During our investigation, we uncovered evidence 

showing the fraud began at least as early as 2003 (and in all likelihood before then). 

10. Our investigation has revealed that for each Hedge Fund, the fund's 

perfomiance as disclosed to investors was based mainly on money and trading results that 

Nadel purported to have in two accounts: a brokerage account cleared through Goldman 

Sachs (jroup, Inc. (in which money was purportedly traded to generate the purported returns 

Nadel was yielding) and a bank account (from which purported distributions and purported 

redemptions were apparently paid). (While the disclo.sed performance of some funds at times 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 4 of 12 

also took into account investments purportedly held in other accounts, the value of those 

purported investments did not meaningfully impact the analysis in the table below - the 

ovei-whelming majority of the purported trading was supposed to take place in the Goldman 

Sachs brokerage accounts). 

11. Below is a table comparing actual values of the Hedge Funds to the values as 

represented to investors. Specifically, for each year-end from 2003 to 2007, the table lists the 

actual value of the brokerage account of each Hedge Fund (identified as "Actual Brokerage") 

and the actual value of the bank account of each Hedge Fund (identified as "Actual Bank"). 

The actual values of each fund for each analyzed time period are added to determine the 

actual total value of the Hedge Funds as of December 31st; that value is identified in the row 

lahcicd "Total Actual Value." Finally, the last row, labeled "Value Represented to 

Investors," identifies the collective value of the funds as of December 31st of each year 

analyzed in the table as represented to investors and as used by Receivership Entities to 

compute fees, returns, and other variables. 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 5 of 12 

Value as of 

12/31/03 ($) 

Value as of 

12/31/04 ($) 

Value as of 

12/31/05 ($) 

Scoop Real Estate 

Actual Brokerage 

Actual Bank 

fund not in 

existence 

16,670,254.69 

2,595.006 26 

20,435,896.75 

^368,.^81.69 

Victory Fund 

Actual Brokerage 

Actual Bank 

22,680,904.69 

3,672,956.54 

23,848,019.27 

2,051,485.25 

23,324,285.51 

724.809.85 

Victory IRA 

.'\ctual Brokerage 

Actual Bank 

5,898,125.28 

283,477.20 

13,070,558 97 

1,733.770.80 

17,746,441.12 

2,223,265.61 

V'alluilla Investment 

Actual Brokerage 

Actual Bank 

8,448,343.09 

576,760.49 

19,448,979.03 

3,391,544.40 

14.249,335.95 

3,027,125.65 

Viking Fund 

Actual Brokerage 

Actual Bank 

23,411,778.98 

1,382,193.93 

33,375,622.75 

5,184,911.26 

25,983.502.33 

,112,871.29 

Value as of 

12/31/06(5) 

Value as of 

12/31/07 ($) 

17,597,319.95 

202,116.95 

2,689,054.53 

1,443,406.92 

7,890,073.1: 

326,132.15 

2,586,116.58 

551,836.41 

9,981,754.77 

325.675.56 

1,096,190.22 

178,009.43 

7,017,679.33 

406.661.65 

10,054,454.11 

185,311.70 

3,429,805.83 

13,281.47 

2,036.992.89 

1,583,671.26 

Viking IRA 

Actual Brokerage 

Actual Bank 

14,172,117.08 

293,720,78 

18,767.696 52 

2,935,428.03 

19,787,093.85 

J. 

548,977.10 

9,539,919.21 

187,995.90 

1,738,703.93 

695,791.20 

TOTAL ACTUAL 

VALUE 

VALUE 

REPRESENTED 

TO INVESTORS 

80,820,378.06 

128,953,973.27 

143,073,367.23 

216,868,604.46 

132,731.986.70 

274.3X7,098.31 

63,715,094.39 18,042,860.67 

282,379,592.45 313.960,110.28 

12. As the previous table shows, for 2003 through 2007 (and, as shown by the 

SEC, also in 2008), the value of the Hedge Funds as represented to investors was 

significantly overstated. The investment returns and performance as represented to investors 

were based on the overstated numbers and thus were also false. 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 6 of 12 

13. Evidence also showed that the Hedge Funds directly or indirectly paid 

substantial fees to Scoop Capital and Scoop Management, and to other Receivership Entities, 

in the form of management, advisory, and/or profit incentive fees. SEC Emerg. Mot. at 5-6. 

According to the Hedge Funds' documents, in 2003 the Hedge Funds paid a total of 

-S7,045,509.31 in fees; in 2004, they paid $14,156,501.17 in fees; in 2005, they paid 

$20,349,897.02 fees; in 2006 they paid $18,257,590.52 in fees; in 2007 they paid 

$ 19,873,365.00 in fees; and in 2008 they paid $15,854,930.76 in fees. 

14. Based on our investigation, it is likely that a significant sum of the proceeds of 

Nadel's scheme made its way into other accounts controlled by Nadel and/or his wife. 

Marguerite Nadel. For example, as demonstrated by the copies of checks attached hereto as 

Exhibit A, in 2008 Nadel signed checks transfemng at least $1,003,500.00 from Scoop 

Capital to himself and his wife. Further, in 2003 and 2004 I have already seen 

documentation showing that at least $685,000.00 was transfen-ed to Nadel and his wife (and 

have reason to believe that significantly more money was transferred to them). In short, it is 

apparent from the documentation that large quantities of money were diverted from the 

Hedge Funds to Nadel and Mrs. Nadel. Indeed, to date we have not uncovered any source of 

income for Nadel or his wife that was not in some manner funded with money from the 

scheme. 

15. Documentation and other information that we have collected shows that 

money derived from the scheme was used by Nadel to purchase and/or fund other businesses, 

including Venice Jet Center, LLC, and Tradewind, LLC. 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 7 of 12 

Venice Jet Center, LLC 

16. To date, our investigation has revealed that Venice Jet Center, LLC ("VJC"), 

is a Florida limited liability company formed in April 2006. See VJC filings with Florida 

Secretary of State, attached hereto as Exhibit B. Its principal address is the Office, and Nadel 

is its registered agent and the managing member. 

17. Based on communications with counsel for Mrs. Nadel and documentation 

that we have reviewed, it appears that Mrs. Nadel owns a 50% interest in VJC. However, the 

informafion we have gathered shows that the assets of VJC were purchased with proceeds of 

the scheme, and that over time additional proceeds of the scheme have been transferred to 

VJC. 

18. As part of my investigation, 1 and.'or my attorneys have had discussions with 

one of Nadel's sons (Chris Nadcl) and with Roger Gemigans, Based on those discussions, 

we have learned that Mr. Gemigans is responsible for VJC's day-to-day operations and that 

VJC is a viable business with potential to generate assets for the receivership estate, 

19. However, Nadel's legal problems have created difficulties for VJC to access 

money for its day-to-day operations and it is at risk of going out of business. I believe VJC's 

business operations would benefit from VJC's inclusion in this receivership and that the 

eventual sale of the business could generate assets for eventual distribution to creditors. 

20. According to documentation retrieved from the Office, on August 8, 2005, 

Nadel entered into an .Asset Purchase Agreement to purchase a fixed base operation known 

as "Triple Diamond Jet Center," which operated in the Venice Airport in Venice, Florida (a 

copy of the Asset Purchase Agreement is attached hereto as Exhibit C). 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 8 of 12 

21. Under the tenns of the Asset Purchase Agreement, Nadel agreed to pay 

$2,795,000,00, including $2,695,000.00 payable at closing, and Dooley & Drake, P.A. was 

named as the escrow agent and the location for closing. See Ex. C ^j^i 1.4.1,, 1.8. Further, the 

Asset Purchase Agreement contemplated that Nadel would assign his interest to the 

purchased assets (which was a 100% interest) to an LLC. See id. ^| 4.1. 

22. The documentation reveals that VJC was formed in April 2006, and in the 

same month the Triple Diamond Jet Center was purchased with a transfer of money on June 

8, 2006, from Scoop Capital to Dooley & Drake, P.A., for $2,793,587.12. The ledger for the 

Scoop Capital account from which the transfer occurred identified the purpose of the transfer 

as "For VJC Closing." Thus, despite the possible co-ownership of VJC by Nadcl and his 

wife, the assets held by VJC were purchased with money from Scoop Capital (and thus, 

Nadel's scheme). 

23. Further, according to documents located in the Office, since the formafion of 

VJC and its acquisition of assets as discussed above, Scoop Capital has made at least the 

following transfers of money to VJC (it is likely that significantly more money was 

transfen'ed to VJC from Receivership Entities, and we continue to look for evidence of 

additional transfers): 

Date 

06/11/06 

06/28/06 

10/24/06 

12/12/06 

Payee 

VJC 

VJC 

VJC 

VJC 

TOTAL: 

Amount 

$100,000 

100,000 

75,000 

50,000 

$325,000.00 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 9 of 12 

Tradewind, LLC 

24. The information that we have reviewed to date shows that Nadel was also the 

managing member of another limited liability company named Tradewind, LLC 

("Tradewind"). 'fradewind was fornied in Delaware in January 2004, and registered for the 

first time in Florida in March 2008, See Tradewind Filings With Florida Secretary of State, 

attached hereto as Exhibit D. Nadel is Tradewind's managing member and its registered 

agent, and Tradewind's principal address is the Office. As with VJC, it appears that Mrs, 

Nadel has an interest in Tradewind. 

25. Based on my discussions with Receivership Entities' personnel, Chris Nadel, 

and an individual involved in Tradewind's business affairs (Edward Loughlin) and a review 

of information obtained from the Office, 1 have learned that Tradewind owns and controls at 

least 5 aircraft and owns airport hangars at the Newnan-Coweta County Airport in Georgia, 

26. My investigation has also revealed that Tradewind was funded with money 

from Nadel's scheme. Specifically, recent financial statements obtained from Nadefs and 

Receivership Entities' files show that Tradewind's liabilities include loans from Scoop 

Capital (in the amount of $2,490,146,77), Scoop Management (in the amount of $80,000), 

and Nadel and his wife ($676,575.00). See Tradewind Balance Sheet at 1, attached hereto as 

Exhibit E. Because, in all likelihood, significant sums of Receivership Entifies' money were 

transferred to Nadel and his wife {see supra ^ 14), even the loan from them likely consisted 

of Receivership Entities' money. Even though Mrs. Nadel may have an interest in tlie 

company, 'fradewind was overwhelmingly, if not completely, funded with proceeds from 

Nadel's scheme. 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 10 of 12 

27. For example, the Receivership Entities' documentation shows that between 

January 2004 and December 2008, at a minimum the following transfers of money were 

made from Scoop Capital directly to Tradewind or for Tradewind's benefit. 

Date 

01/16/04 

01./29/04 

03/31 ,/05 

02,/07/06 

03/08/06 

04/05/06 

05/05/06 

05/05/06 

05/08/06 

05/09/06 

05/22/06 

06/11/06 

06/28/06 

07/05/06 

08/03/06 

08/17/06 

08/24/06 

09/11/06 

09/11/06 

09/28/06 

10/16/06 

11/03/06 

11/14/06 

12/11/06 

12/19/06 

01/08/07 

01/12/07 

01/29/07 

02/14/07 

04/09/08 

05/07/08 

05/13/08 

05/14/08 

06/02/08 

Payee 

Insured Aircraft Title' 

Unizan Bank 

Tradewind 

Tradewind 

Tradewind 

Insured Aircraft Title' 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Amount 

$50,000 

152,000 

200,000 

100,000 

50,000 

100,000 

200,000 

200,000 

50,000 

50,000 

50,000 

100,000 

50,000 

50,000 

100,000 

50,000 

100,000 

50,000 

50,000 

150,000 

150,000 

100,000 

100,000 

100,000 

50,000 

50,000 

50,000 

50,000 

50,000 

75,000 

50,000 

20,000 

10,000 

90,000 

10 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 11 of 12 

07/07/08 

08/14/08 

08/25/08 

09/02/08 

09/30/08 

10/03/08 

10/13/08 

10/25/08 

' 11/11/08 

11/18/08 

11/21/08 

12/09/08 

12/15/08 

12/23/08 

Tradewind 

Tradewind 

Tradewind 

'Tradewind 

Tradewind 

Tradewind 

'Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

rOTAL: 

100,000 

80,000 

20,000 

60,000 

20,000 

20,000 

20,000 

20,000 

25,000 

5,000 

30,000 

6,000 

30,000 

13,000 

$3,296,000 

* Theses transfers were made in connection with the purchase or lease of one or more 

aircraft for Tradewind. 

28. Those documents also reveal that the following transfers of money were made 

from an account titled in the name of Scoop Management to Tradewind: 

Date 

02/17./04 

03/01/04 

05/27/04 

09/19/05 

10/25/05 

04/17/06 

Payee 

'Tradewind 

'Tradewind 

Tradewind 

Tradewind 

Tradewind 

Tradewind 

roiAL 

Amount 

1,000.00 

50,000.00 

50,000.00 

50,000,00 

20,000.00 

"50,000.00 

$221,000.00 

29. Similarly to VJC, Tradewind appears to be a viable business with potential to 

generate assets for the receivership estate. However, Nadel's legal problems have created 

operational difficulties for 'Tradewind, and I believe Tradewind's business operations would 

benefit from the inclusion of'Tradewind into this receivership. 

11 
Case 8:09-cv-00087-RAL-TBM Document 16 Filed 01/26/2009 Page 12 of 12 

I declare under the penalty of perjury that the foregoing is true and correct and is 

executed this 26th day of January, 2009. 

Burton W. Wiand, as Receiver 

c/o FOWLER WHITE BOGGS P.A. 

501 E. Kennedy Blvd. 

Suite 1700 

Tampa, FL 33602 

Tel. 813.228.7411 

Fax 813.229.8313 

bwiand(^fowlerwhite.com 
FOWLER© 

City Exhibit 3 

Anomcyi at Law 

ESTJ943 "^^CtoTEBOGGS 

Burton W, Wiand 

Direct Dial: 813-222-2029 

Direct Fax: 813-384-2848 

bwiaiid@fowlerwhite.com 

June 25, 2009 

BY U.S. MAIL & FACSIMILE 

Robert C. Anderson 

City Attorney 

Hall & Anderson, P.A. 

1314 East Venice Avenue Suite E 

Venice, Florida 34285 

Fax:(941)480-1446 

Re: June 19, 2009 Meeting Re Venice Jet Center, LLC 

Dear Bob: 

As discussed in our meeting on Friday, June 19, 2009,1 am forwarding for your 

review the second interim report submitted to the Federal court in connection with the 

Receivership. The report details as of April 30, 3009, the assets held in the receivership 

fiind. They are of substantial value in excess of $10 million. As of today, we have 

approximately $4 million in cash in bank accounts. As you can see, the Receiver clearly 

has the financial ability to construct four box-hangars on the Jet Center's leasehold. To 

reiterate, however, I have no desire to do so and am currently accepting bids for purchase 

of the Company. As we discussed, I do not anticipate that any prospective purchasers of 

the Jet Center would be unable to demonstrate financial ability to build the hangars. 

Indeed, the ability to construct the hangars is a material concern for all whom have shown 

any interest in purchasing the Company. 

As stated during the meeting, I remain open to any suggestions by the City for 

amicably resolving this matter. However, as Mr. Turner repeatedly made it clear that he 

had no authority to negotiate on behalf of the City nor make any actual proposal as to 

how to resolve this matter, my hands are significantly tied. My obligations as receiver 

require that I attempt to maximize the value of receivership assets and to protect the 

assets from depreciating in value. It is my position that the Council's refusal to permit 

the construction, repeated delay tactics, and negative public comments are causing the Jet 

FOWLER WHIT E BOGGS P.A. 

TAMP A • FOR T MYER S • TALLAHASSE E • JACKSONVILL E • FOR T LAUDERDAL E 

501 EAST KENNEDY BLVD., SUITE 1700 • TAMPA, FLORIDA 33602 • P,0, Box 1438 • TAMPA, FL 33601 

TELEPHONE (813) 228-7411 • FAX (813) 229-8313 • www.fowIerwhite.com 
Robert C. Anderson 

June 25, 2009 

Page 2 

Center to depreciate in value. The City has left me little choice but to file the Part 16 

Complaint with the FAA. While this proceeding will be begun in the immediate future, I 

am not waiving my right to seek relief in state or Federal court for the Council's actions. 

I appreciated our conversation and would look forward to any constructive 

proposal to resolve our impasse should you or Mr. Turner ever have authority to do so. 

Sincerely, 

Burton W. Wiand 

cc: Isaac Turner 

Enclosure 

FOWLER WHIT E BOGG S P.A. 

TAMP A • FOR T MYER S • TALLAHASSE E • JACKSONVILL E • FOR T LAUDERDAL E 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 1 of 41 

UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

ARTHUR NADEL, 

SCOOP CAPITAL, LLC, 

SCOOP MANAGEMENT, INC. 

Defendants, 

SCOOP REAL ESTATE, L.P. 

VALHALLA INVESTMENT PARTNERS, L.P., 

VALHALLA MANAGEMENT, INC. 

VICTORY IRA FUND, LTD, 

VICTORY FUND, LTD, 

VIKING IRA FUND, LLC, 

VIKING FUND, LLC, AND 

VIKING MANAGEMENT, 

Case No. 8:09-cv-0087-T-26TBM 

Relief Defendants. 

/ 

THE RECEIVER'S SECOND INTERIM REPORT 

I. Introduction 

Burton W. Wiand, the Court-appointed Receiver for (a) Defendants Scoop Capital, 

LLC ("Scoop Capital") and Scoop Management, Inc. ("Scoop Management") (which, along 

with Arthur Nadel, are collectively referred to as "Defendants"); (b) Relief Defendants Scoop 

Real Estate, L.P.; Valhalla Investment Partners, L.P.; Victory IRA Fund, Ltd.; Victory Fund, 

Ltd.; Viking IRA Fund, LLC; and Viking Fund LLC (collectively referred to as the "Hedge 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 2 of 41 

Funds");' (c) Relief Defendants Valhalla Management, Inc. and Viking Management (which, 

along with Scoop Capital and Scoop Management, are collectively referred to as the 

"Investment Managers"); and (d) Venice Jet Center, LLC; Tradewind, LLC; Laurel 

Mountain Preserve, LLC; Laurel Preserve, LLC; Laurel Mountain Preserve Homeowners 

Association, Inc.; Marguerite J. Nadel Revocable Trust UAD 8/2/07; Guy-Nadel Foundation, 

Inc.; Lime Avenue Enterprises, LLC; and A Victorian Garden Florist, LLC (all of the 

foregoing are collectively referred to as the "Receivership Entities"), hereby files this Second 

Interim Report in order to inform the Court, the investors, and others interested in the 

Receivership Entities of activities to date, as well as the proposed course of action. 

The Receiver was appointed on January 21, 2009. By January 26, 2009, the Receiver 

established an informational website www.nadelreceivership.com. The Receiver has updated 

this website periodically and continues to update it with the Receiver's most significant 

actions to date; important court filings in this proceeding; and other news that might be of 

interest to the public. This Second Interim Report, as well as all previous and subsequent 

reports, will be posted on the Receiver's website. 

II. Procedural Background 

On or about January 14, 2009, Arthur Nadel ("Nadel"), the Hedge Funds' principal 

investment advisor and the sole officer and director of Scoop Management and sole 

While these fiinds are referred to as hedge funds in this report, the Receiver's investigation 

has raised serious questions as to whether they were ever operated as legitimate investment 

vehicles. 

This Second Interim Report is intended to report on information and activity from March 

24, 2009, through May 15, 2009. Thus, unless otherwise indicated, the information reported 

herein reflects the information in the Receiver's possession as of May 15, 2009. 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 3 of 41 

managing member of Scoop Capital, fied Sarasota county and disappeared for nearly two 

weeks. On January 21, 2009, the Securities and Exchange Commission (the "SEC" or 

"Commission") filed a complaint in the United States District Court for the Middle District 

of Florida charging the Defendants with violations of the federal securities laws (the "SEC 

Action"). The Commission alleges that Nadel used the Investment Managers to defraud 

investors in the Hedge Funds from at least January 2008 forward by "massively" overstating 

investment returns and the value of fund assets to investors in these funds and issuing false 

account statements to investors. The Commission also asserts that Nadel misappropriated 

investor funds by transferring $1.25 million from Viking IRA Fund and Valhalla Investment 

Partners to secret bank accounts. The Court found the Commission demonstrated a prima 

facie case that Defendants committed multiple violations of federal securities laws. 

The same day the Commission filed its complaint, the Court entered an order 

appointing Burton W. Wiand as Receiver for the Investment Managers and Relief 

Defendants (the "Order Appointing Receiver"). {See generally Order Appointing Receiver 

(Doc. 8).) 

Also on that same day, on the SEC's motion, the Court entered (i) an Order of 

Preliminary Injunction and Other Relief as to the Investment Managers and all Relief 

Defendants (Doc. 7) and (ii) a Temporary Restraining Order and Other Emergency Relief as 

to Nadel (the "TRO") (Doc. 9). Among other things, these orders enjoined the Defendants 

and Relief Defendants from further violations of federal securities laws and froze their assets. 

On February 3, 2009, the Court entered an Order of Preliminary Injunction and Other Relief 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 4 of 41 

as to Nadel (the "February 3 Preliminary Injunction") (Doc. 29), the terms of which are 

essentially identical to those of the TRO.'' 

On January 27, 2009, on the Receiver's motion, the Court entered an order expanding 

the scope of the receivership and appointing the Receiver as receiver also over the Venice Jet 

Center, LLC, and Tradewind, LLC. {See Order, Jan. 27, 2009 (Doc. 17).) On February II, 

2009, on the Receiver's motion, the Court entered an order expanding the scope of the 

receivership and appointing the Receiver as receiver also over Laurel Mountain Preserve, 

LLC; Laurel Preserve, LLC; the Marguerite J. Nadel Revocable Trust UAD 8/2/07; and the 

Laurel Mountain Preserve Homeowners Association, Inc. {See Order, Feb. 11, 2009 

(Doc. 44).) On March 9, 2009, on the Receiver's motion, the Court entered an order 

expanding the scope of the receivership and appointing the Receiver as receiver also over the 

Guy-Nadel Foundation, Inc. {See Order, March 9, 2009 (Doc. 68).) On March 17, 2009, on 

the Receiver's motion, the Court entered an order expanding the scope of the receivership 

and appointing the Receiver as receiver also over Lime Avenue Enterprises, LLC, and A 

Victorian Garden Florist. {See Amended Order, March 17, 2009 (Doc. 81).) 

Pursuant to the Order Appointing Receiver, the Receiver has the duty and authority 

to: "administer and manage the business affairs, funds, assets, choses in action and any other 

property of the Defendants and Relief Defendants; marshal and safeguard all of the assets of 

•* Both the TRO and the February 3 Preliminary Injunction required Nadel to make a sworn 

accounting to the Court and the Commission of all funds received by him from any of the 

Defendants or Relief Defendants and a sworn identification of all accounts in which he has 

an interest or has the power or right to exercise control. (Docs. 9, 29.) In response to these 

Orders, on March 31, 2009, Nadel submitted a letter asserting his Fifth Amendment right 

against self-incrimination and refused to provide this information. (Doc. 102.) 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 5 of 41 

the Defendants and Relief Defendants; and take whatever actions are necessary for the 

protection of the investors." (Order Appointing Receiver at 1-2.) 

On January 27, 2009, Nadel surrendered to the FBI in Tampa, Florida. Nadel was 

arrested and charged with two counts of securities fraud and wire fraud based on the 

fraudulent investment scheme discussed below. On January 30, 2009, Magistrate Judge 

Mark Pizzo of the United States District Court for the Middle District of Florida denied 

Nadel's request for a release on bond awaiting trial, deciding instead that Nadel should 

remain in jail based on, among other things, a risk of flight. On or about February 2, 2009, 

Judge Pizzo entered a Detention Order denying bail and a Removal Order requiring that 

Nadel be transferred to the Metropolitan Correctional Center in New York, New York to 

await trial. See U.S. v. Nadel, (U.S. Dist. Ct. M.D. Fla., Case No. 8:09-mj-01039-MAP 

(Docs. 5, 6)). 

On February 26, 2009, Judge Denise Cote of the United States District Court for the 

Southern District of New York agreed to release Nadel on $5 million bail, contingent on a 

number of conditions including $1 million in cash, living restrictions, and specific bond 

guarantees. Judge Cote also required Nadel to fully and completely cooperate with the SEC. 

As of the date of this Report, Nadel has not met the condifions for bail and is still being held 

in the Metropolitan Correctional Center. 

On April 28, 2009, Nadel was indicted on six counts of securities fraud, one count of 

mail fraud, and eight counts of wire fraud. The maximum sentence for each charge is 20 

years of imprisonment. On April 30, 2009, Nadel pleaded not guilty to the fifteen charges. 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 6 of 41 

In the SEC Action, on April 6, 2009, Nadel filed his answer and affirmative defenses, 

in which he denied nearly every allegation in the Complaint and set forth two affirmative 

defenses. (Doc. 104.) Nadel also purported to set forth a "Counterclaim," which the Court 

struck on the Receiver's motion. (Docs. Ill, 112.) 

III. The Receiver's Role and Responsibilities 

The Receiver functions as an independent agent of the court. The United States 

Supreme Court has explained that: 

[a receiver] .. . is an officer of the court; his appointment is 

provisional. He is appointed on behalf of all parties, and not of 

the complainant or of the defendant only. He is appointed for 

the benefit of all parties who may establish rights in the cause. 

The money in his hand is in custodia legis for whoever can 

make out a title to it. . . It is the court itself which has the care 

of the property in dispute. The receiver is but the creature of 

the court; he has no power except such as are conferred upon 

him by the order of his appointment and the course and 

practice of the court. 

Booth V. Clark, 58 U.S. 322, 331 (1854). Generally, the Receiver is charged by the Court 

with maximizing investors' and creditors' recoveries. To this end, the Court directed the 

Receiver to engage in the following activities: 

A. Operating the Business of the Receivership Entities. 

The Court granted the Receiver the "full and exclusive power, duty, and authority" to 

"administer and manage the business affairs, funds, assets, choses in action and any other 

property of the Defendants and Relief Defendants .... " (Order Appointing Receiver at 1.) 

B. Taking Possession of Receivership Property. 

The Court directed the Receiver to "[t]ake immediate possession of all property, 

assets and estates of every kind of the Defendants and Relief Defendants, whatsoever and 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 7 of 41 

wheresoever, located, belonging to or in the possession of the Defendants and Relief 

Defendants . . .." (Order Appointing Receiver ^ 1.) 

C. Investigating Receivership Affairs and Recovering Funds. 

The Court also directed the Receiver to "[ijnvestigate the manner in which the affairs 

of the Defendants and Relief Defendants were conducted and institute such actions and legal 

proceedings, for the benefit and on behalf of the Defendants and Relief Defendants and their 

investors and other creditors as the Receiver deems necessary against those individuals, 

corporations, partnerships, associations and/or unincorporated organizations, which the 

Receiver may claim have wrongfully, illegally or otherwise improperly misappropriated or 

transferred monies or other proceeds directly or indirectly traceable from investors in the 

Defendants or Relief Defendants .... " (Order Appointing Receiver^ 2.) 

D. Reporting on Assets and Liabilities and Implementing Claims Process. 

The Court further directed the Receiver to "[pjresent to this Court a report reflecting 

the existence and value of the assets of the Defendants and Relief Defendants and of the 

extent of liabiHties, both those claimed to exist by others and those the Receiver believes to 

be legal obligations of the Defendants and Relief Defendants." (Order Appointing Receiver 

^ 3.) As contemplated by the Order, the Receiver will ultimately institute a claims process 

primarily for the benefit of the Receivership Entities' investors who have been defrauded and 

suffered legitimate losses as a result of the activities of Nadel and others. 

IV. Overview of Preliminary Findings 

The Receiver is in the process of reviewing voluminous records from the offices of 

Receivership Entities, as well as records from more than thirty (30) different institutions. 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 8 of 41 

including banks and brokerage firms. The Receiver also is in the process of obtaining 

documents from additional third parties. The Receiver has formed some preliminary 

conclusions based on his review of a portion of the records received. While these 

conclusions are not final, and may change as the review becomes more complete, the 

Receiver believes they should be shared with the Court, the investors, and other potentially 

interested parties. 

In the Commission's Emergency Motion and Memorandum of Law in Support of 

Temporary Restraining Order and Other Emergency Relief ("SEC's Emergency Motion") 

(Doc. 2) and supporting papers, the Commission presented evidence showing Nadel 

defrauded investors through his control of the Hedge Funds' advisers and/or managers. 

Scoop Capital and Scoop Management. Through the Investment Managers, Nadel, along 

with Christopher Moody and Neil Moody, were ultimately responsible for controlling the 

Hedge Funds' investment activities. While the Commission's evidence showed that Nadel 

defrauded investors since at least January 2008, the Receiver's investigation has uncovered 

evidence showing that the fraud began at least as early as 2003 and in all likelihood before 

then. 

The Receiver's investigation has revealed that for each Hedge Fund, the Hedge 

Fund's performance as disclosed to investors from at least 2003 forward was based mainly 

on trading results that Nadel purported to have in brokerage transactions cleared through 

Goldman Sachs Group, Inc. (in which money was purportedly traded to generate the 

purported returns Nadel was paying). The returns reported to investors and potential 

investors were based on fictitious performance results that were created by Nadel and then 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 9 of 41 

included in a database maintained by Scoop Management. These fictitious performance 

results formed the basis of gross misrepresentations to investors. 

Table 1, below, shows a comparison of actual trading results in the Hedge Funds' 

Goldman Sachs accounts to the values represented to investors and to distributions paid. 

Specifically, for each year from 2003 to 2008, the table lists from, left to right, (1) the 

pertinent year; (2) the amount of gains the Investment Managers represented that the Hedge 

Funds had achieved that year (identified as "Company Represented Amounts"); (3) the actual 

combined total gain or loss experienced that year in the accounts for the Hedge Funds 

(identified as "Hedge Funds"); (4) the difference between what the Investment Managers 

represented the Hedge Funds had achieved in performance versus the actual trading results in 

the Goldman Sachs accounts for the Hedge Funds (identified as "Difference"); and (5) the 

actual distributions paid by the Hedge Funds for the pertinent year, including distributions to 

investors and management and performance incentive fees paid (identified as 

"Distributions"). 

Table 1 

Year 

2003 

2004 

2005 

2006 

2007 

2008 

Total 

Company 

Represented 

Amounts 

23,716,749 

46,950,345 

61,169,058 

50,003,778 

54,665,571 

36,334,794 

272,840,295 

Gains/(Losses) 

Hedge Funds 

Actual Amounts 

(Per Goldman 

Sachs statements) 

17,237,008 

4,637,878 

5,739,301 

(18,549,355) 

(24,989,307) 

(2,493,654) 

(18,418,129) 

Difference 

6,479,741 

42,312,467 

55,429,756 

68,553,133 

79,654,879 

38,828,448 

291,258,424 

Distributions 

16,729,147 

49,329,387 

75,078,840 

75,444,122 

60,034,321 

73,443,310 

350,059,127 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 10 of 41 

As Table 1 shows, for 2003 through 2008, the Hedge Funds' performance as 

represented to investors was significantly overstated and thus, false. For instance, for the 

years 2003 to 2008, the Investment Managers represented that the Hedge Funds' trading 

activity generated more than $272 million in gains when, in reality, the Hedge Funds' 

investment accounts actually lost approximately $18.4 million. Further, while the Hedge 

Funds lost approximately $18.4 million for this same period, more than $350 million was 

paid by the Investment Managers in distributions to investors and to themselves and others as 

fees. As this table shows, from at least 2003 through 2008, the Investment Managers were 

making distributions and paying fees that the investment performance of the Hedge Funds 

never supported. The Investment Managers were also crediting fictitious profits to accounts 

where the accountholders were not taking distributions. These fictitious profits were 

likewise unsupported by the Hedge Funds' investment performance and only served to 

further increase the Hedge Funds' insolvency. This negative cash flow made the eventual 

collapse of Nadel's enterprise inevitable. 

In short, the investment returns and performance as represented to investors were 

based on grossly overstated performance numbers created by Nadel, and the results reported 

to investors were fiction. The true results of the trading activity that actually occurred was 

never included in data reported to investors or potential investors. 

Evidence also shows that the Hedge Funds directly or indirectly paid substantial fees 

to Scoop Capital and Scoop Management, to other Receivership Entities, and to other third 

parties in the form of management, advisory, and/or profit incentive fees and "finder" fees. 

As reflected in Table 2, below, according to the Hedge Funds' documents from 2003 through 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 11 of 41 

2008, they paid approximately $97,168,122 in total fees. Profit incentive fees were paid to 

Scoop Management, Viking Management and Valhalla Management (and sometimes split 

with third parties) based on a percentage of profits that never occurred and thus significantly 

depleted the Hedge Funds' assets and diverted those assets to Scoop Capital and Scoop 

Management, which were controlled by Nadel, and to Valhalla Management and Viking 

Management, which were controlled by Neil and Christopher Moody. 

Table 2 

Year 

2003 

2004 

2005 

2006 

2007 

2008 

Total 

Management 

Fees 

1,521,377 

3,644,188 

5,057,633 

5,756,646 

6,206,972 

6,771,232 

28,958,048 

Performance 

Incentive Fees 

5,929,187 

11,737,586 

15,292,264 

12,500,945 

13,666,393 

9,083,698 

68,210,074 

Total Fees 

7,450,565 

15,381,774 

20,349,897 

18,257,590 

19,873,365 

15,854,931 

97,168,122 

Significant sums from the proceeds of Nadel's scheme also made their way into other 

accounts controlled by Nadel and/or his wife. Marguerite Nadel. As of December 31, 2008, 

according to the balance sheet for Scoop Management, Scoop Management had transferred 

approximately $17,177,896.56 to accounts owned either individually or jointly by the 

Nadels. These amounts are in addition to the amounts Mrs. Nadel received from Scoop 

Management as compensation. According to its balance sheet. Scoop Management also 

transferred approximately $6,433,804.40 to other entities controlled by Nadel. To date, the 

Receiver has not uncovered any source of income for Nadel or his wife (during the time of 

Nadel's scheme) that was not in some manner funded with money from that scheme. 

II 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 12 of 41 

Documentation and other information that the Receiver has collected shows that 

money derived from the scheme was used by Nadel to purchase and/or fund other businesses. 

The Receiver has expanded the Receivership to include additional businesses controlled by 

Nadel. See discussion of expansion at Section V.B. below. 

To date, the Receiver has discovered and identified approximately 371 investors who 

invested slightly more than $397 million. Based on documentation analyzed to date, it 

appears that investors have out of pocket losses of approximately $168 million. The 

Receiver has also discovered that some investors were paid more than their total investments. 

These overpayments were "fictitious profits." At this time, the Receiver has discovered 

approximately $53.5 million in such fictitious profits. Further, it appears that, although 

separately numbered investor accounts were used in communications with investors and 

brokerage accounts were used for each Hedge Fund, in reality there were not separate funds. 

Due to the method Nadel used to trade securities, distinctions made between the individual 

Hedge Funds and between investor "accounts" have little meaning. The documents reviewed 

reveal that Nadel treated the Hedge Funds as a single source of money regardless of with 

which Hedge Fund investors purportedly invested. The Receiver has reached the preliminary 

conclusion based on available research and evidence that investor funds were commingled in 

Nadel's and the Receivership Entities' accounts. 

12 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 13 of 41 

A. Nadel's Trading Activities in the Hedge Funds. 

In the Executive Summaries disseminated to investors, Nadel represented that the 

Hedge Funds were generating the annual returns reflected in Table 3, below, primarily 

through trading in the quadruple Qs."* 

Table 3 

Fund Performance as Represented in Executive Summaries 

Scoop 

Viking Victory Real 

Year Valhalla Victory Viking IRA IRA Estate 

2002 

2003 

2004 

2005 

2006 

2007 

2008* 

* Results are for an incomplete year. 

While Nadel did trade in quadruple-Qs, he did not achieve for the Hedge Funds the 

amount of retums he represented to investors. Rather, based on the documents the 

Receiver's financial expert has analyzed to date, the Hedge Funds as a whole lost significant 

sums from their inception. Specifically, Table 4, below, shows the actual account profits and 

losses for the Hedge Funds for the indicated time. 

21.59% 

41.57% 

28.96% 

30.19% 

19.99% 

19.24% 

10.97% 

40.93% 

42.52% 

30.30% 

25.90% 

18.94% 

19.65% 

11.82% 

26.98% 

46.42% 

30.46% 

27.40% 

19.08% 

20.60% 

11.43% 

26.88% 

45.23% 

29.93% 

26.36% 

18.93% 

20.55% 

11.52% 

N/A 

30.43% 

32.16% 

27.31% 

19.50% 

20.02% 

11.72% 

N/A 

N/A 

48.67% 

32.14% 

21.15% 

21.75% 

12.31% 

" The term "Quadruple Qs" (ticker symbol: QQQQ) refers to the NASDAQ-100 Tracking 

Stock, an exchange-traded fund ("ETF") listed on the NASDAQ intended to track the 

NASDAQ index. 

13 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 14 of 41 

Table 4 

Account Name 

Scoop Real Estate Ltd. 

2/1/04-12/31/08 

Valhalla Investment Partners, LP 

10/01/02-12/31/08 

Viking Fund LLC 

3/01/03-12/31/08 

Viking IRA Fund Ltd. 

3/01/03-12/31/08 

Victory Fund, Ltd. 

6/01/02-12/31/08 

Victory Fund, Ltd. 

2/01/03-8/31/03 

Victory IRA Fund, Ltd. 

Hedge Fund Total 

Account 

Profit/Losses 

($6,637,880) 

$2,863,875 

($8,073,752) 

($2,053,443) 

$1,825,701 

($66,776) 

($5,941,164) 

($18,083,439) 

Overall Annualized 

Rate of Return 

-33.35% 

3.98% 

-19.40% 

-24.53% 

-16.70% 

-18.45% 

-18.63% 

Between 2002 and 2008, the highest annualized rate of return Nadel appears to have 

achieved was approximately 4%, while the rest of the Hedge Funds experienced annualized 

retums of-16.70% to -33.25%. While these actual performance numbers demonstrate the 

disparity between what Nadel and others were claiming the Hedge Funds were achieving and 

the retums the Hedge Funds were actually achieving, the performance of each individual 

Hedge Fund is not significant because it appears that Nadel arbitrarily allocated daily results 

of trading transactions among the Hedge Funds. This activity resulted in the commingling of 

the Hedge Funds' assets and makes the performance results of each individual Hedge Fund 

immaterial. In short, Nadel was losing significant sums of money while representing that he 

was achieving annual retums from 18.93% to 48.67% (for years with full activity). 

Further, as shown in Table 5, below, while the Hedge Funds' accounts experienced 

losses, all but one of Nadel's personal accounts and other accounts maintained essentially for 

14 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 15 of 41 

the benefit of Nadel and in the sole control of Nadel (collectively referred to herein as 

"Nadel's Accounts") experienced significant gains. 

Table 5 

Account Name 

Scoop Capital LLC 

12/01/04-12/31/08 

Scoop Management 

10/01/02-12/31/08 

Arthur Nadel 

6/01/02-10/31/08 

Marguerite Nadel 

8/01/07-1/30/09 

Non-Fund Total 

Account 

Profit/Losses 

$11,331,464 

$737,141 

$10,781,029 

$10,033 

$22,859,667 

Overall Annualized 

Rate of Return 

49.37% 

36.72% 

71.62% 

-15.49% 

The trading activity in the Hedge Funds' accounts and Nadel's Accounts appears to 

have been essentially the same, and trading in those accounts was done concurrently. 

Virtually all trading allocated to every account was in quadmple-Qs. Given the dramatic 

differences in trading results in Nadel's accounts as compared to the Hedge Funds' accounts 

and preliminary information received by the Receiver concerning Nadel's trading practices, 

the Receiver believes that this evidence may indicate that Nadel engaged in a fraudulent 

practice known as "cherry picking." In cherry picking, the trader allocates profitable trades 

to himself and unprofitable trades to clients. See, e.g., S.E.C. v. K. W. Brown and Co., 555 F. 

Supp. 2d 1275, 1302-1307 (S.D. Fla. 2007) (holding that "cherry-picking" day-trading 

scheme operated by officers constituted scheme to defraud under Securities Exchange Act). 

Analysis of the trading activity and cash flows is ongoing. However, in light of the fact that 

Nadel traded the same investments for all Hedge Funds and the accounts he owned and/or 

controlled for his benefit and that there was a wide disparity between the results allocated to 

15 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 16 of 41 

the Hedge Funds' accounts and those allocated to Nadel's Accounts, there is no apparent 

logical explanation other than the improper diversion of profitable transactions by Nadel. 

B. Funds Located by the Receiver. 

1. Funds at Inception of Receivership. 

At the outset of the Receivership, approximately $556,758.33 in cash and cash 

equivalents in financial accounts titled in the name of the Hedge Funds and Investment 

Managers (which include Scoop Management, Scoop Capital, Valhalla Management, and 

Victory Management) had been identified and frozen pursuant to the Court's TRO and 

Preliminary Injunction Orders. In addition, cash and cash equivalents in financial accounts 

titled in the name of other Receivership Entities at the time the entities were brought into 

receivership were approximately $556,654.72. Thus, total cash and cash equivalents at the 

inception of the Receivership and as the Receivership was expanded to include each 

additional Receivership Entity indicated was approximately $1,113,413.05.* 

2. Additional Funds Located. 

One of the Receiver's highest priorities is to locate and recover any additional funds. 

The Receiver has retained a forensic accounting firm to assist in tracing funds. As of the date 

^ These other Receivership Entities include Venice Jet Center, LLC; Tradewind, LLC; Laurel 

Mountain Preserve, LLC; Laurel Preserve, LLC; and the Marguerite J. Nadel Revocable 

Trust UAD 8/2/2007. 

This amount does not include any sum for non-cash or non-cash equivalent assets the 

Receiver has recovered. For a discussion of these assets, please refer to Sections V.B. & 

V.D. below. 

16 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 17 of 41 

of this report, the Receiver has also identified and recovered $120,000. Also, on April 29, 

2009, the Court granted the Receiver exclusive interest in a note and mortgage for a 

condominium located in Sarasota, Florida. The condominium's owner, an employee of one 

of the Receivership Entities (see Section V.B.6, below), had executed a promissory note 

payable to Mrs. Nadel for $126,556.24. The note was secured by a mortgage held by Mrs. 

Nadel. On February 9, 2009, Mrs. Nadel had assigned the note and mortgage to Nadel's 

criminal-defense attomeys, Cohen, Jayson & Foster, P.A. The principal balance due under 

the note is $124,637.64, with $5,457.66 due in outstanding interest. 

The Receiver will continue to diligently investigate, and will update the Court and the 

investors if additional funds are located. 

3. Business and Miscellaneous Income and Interest. 

From March 1, 2009 through April 30, 2009, the Receiver received $579,205.43 in 

business income from ongoing operations of some Receivership Entities, $18,056.53 in 

interest/dividend income, and $2,582.18 in miscellaneous income. 

4. Profiteer Settlements. 

In April 2009, the Receiver sent letters to 85 investors, each of whom, according to 

the records in the Receiver's possession, made "fictitious profits" by receiving monies from 

the Hedge Funds in an amount that exceeded his or her investments (the "Profiteers"). With 

the SEC's approval, the Receiver offered to settle with each such investor for payment by the 

' This amount is comprised of two $60,000 payments the Receiver recovered from two 

individuals. The Receiver determined that the transfers made to these individuals in the 

amount of $60,000 each were an improper diversion of investor funds and obtained court 

orders to recover these funds. 

17 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 18 of 41 

Q 

investor of 90% of his or her fictitious profits. Collectively, if accepted, these settlements 

would yield $14,586,005.14. As of May 15, 2009, the Court has approved five profiteer 

settlements totaling $683,778.64. Settlement discussions with other profiteers are ongoing. 

The Receiver continues to work to identify additional profiteers and intends to send 

settlement offers to additional profiteers in the near future. 

V. Actions Taken By the Receiver. 

Since his appointment on January 21, 2009, the Receiver has taken a number of steps 

to fulfill his mandates under the Order Appointing Receiver. 

A. Taking possession of Receivership Property. 

1. Physical premises and tangible assets. 

On the day of his appointment, the Receiver took possession of the Receivership 

Entities' offices at 1618 Main Street, Sarasota, FL 34236 (the "Office"). The Office was 

used by Nadel as the headquarters for administering his control of the Receivership Entities. 

The Receiver secured the premises by changing the locks and inventoried all of the physical 

property at the premises. The Receiver has provided change of address notifications to the 

United States Postal Service and Federal Express, as well as all known service providers to 

the Receivership Entities. 

Since the filing of the last Interim Report, the Receiver ended the Office's lease; 

tumed over the keys; and sold the office furniture and other items for $3,500.00. All of the 

documents from the Office have been moved to the Tampa offices of Fowler White Boggs 

P.A. The Receiver also removed several servers and computer-related equipment from the 

* See Section V.D.I below, regarding litigation against profiteers. 

18 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 19 of 41 

premises that were used by the Receivership Entities and Mr. Nadel. The Receiver retained 

experienced forensic information technology experts with the firm E-Hounds, Inc., to assist 

in securing and analyzing the electronic data on the computers. E-Hounds personnel have 

secured the data and are underway in their forensic analysis. 

Since obtaining control of the Receivership Enthies, the Receiver and his 

professionals have had discussions - including continuing discussions - with a number of 

people associated with Nadel and/or the Receivership Entities, including officers of some of 

the Receivership Entities and persons responsible for maintaining the financial books of 

Receivership Entities, for operating the business of Receivership Entities, for performing 

accounting services, and for administering the Hedge Funds. 

The Receiver and his professionals have also reviewed documents located in the 

Office; documents obtained from the accountant for one or more Receivership Entities; 

information stored on the Receivership Entities' computer network; documents obtained 

from other businesses controlled by Nadel; documents obtained from financial institutions 

and other third parties, including lawyers and others who assisted Nadel's businesses with 

their transactions; and information available in the public record. 

B. Expansion of the Receivership. 

As a result of the review of these records and of the discussions noted above, the 

Receiver sought and successfully obtained the expansion of the Receivership to include: 

Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC; Laurel Preserve, 

LLC; Laurel Mountain Preserve Homeowners Association, Inc.; the Marguerite J. Nadel 

Revocable Tmst UAD 8/2/07; the Guy-Nadel Foundation, Inc.; Lime Avenue Enterprises, 

19 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 20 of 41 

LLC; and A Victorian Garden Florist, LLC. The Receiver's investigation revealed that 

Nadel had control and/or a full or partial interest in these additional businesses and that they 

were purchased and/or funded with money derived from Nadel's fraudulent investment 

scheme. Further, by virtue of Scoop Capital's ownership interest in Home Front Homes, 

LLC and Summer Place Development Corporation the Receiver also has control of these 

entities but, for various reasons, a formal order expanding the Receivership to include Home 

Front Homes or Summer Place Development has not been sought. 

The following discussion of these entities includes a description of assets the 

Receiver has acquired as a resuU of their inclusion in the Receivership. Where possible the 

Receiver has included estimated values of these assets. However, given the state of the U.S. 

economy at the time of this Report, it is important to note that any such estimations, 

valuations or appraisals are subject to change. In particular, due to the poor state of the real 

estate markets, the estimates provided may differ markedly from the actual amounts realized 

upon the selling of any real property. 

1. Venice Jet Center, LLC. 

Venice Jet Center, LLC ("VJC"), is a Florida limited liability company formed in 

April 2006. Its principal address is the Office, and Nadel was its registered agent and the 

managing member. The assets of VJC were purchased with proceeds of Nadel's scheme, and 

over time additional proceeds of the scheme were transferred to VJC. VJC is a viable 

business with potential to generate assets for the Receivership estate. 

On January 27, 2009, the Court expanded the Receivership to include VJC. VJC is a 

fully operating fixed-base operator, or "FBO," business. It includes a flight school, fueling 

20 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 21 of 41 

service, hangar rentals, and a cafe. Since the Receiver's appointment as Receiver of VJC, he 

has taken control of it and is continuing to operate the business. The Receiver is continuing 

VJC's longstanding pursuit of a permit to build new hangers at the VJC. The Receiver 

believes that the permit to build more hangars, which was requested well before the 

Receiver's appointment, will make the VJC more attractive to potential purchasers and 

ultimately increase the value of the business. 

The Receiver has possession and control of a building owned by VJC located at 400 

Airport Avenue East, Venice, Florida, 34285 (the "VJC Building"). The VJC Building has 

one known encumbrance: a loan with Northern Trust Bank, N.A., on which there is a 

remaining balance of $1,963,790.00. 

The Receiver has encountered some problems in connection with the ongoing 

management of the VJC. The City of Venice (the "City"), in contravention of its lease and 

specific direction from the Federal Aviation Authority ("FAA"), has refused to grant VJC 

authorization to develop four hangars at the VJC facility. The City officials have publicly 

announced their intent to terminate the VJC lease with the City and take over VJC's 

operations. The Receiver intends to vigorously resist any unwarranted interference by the 

City with what appears to be a substantial and valuable property right of VJC (and of the 

Receivership estate). On May 14, 2009, the Court granted the Receiver's request for leave to 

file a complaint against the City of Venice pursuant to Title 14 of the Code of Federal 

Regulations, Part 16. (Doc. 132.) As of the date of filing this Report, the City has not yet 

voted on whether it intends to further resist the development of the hangars at the VJC. 

21 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 22 of 41 

The Receiver estimates VJC has significant value in excess of the funds owed to 

Northem Trust. However, this value is subject to change depending on the resolution of the 

hangar permit issue. The Receiver has received significant interest in the purchase of VJC 

and continues to actively marketing the business. Parties interested in marketing or 

purchasing this property should contact the Receiver directly. 

2. Tradewind, LLC. 

The information reviewed to date shows that Nadel was also the managing member of 

Tradewind, LLC ("Tradewind"). Tradewind was formed in Delaware in January 2004, and 

registered for the first time in Florida in March 2008. Nadel was Tradewind's managing 

member and its registered agent, and Tradewind's principal address was the Office. The 

Receiver discovered that Tradewind owned and controlled five planes and one helicopter. 

Tradewind also owns 31 airport hangars at the Newnan-Coweta County Airport in Georgia 

(the "Georgia Hangars"). The Receiver's investigation revealed that Tradewind was funded 

with money from Nadel's scheme. Similar to VJC, Tradewind appears to be a viable 

business with potential to generate assets for the Receivership estate. 

On January 27, 2009, the Court expanded the Receivership to include Tradewind. 

Tradewind is a fully operating business. Since the Receiver's appointment as Receiver of 

Tradewind, he has taken control of it and is continuing to operate the business. Tradewind 

collects approximately $28,000 in monthly rent (mainly from the hangars) and incurs varying 

monthly expenses, which include land rent, loan payments, payroll, and various utilities. The 

Receiver is entertaining offers to purchase this business or any of its assets. 

22 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 23 of 41 

The Receiver has possession and control of the Georgia Hangars. The Georgia 

Hangars have one known encumbrance: a loan with the Bank of Coweta with a remaining 

balance of approximately $958,265.79, and monthly payments of $8,055. There is also 

monthly rent of $3,079.89 due to the Newnan Coweta Aviation Authority. The Receiver has 

been making these monthly payments as he believes they are in the best interest of the 

Receivership. 

The Receiver also gained possession and control of the five planes and helicopter. 

The following table shows the year, model, and known encumbrances relating to each 

aircraft. 

Aircraft in Receiver's Possession 

••'•^iliiidteih: v':. 

Piper PA-28/140 

Cessna 152 

Learjet31A 

Citation 

Baron 

Schweizer 300 

Ymr 

1971 

1978 

1996 

1992 

1977 

1997 

Minihft 

Airplane 

Airplane 

Airplane 

Airplane 

Airplane 

Helicopter 

1%-:, '^ llnowQ Ei#iuii«iKse •• 

None. 

None. 

Loan with General Electric Capital Corporation 

("GECC") entered into on May 17, 2006, for 

approximately $2.4 million. 

Loan with VFS Financing, Inc. ("VFS") entered 

into on May 23, 2008, for approximately $2.1 

million 

None. 

None. 

On April 17, 2009, the Court authorized the sale of the Schweizer helicopter for 

$200,000.00. (Doc. 108.) On May 1, 2009, the Court authorized the Receiver's settlements 

with GECC and VFS to dispose of the Learjet and the Citation, respectively, in full 

satisfaction of the respective loans. (Doc. 119.) Because it appeared that the aircraft were 

23 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 24 of 41 

valued significantly less than the amount of the loans on the aircraft, the Receiver determined 

that these settlements were in the best interest of the receivership. The Receiver is currently 

evaluating the value of the other three aircraft and determining the appropriate method of 

their disposition. 

3. Laurel Mountain Preserve, LLC; Laurel Preserve, LLC; and 

Laurel Mountain Preserve Homeowners Association, Inc. 

The Receiver's investigation revealed that Laurel Mountain Preserve, LLC ("Laurel 

Mountain"), was a North Carolina limited liability company formed in or about December 

2003. Laurel Mountain was "withdrawn" as a limited liability company in January 2006. Its 

principal address was the Office, and its manager and member was Nadel. Laurel Preserve, 

LLC ("Laurel Preserve"), was formed as a North Carolina limited liability company in 

February 2006. Its principal address was the Office, Nadel was its registered agent, and the 

"Registered Office" address was a home in Fairview, North Carolina titled in the names of 

Nadel and his wife. The manager was Nadel, and although Laurel Preserve's 2006 Operating 

Agreement identifies Nadel and his wife as members of Laurel Preserve with each having 

made a "capital contribution" of $750, the Laurel Preserve 2007 federal income tax retum 

identifies Scoop Capital as owner of 100% of Laurel Preserve. 

Laurel Mountain Preserve Homeowners Association, Inc. (the "HOA"), is a North 

Carolina non-profit corporation formed in March 2006. Its principal address was the 

Fairview, North Carolina home, and its registered agent was Nadel. 

Documentation reviewed and information obtained by the Receiver showed that 

Laurel Preserve holds title to approximately 420 acres near Asheville, North Carolina in 

Buncombe and McDowell counties, intended for development of home-sites (the "Laurel 

24 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 25 of 41 

Mountain Property"). The Laurel Mountain Property was originally purchased by Laurel 

Mountain in 2003 and then "sold" to Laurel Preserve in February 2006. Laurel Mountain 

provided financing for that purchase in the form of a $2,900,000 loan to Laurel Preserve. 

According to documentation retrieved from the Office, Laurel Mountain and Laurel 

Preserve received significant funding in the form of "loans" from Scoop Capital, Scoop 

Management, Tradewind, Nadel and Mrs. Nadel and BB&T Bank. On February 11, 2009, 

the Court expanded the Receivership to include Laurel Mountain, Laurel Preserve, and the 

HOA. Since the Receiver's appointment as Receiver of these entities, he has taken control of 

them and is working on marketing for sale the Laurel Mountain Property. This property 

currently does not generate any income. 

The Laurel Mountain Property encompasses 29 lots, including 23 estate-sized and 6 

cottage-sized lots. There is also a cabin on this property that, according to the Buncombe 

County Property Appraiser, is valued at $319,800. The Laurel Mountain Property is fully 

developed: infrastructure and utilities are currently in place and are fully functional. 

The Laurel Mountain Property has three known encumbrances. The first 

encumbrance is a $360,157.37 loan from BB&T Bank. The second encumbrance is a 

$1,900,000 interest only loan from Wachovia Bank, N.A. There is a monthly payment of 

$5,149.66 due on this latter loan and the Receiver presently is not making payments on this 

loan. The third encumbrance is an easement of approximately 169 acres of the Laurel 

Mountain Property, which was granted to a land conservancy in 2005. It appears that this 

donation was made in part for the Nadels' own tax benefit. The Receiver is contemplating 

25 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 26 of 41 

whether it would be in the best interests of the Receivership to seek to recover this easement 

from the conservancy as it may create an exponential increase in the value of the full acreage. 

The Receiver has consulted with a realtor who previously listed the property and is 

entertaining offers to purchase or proposals to market this developed property either by lot or 

in its entirety. The Receiver is still evaluating the current value of this property, but it 

appears that the value is higher than the amount of the encumbrances. For more information 

regarding this property, please refer to http://www.laurelmountainpreserve.com/. Parties 

interested in marketing or purchasing this property should contact the Receiver directly. 

4. Marguerite J. Nadel Revocable Trust UAD 8/2/2007. 

The Marguerite J. Nadel Revocable Trust Under Agreement Dated 8/2/2007 (the 

"Trust") was created on August 2, 2007. The trustee is identified as Mrs. Nadel. The 

Receiver's investigation revealed that the Trust was fianded entirely with proceeds of Nadel's 

scheme through (1) a transfer of $500,000 from Scoop Management in August 2007 and (2) a 

transfer of $150,000 from Scoop Capital on the day before Nadel fled. It also revealed that 

Nadel controlled the account in which the money held by the Trust purchased and sold 

securities. Significantly, as alleged in the criminal complaint against Nadel, in an apparent 

note Nadel left for his wife before fleeing, he instructed her to "use the trust (yours) to your 

benefit as much and as soon as possible." United States v. Nadel, Case No. 09 MAG 169 

(S.D.N.Y.), Compl. ^ 17, attached as Exhibit 14 to the Receiver's Declaration in Support of 

Second Unopposed Motion to Expand receivership (Doc. 37-15). 

26 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 27 of 41 

Since the Receiver's appointment as Receiver of this Trust, he has taken control of 

the bank account owned by the Trust. Currently, there is approximately $381,142.34 

remaining in this account. 

5. Guy-Nadel Foundation, Inc. 

The Guy-Nadel Foundation, Inc. (the "Foundation"), is a Florida non-profit 

corporation formed in December 2003 for "charitable, educational and scientific purposes." 

Nadel was the Foundation's incorporator and its registered agent. Further, according to its 

2006 federal tax retum, the Foundation's President is Nadel. The Foundation's current 

principal address is the Office. 

The Receiver has gathered information that indicates the Foundation was funded with 

proceeds of Nadel's scheme, which were transferred directly from Scoop Capital or 

indirectly through transfers from the Nadels' personal accounts. In addition, in December 

2003 and December 2004, the Foundation was deeded approximately 22 lots located in North 

Carolina from Laurel Mountain and Nadel and his wife. These lots are essentially adjacent to 

each other. The lots appear to have been purchased by Laurel Mountain and the Nadels as 

part of the same general transaction in which Laurel Mountain purchased the Laurel 

Mountain Property. At the time of those transactions, Nadel was already perpetrating his 

scheme, and essentially all of the Nadels' income was derived from that scheme. 

Additionally, the Receiver has possession and control of two small parcels of 

unimproved land in Thomasville, Georgia (this land is separate from the Thomasville 

Property discussed in section V.D. La, below) owned by the Foundation. According to the 

Thomas County Tax Assessor's Office, one of the parcels is approximately 1.17 acres with a 

27 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 28 of 41 

land value of $30,762 and a free-standing garage with a value of $3,928. The other parcel is 

.12 acres with a land value of $4,276. 

On March 9, 2009, the Court expanded the Receivership to include the Foundation. 

Since the Receiver's appointment as Receiver of the Foundation, he has taken control of it 

and is working on marketing the real property owned by the Foundation. 

6. Lime Avenue Enterprises, LLC, and A Victorian Garden Florist, 

LLC. 

Lime Avenue Enterprises, LLC ("Lime") is a Florida limited liability company 

formed in August 2006 for "any and all lawful business." Lime owns a building located at 

599 North Lime Avenue, Sarasota, Florida 34237 (the "Lime Building"). Lime purchased 

the Lime Building in August 2006. Public records and other information reviewed by the 

Receiver indicate that Lime was formed by the Nadels for the specific purpose of purchasing 

the Lime Building. The Lime Building houses a flower shop, which is owned by A Victorian 

Garden Florist, LLC ("Victorian Garden"), a Florida limited liability company formed in 

April 2005. The Receiver's investigation revealed that Lime and Victorian Garden were 

funded with proceeds from Nadel's scheme. 

On March 17, 2009, the Court expanded the Receivership to include Lime and 

Victorian Garden. Since the Receiver's appointment as Receiver of these entities, he has 

taken control of them and is working on reviewing their books and records and determining 

the most prudent course of action to take. In that regard, the Receiver is evaluating whether 

the flower shop's operations are profitable and whether it is in the best interest of the 

Receivership estate to maintain ownership of this business. 

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The Receiver has possession and control of the Lime Building. The Lime Building 

has one known encumbrance: a mortgage owed to the individuals who sold the building to 

Lime on which the balance is approximately $600,000. The Receiver is presently attempting 

to determine the value of this property. The Receiver also has possession and control of two 

vans owned by Lime; a 1999 Ford van and a 2003 Dodge van. The Receiver does not have 

any estimation of value of these vans at this time. There are no known encumbrances on 

these vans. 

7. Home Front Homes, LLC. 

Home Front Homes, LLC ("Home Front Homes") is a Florida limited-liability 

company that was formed in 2006 for the purpose of "any and all lawful business." The 

Receiver has not sought a formal order expanding the Receivership to include Home Front 

Homes. However, as of April 15, 2008, Nadel was the sole managing member of Home 

Front Homes, and Scoop Capital owns a majority equity interest in Home Front Homes. By 

virtue of this controlling interest, the Receiver has assumed control over Home Front Homes 

and is directing the operation of that company for the benefit of the Receivership estate.' 

' On behalf of Home Front Homes, the Receiver initiated a lawsuit against Brian C. Bishop, 

a former employee who also had an ownership interest in Home Front Homes. Home Front 

Homes sued Mr. Bishop for breach of non-compete covenants in his employment agreement 

and of a purchase agreement (wherein Home Front Homes purchased the assets, goodwill, 

and customers of Mr. Bishop's company. Home Front, Inc.), as well as breach of a 

promissory note and tortious interference with a business relationship. Since ending his 

employment with Home Front Homes, Mr. Bishop had started a competing business in direct 

violation of his non-compete agreement and had solicited Home Front Homes customers. 

The Receiver, through Home Front Homes, instituted this litigation to preserve the value of 

Home Front Homes for the Receivership estate. 

(footnote cont'd) 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 30 of 41 

Home Front Homes is engaged in the business of manufacturing, marketing, and 

selling energy-efficient homes. Home Front Homes is an operating business. The Receiver 

intends to sell Scoop Capital's equity interest in this entity in a manner which would be most 

beneficial to the Receivership estate. To date, the Receiver has not sought to bring this 

business as a whole into the Receivership and likely will not do so absent a necessity to 

protect the operation from creditors while the business or the Receiver's interest therein is 

being sold. The Receiver is currently negotiating the sale of the receivership's interest in this 

business. If a transaction is confirmed, the Receiver will apply to the Court for approval of 

the sale of the Receiver's interest. Parties interested in marketing or purchasing this business 

should contact the Receiver directly. 

8. Summer Place Development Corporation. 

Summer Place Development Corporation ("Summer Place") is a Florida company 

that was formed in 2005 for the purpose of "any and all lawful business." The Receiver has 

not sought a formal order expanding the Receivership to include Summer Place. However, 

as of January 20, 2007, Nadel was a managing member of Summer Place, and Scoop Capital 

owns a fifty-percent interest in Summer Place. By virtue of this fifty-percent interest, the 

Receiver has not assumed full control over Summer Place, but is working with the other 

managing member and fifty-percent owner in directing the operation of Summer Place for 

the benefit of the Receivership estate. 

This matter has been settled and the litigation is no longer pending. Mr. Bishop was asked to 

comply with the restrictive covenants, and the company forgave certain purported debt owed 

from Mr. Bishop to Home Front Homes, which debt appeared uncollectible. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 31 of 41 

Summer Place is the owner of a proposed affordable residential housing development 

site in Manatee County, Florida. Summer Place is an operating business. The Receiver 

intends to sell Scoop Capital's equity interest in this entity in a manner which would be most 

beneficial to the Receivership estate. Parties interested in marketing or purchasing this 

business should contact the Receiver directly. 

C. Securing Receivership Funds. 

Upon his appointment, the Receiver was initially concerned that the Receivership 

Entities might hold positions in volatile securities that would require an exit strategy to avoid 

or minimize losses. The Receiver immediately investigated the nature of the Receivership's 

holdings and determined that no such exit strategies were required because almost all of the 

relatively liquid holdings were in cash or cash equivalents.' 

The Receiver coordinated with the SEC to move swiftly to freeze all funds of which 

they were aware. The Receiver and his attorneys engaged in a preliminary review of 

documents and other information for the purpose of identifying institutions that potentially 

held relevant financial accounts or lines of credit. The Receiver immediately forwarded 

copies of the asset freeze orders to the pertinent institutions and confirmed that they 

understood their obligations under the freeze orders. 

Receivership funds are currently being held in six different institutions: (1) Northem 

Trust Bank, N.A.; (2) Wachovia Bank, N.A.; (3) Shoreline Trading Group, LLC; (4) Branch 

Banking and Trust Company ("BB&T"); (5) Bank of Coweta; and (6) Thomasville National 

Bank. VJC also maintains an insignificant amount of funds in a small operating account with 

'" See Section V.D.2.b. infra for a discussion of the Receivership estate's securities holdings. 

31 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 32 of 41 

Bank of America. Attached as Exhibit A to this Interim Report is a cash accounting report 

showing the amount of money on hand at inception of the Receivership (January 21, 2009) 

less operating expenses plus revenue through April 30, 2009. This cash accounting report 

does not reflect non-cash or non-cash equivalent assets. Thus, the value of all property 

discussed in Section V.B. above and Section V.D. below is not included in this report. All 

Receivership funds are currently being held in non-interest bearing accounts. The Receiver 

is contemplating the most appropriate action to take with respect to these funds in light of the 

current state of the economy and financial institutions. He will likely consolidate the funds 

into one to three institutions and will explore the relative benefits and risks of moving the 

funds into interest-bearing accounts and/or revenue-generating investments. 

D. Other Assets Recovered. 

In addition to the assets discussed in conjunction with the expansion of the 

Receivership in section V.B. above, the Receiver has also recovered a number of other assets, 

most of which are in the process of being valued, assessed, and otherwise analyzed for 

liquidation, disposition, or other action. Again, given the state of the U.S. economy at the 

time of submission of this Report, the Receiver emphasizes that any estimates, appraisals, or 

valuations are subject to change because of market forces. In particular, due to the poor state 

of the real estate markets, the estimates provided in section V.D.I below may be significantly 

different from the amounts realized upon selling such real property. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 33 of 41 

1. Real Property. 

a. Thomasville, Georgia. 

The Receiver has possession and control of approximately 14 acres in Thomasville, 

Georgia (the "Thomasville Property"). The Thomasville Property encompasses 45 lots, 44 of 

which are vacant. A home on one of the Thomasville Property lots was built by Home Front 

Homes. After its purchase, approximately $750,000 of infrastructure was added to the 

Thomasville Property. The Thomasville Property is fully developed: infrastructure and 

utilities are currently in place and are fully functional. First Realty & Appraisal Services, 

Inc., prepared appraisal reports of two lots on the Thomasville Property. As of February 5, 

2009, the lot with the home on it was valued at $123,500. Also as of February 5, 2009, a 

vacant lot on the Thomasville Property was valued at $14,000. 

The Thomasville Property has two known encumbrances. The first encumbrance is a 

$600,000 loan, on which a $571,816 balance is due. All interest has been paid for the year 

2008, and no interest is due until December 2009. The second encumbrance is a loan for 

$141,366 for the construction of the house. Both of these loans mature in December 2009. 

The Thomasville Property currently is not generating any income. 

The Thomasville Property is ready for sale with 45 lots having all utilities, roads, and 

other improvements. RE/MAX of Thomasville had previously listed the property on its 

website. The Receiver is presently determining the appropriate method and agents to use to 

market this property. Parties interested in marketing or purchasing this property should 

contact the Receiver directly. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 34 of 41 

b. Grady County, Georgia. 

The Receiver very recently was made aware of approximately 37.5 acres owned by 

Scoop Capital in Grady County, Georgia (the "Grady Property"). According to Grady 

County public records, the land value of the Grady Property in 2008 was $151,125. The 

Receiver is currently determining the best course of action to take regarding this land. 

Parties interested in marketing or purchasing this property should contact the Receiver 

directly. 

c. Graham, North Carolina." 

The Receiver has possession and control of a building located at 841 South Main 

Street, Graham, North Carolina 27253 (the "Rite-Aid Building"). This building was 

purchased for $2,655,000 and is currently being leased to a Rite-Aid Pharmacy for 

$33,073.08 per month under an absolute net lease.'^ The Rite-Aid Building has one known 

encumbrance: a loan with Wachovia Bank on which there is a remaining balance of 

approximately $2,655,000. Parties interested in marketing or purchasing this property should 

contact the Receiver directly. 

" The properties described in this subsection and the following subsections d, e, and f appear 

to have been purchased through Scoop Real Estate Fund. However, in light of the 

commingling of assets among all Receivership Entities, these properties appear to be 

appropriately attributed as general assets of the Receivership estate. 

'^ Under an "absolute net lease," a tenant is required to pay all operating expenses of the 

property, and the landlord receives a net rent. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 35 of 41 

d. Raleigh, North Carolina. 

The Receiver has possession and control of a building located at 4905 Waters Edge, 

Raleigh, North Carolina 27060 (the "EDS Building"). This building was purchased for 

$1,900,000 and is currently being leased to Electronic Data Systems ("EDS"), a technology 

services provider, for $29,688.54 per month under a double net lease.'^ The EDS Building 

has no known encumbrances. Parties interested in marketing or purchasing this property 

should contact the Receiver directly. 

e. Tupelo, Mississippi. 

The Receiver has possession and control of a building located at 2433 West Main 

Street, Tupelo, Mississippi 38801 (the "Starbucks Building"). This building was purchased 

for $941,000 and is currently being leased to Starbucks (Store #8809) for $5,745.83 per 

month under an absolute net lease. The Starbucks Building has no known encumbrances. 

Parties interested in marketing or purchasing this property should contact the Receiver 

directly. 

f. Newnan, Georgia. 

The Receiver has possession and control of a gas station located at 5 McCollum 

Station, Newnan, Georgia 30265 (the "Gas Station"). This gas station was purchased for 

$2,450,000 and is currently being leased to a Shell Gas franchisee for $10,800 per month. 

The Gas Station has no known encumbrances. Parties interested in marketing or purchasing 

this property should contact the Receiver directly. 

''' Under a "double net lease," the tenant pays all taxes and insurance expenses that arise from 

the use of the property. The tenant pays rent, and the landlord pays maintenance expenses. 

35 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 36 of 41 

g. Fairview, North Carolina. 

On March 30, 2009, the Court granted the Receiver's motion (Doc. 98) for possession 

of property located in Fairview, North Carolina (the "Fairview Property"). (Doc. 100.) On 

June 14, 2004, Nadel and his wife purchased the Fairview Property for $335,000.00. The 

Fairview Property was a secondary residence of the Nadels that is located in the mountains of 

North Carolina near the large property owned by Laurel Preserve, LLC (see Section V.B.3, 

above). The Fairview Property has one known encumbrance: a loan with BB&T Bank on 

which there is a remaining balance of approximately $248,560.62 Parties interested in 

marketing or purchasing this property should contact the Receiver directly. 

2. Vehicles and Other Items, 

a. Vehicles. 

The Receiver assumed control of three vehicles: (1) 2008 Mercedes-Benz E63 

("Mercedes"); (2) 2009 Volkswagen EOS ("Volkswagen"); and (3) Maserati Grand Turismo 

("Maserati"). These vehicles were used by Neil and Christopher Moody. The Mercedes and 

Volkswagen were leased by Valhalla Management. Because there was no value to these 

vehicles and only the continuing obligation of lease payments, the Receiver surrendered them 

to the leasing company without penalty and without the lessor retaining any claim to 

Receivership assets. The Maserati was leased by Viking Management. As with the 

Mercedes and Volkswagen, because there was no value to this vehicle and only the 

continuing obligation of lease payments, the Receiver surrendered the Maserati to the leasing 

company without penalty and without the lessor retaining any claim to Receivership assets. 

36 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 37 of 41 

b. Other Items. 

The Receiver has also recovered a myriad of other items that he may be able to sell, 

including a variety of fumiture, fixtures, computers, and miscellaneous supplies. The 

Receiver will take reasonable efforts to maximize the amount he is able to recover from the 

possible sale of all of these items. 

The Receivership Entities also have a certificate of deposit ("CD") and a promissory 

note. Northern Tmst Bank issued the CD for approximately $1.5 million. There is also a 

loan with Northern Trust for $1.5 million with a maturity date of December 1, 2011. The 

Receiver is still reviewing the nature of this loan and its relationship to the CD. The 

promissory note is from Quest Energy Management and two individuals to Valhalla 

Investment Partners in the amount of $1,100,000. Interest is being paid on this note. 

The Receiver also has two promissory notes that were executed by Valhalla 

Investment Partners, L.P., and Bonds.com, Inc. ("Bonds.com"). One of the notes is for 

$400,000.00 with 9% interest secured by the domain name www.bonds.com. Bonds.com 

paid all of the interest due on this note, and the parties amended and revised the note in the 

best interest of the Receivership. The $400,000.00 note is due on October 31, 2009, per a 

six-month extension granted by the Receiver. The other note is for $203,800.00; is due to 

mature on September 22, 2010; and is still owing and outstanding. The $203,800 note is a 

convertible note that can be converted into equity fo the company at the Receiver's option. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 38 of 41 

E. Litigation. 

1. False Profits Obtained by Some Investors. 

As discussed above in Section IV.B.4, the Receiver has determined that some 

purported investor accounts received monies in an amount that exceeded their investments. 

The Receiver intends to seek to recover these fictitious profits and redistribute the funds 

more equitably among investors holding legitimate and allowed claims. The Receiver has 

continued to move toward initiating these "clawback" lawsuits by filing a Motion to 

Reappoint Receiver (Doc. 139). That motion was granted on June 3, 2009 

2. Moodys. 

From the Receiver's investigation to date, it appears that a significant portion of 

activities of certain Hedge Funds were managed and directed by Christopher and Neil 

Moody. The Receiver believes that the Moodys had fiduciary responsibility with respect to 

the management of these Hedge Funds. From the documentation reviewed to date, the 

Moodys have received millions of dollars as a result of their efforts and participation in 

Nadel's activities. The Receiver is preparing to institute appropriate legal action against the 

Moodys to recover this money and assets that were acquired with this money. 

3. Recipients of Commissions. 

Information available to the Receiver reveals that several individuals received 

commissions in connection with distribution of investments by the Receivership Entities. 

The Receiver is considering instituting litigation to seek the recovery of all such sums. 

4. Other Litigation. 

The Receiver previously has been contacted by the law firm of Johnson, Pope, Bokor, 

Ruppel & Bums, LLP ("Johnson Pope") regarding the institution of a class action against 

38 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 39 of 41 

Holland & Knight, the law firm that prepared the private placement memoranda used to 

solicit investors into the Nadel scheme. On March 20, 2009, Johnson Pope on behalf of 

Michael Sullivan and others similarly situated, instituted a class action suit against Holland & 

Knight, Michael Sullivan v. Holland & Knight LLP, Case No. 09-cv-0531-EAJ (M.D. Fla.). 

Should Johnson Pope be successful in this litigation it is likely that the claims process created 

for the Receivership estate for distributions to investors with legitimate and allowed claims 

will be used to distribute any proceeds. 

The Receiver continues to examine the actions of other professionals and businesses 

that provided services to Receivership Entities to determine whether he needs to take 

additional steps with respect to any of those professionals and businesses to recover assets for 

the receivership. 

F. Investigating Receivership Affairs, and Recovering Receivership Funds. 

The Receiver has retained the services of PDR Certified Public Accountants ("PDR"), 

forensic accountants, to assist in investigating and analyzing the flow of funds both in and 

out of the Receivership Entities, and to assist in locating additional funds, if any. The 

Receiver has also retained the services of Riverside Financial Group ("Riverside"), financial 

analysts to assist in investigating and analyzing all of the trading activity. In conjunction 

with the Receiver, PDR and Riverside are further attempting to identify additional 

individuals and/or entities who may be in possession of Receivership funds. PDR will also 

assist in determining the amount of each investor's loss. 

39 
Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 40 of 41 

VI. The Next Sixty Davs 

The Receiver has received only a portion of the documents he has subpoenaed from 

third parties. It will be necessary to obtain and review all such documents in order to 

complete an understanding of the flow of funds through the Receivership Entities, to identify 

any additional sources of recovery, and to prepare an accounting. The Receiver is working 

diligently on this task, but without knowing the volume of documents he expects to receive, 

it is difficult to estimate the time needed for completion. 

During this process, the Receiver is also compiling and analyzing individual investor 

accounts. This is a necessary task to assess and administer investor claims. The Receiver 

will likely ask all investors to send him copies of all documentation related to their 

investments in the Hedge Funds. He will review and analyze all documents relating to each 

investment to determine the amounts owed, if any, to each investor. The Receiver does not 

expect to commence the claims process until late 2009 or early 2010. The Receiver will 

provide a more definitive time estimate as his analysis progresses. 

The Receiver is also reviewing information to determine if any third parties may have 

liability either to the Receivership estate or investors. In this regard it should be anticipated 

that the Receiver will bring actions in the future. 

The Receiver will continue to attempt to locate additional funds and other assets and, 

if appropriate, will institute proceedings to recover assets on behalf of the Receivership 

Entities. In an effort to more fully understand the conduct at issue and in an attempt to locate 

more assets, the Receiver will continue to conduct interviews and/or depositions of parties 

and third parties with knowledge. 

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Case 8:09-cv-00087-RAL-TBM Document 141 Filed 06/09/2009 Page 41 of 41 

The Receiver will also continue the operations of all ongoing businesses of the 

Receivership Entities to maintain and, if possible, enhance their value. The Receiver will 

continue to market properties for sale and entertain offers for purchase. 

VII. Conclusion. 

Creditors and investors in the Receivership Entities are encouraged to periodically 

check the informational website (http://www.nadelreceivership.com/) for current information 

conceming this Receivership. The Receiver and his counsel have received an enormous 

amount of emails and telephone inquiries and have had to expend significant resources to 

address them. To minimize those expenses, creditors and investors are strongly encouraged 

to consult the Receiver's website before contacting the Receiver or his counsel. However, 

the Receiver continues to encourage individuals or attomeys representing investors who may 

have information that may be helpful in securing further assets for the Receivership estate or 

identifying other potential parties who may have liability to either the Receivership estate or 

investors directly to either email ksalo@fowlerwhite.com, or call Kathy Salo at 813-228-

7411. 

Dated this 9th day of June, 2009. 

Respectfully submitted. 

s/ Burton W. Wiand 

Burton W. Wiand, Receiver 

FOWLER WHITE BOGGS P.A. 

501 E. Kennedy Blvd., Suite 1700 

Tampa, Florida 33602 

Phone: 813-228-7411 

Fax:813-229-8313 

40693714v3 

41 
Case 8:09-cv-00087-RAL-TBM Document 141-2 Filed 06/09/2009 Page 1 of 2 

standardized Fund Accounting Report 

for Consolidated Nadel Entities - Cash Basis 

Receivership; Civil Court Docket No. 8:09-cv-87-T-26TBM 

Reporting Period 03/01/09 to 04/30/09 

Fund Accounting (See Instructions): 

•Line 1 

Line 2 

Lines 

Line 4 

Lines 

Line 6 

Line 7 

Lines 

'•«^< 

Line 9 

Line 10 

Line 10a 

Line 10b 

Line 10c 

Line 10d 

Line lOe 

Line lOf 

Line 10g 

Line 11 

Line 11a 

Beginning Balance (As of 03/01/09): 

Increases in Fund Balance: 

Business Income 

Cash and Securities 

Interest/Dividend Income 

Business Asset Liquidation 

Personal Asset Liquidation 

Third-Party Litigation Income 

Miscellaneous - Other 

Decreases in Fund Balance: 

Disbursements to Investors 

Disbursements for Receivership in Operations 

Disbursements to Receiver or Other Professionals 

Business Asset Expenses 

Personal Asset Expenses 

Investment Expenses 

Third-Party Litigation Expenses 

1. Attomey Fees 

2. Litigation Expenses 

Total Third-Party Litigation Expenses 

Tax Administrator Fees and Bonds 

Federal and State Tax Payments 

Total Disbursements for Receivership Operations 

Disbursements for Distribution Expenses Paid by 

the Fund: 

Distribution Plan Development Expenses: 

1. Fees: 

Fund Administrator 

Independent Distribution Consultant (IDC) 

Distribution Agent 

Consultants 

Legal Advisors 

Tax Advisors 

2. Administrative Expenses 

3. Miscellaneous 

Total Plan Development Expenses 

Detail Subtotal Grand Total 

579,205.43 

139,101.80 

18,056.53 

5,100.00 

9,817.36 

2,582.18 

I 1,299,779.30 

485,112.45 

11,098.99 •fi 

$496,211.44 ij. $496,211.44 

•f.;' 

JL 

'Line 1 Doesnt include $1.5m Scoop Capital CD/will be paying $1.5m loan 
Case 8:09-cv-00087-RAL-TBM Document 141-2 Filed 06/09/2009 Page 2 of 2 

Standardized Fund Accounting Report 

for Consolidated Nadel Entities - Cash Basis 

Receivership; Civil Court Docket No. 8:09-cv-87-T-26TBM 

Reporting Period 03/01/09 to 04/30/09 

Fund Accounting (See Instructions): 

Line 1 lb 

Line 12 

Line 12a 

Line 12b 

Line 13 

Line 14 

Line 14a 

Line 14b 

Line 14c 

Distribution Plan Implementation Expenses: 

1. Fees: 

Fund Administrator 

IDC 

Distribution Agent 

Consultants 

Legal Advisors 

Tax Advisors 

2. Administrative Expenses 

3. Investor Identification: 

Notice/Publishing Approved Plan 

Claimant Identification 

Claims Processing 

Web Site Maintenance/Call Center 

4. Fund Administrator Bond 

5. Miscellaneous 

6. Federal Account for Investor Restitution 

(FAIR) Reporting Expenses 

Total Plan Implementation Expenses 

Total Disbursements for Distribution Expenses 

Paid by the Fund 

Disbursements to Court/Other: 

Investment Expenses/Court Registry Investment 

System (ORIS) Fees 

Federal Tax Payments 

Total Disbursements to Court/Other: 

Ending Balance (As of 04/30/09) 

Ending Balance of Fund - Net Assets: 

Cash <S Cash Equivalents 

Investments 

Other Assets or Uncleared Funds 

Total Ending Balance of Fund - Net Assets 

Detail Subtotal 'fii Grand Total 

m 

1 

'€, 

J|-

>l 

1,557,431.16 

1,557,431.16 

1,557,431.16 

& 1,557,431.16 

=» -—' J . 
City Exhibit 4 

Q 

Fffdaroi AvtalkiM 

Adu'ii'MliubCKi 

JUL . 1 2009 

ITlf UoiWiahle \lt'\ \iann\c,' 

L'niied ."JlatitF SsiWOM 

5 • 5 Juiis-I Ktibiraon Utr^:-! 

l^rtAniiuk CcrMr <'it ir 

Ori*?>4n, H 32HQI 

r>car ScnAf<'» Miimne/: 

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»!»wii UiL- ei.nu(isl-.mcv !•• ^Evll^.^l .'i'. -.iiUt-.v Aitti-.im^ir.vTi ni (JcitTmnuiion^ si' V ;-i, .. 

Mtiiacipa! AJrpsn Nii Raflen;. ;(ij4CTi.ir«i iho aODnr./ ot'oiiT Olla.yo Airport.-, T.'iun.'f 

Orfi « <.MK» and askini 'onitoiic lu k>ot. imo the tr *t>!;i \\..j huj\a -fAmirifd ihis'. ariioTM 

and provide 'He wltt!v\ ing rcapnnfa'Ji 

The aenirw«Qcal iiudv ihal Mr R^l'fcnv Kfcrrod to W M assiH.;aie*l w^ilii a jwopajisl 70 chiii«,'t 

iJjc aEhtrafI lltghl patloni f«« Riui^^av 411 . The iiKl Uic propaiteo ilighs pitHciij Llio-'igc wa^ 

nol canwswni; will' liic Airport IjtyriiK Plaii ^ALPt wot nol the pfiiiiary reaaiffl I -V\ i>hjc*U:rl 

10 ttie pHiposaL Van<Ki« f\.^ olfiies revne««Mf Ihe pnipoaai ami coinmemcd I?*4ti3 iin 

r-AA'i !ilan<t*rds nod aL-ceplahrr ^ffi y 5(,'vch The r.\, \ d«tcnti3i;-i^J sht' prnposal wodil 

•:rft«c (WtciHiaJfy cootln tiilg; uitd cuol'uiritig traffic pattiittis. We would ri<it i<it.«iirani:nd ehoF 

trafEic puttem wdwi n m opiantinft air trailTK' conJml «y*cr at the j^rpon. Becfliwd oi 3h«esc 

fiafety isMjc*. FA.^ is ni>! *>I1UHT UJ app«jv« ihe prrvpijxxl cJianfe r«^ ihe omiurl's Al-F 

Kir Riffety i'lles a sccnr*! f A.A ifctision ubaisi ihe (lujioiii's ALP snii .i prwow J in SuiJt'. 

fiirurail KJiwjisc haii|fdJi ijn clie uiipjsn Mr Rjilffert> igj^n aMfftSi ^ AA is bcmg ii^Cv^iSisteit 

in ilK decisw*! nuAmg The h A A tw» alrtsudy mtdFcsscd dus laaiK by Ictlcf 10 .Mr RaffHty 

JatwJ -Apnl 16 The AD O IIKJ proiou^t y sfh^ised ibc city th#i it raay apjirovi! a pni{)o$»J fwt 

hangar ii«cks^Jiliciil in iltc anm. HttTflCfU' Idbctod w "TerniinAJ An:a" anil "Fisiuirf .VttiMii" isci 

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s^onst-ir 11 is aJsti up lo Uic city '.a «lc«(tc wiietha ibt propotuKit wjshiiJ^j! SJJ ti^iilii the st^umjitc 

^ita\^ i btt!» lliL' rnMMiciuS ithilhy to coiiatmct the hnni^tfri 

III jiddiiian. M r RufTery KUikes s^vBrai odhsT occw&Kioni^ ik^Mrribcd in his *twd& to, "recent 

wiJurcs." ^^•^v folkvwiitg pangraphc flddresfr tliose xctiiuiiioiis 

Mr Rairerty sluted oiic iixuzil F.'VA tiriiiirc invotvcd afi^Koval a f vtidc3l3r^ ^i l slrws 

Runway 13'3l vnAom prwpusr mvyottiQCulaJ at^iravjEi, RuR^ay 13.'ll I was OIK widH 

WJS5 It OTvttjjIhfficd. Runway I:S"!51 w«( Tchab'tUlatod to restore it tio its(Kcvjoia airiu:mit|7<,,, ^ ^ - - .-, 

cMKfiticm Thf FAA cxafliincd Uiii p04i!n>iul envimrmoeit^af impobckt asEmcut^sd *i?K liit ' •' ' ' 34J 

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thas liie m\ liavc ;i.w{jTi''fii;.j,t« ailvcrsc effect on lU' hucnon -snviAjnimfiK and ruxtia^ r.ri 

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«rpon Die K^A rt-views Ihc^c kiri^tast* far rcwtfoahkivcia ani5 ci>7isist«Kc v, i:!. ^ A.A •. 

naUi.TuI tcircCiMi: IViaJ opcmwr.s Hoih . jdidmui asiiJ ukfjiff. nic cyrrtrct r.urv.>'rr^ !•• 

consiiier in ajrpuit pjanninji. ivhv'l.i^ i' n fnr sbii". ^iv-jjiuni, or Irjuig-tcnii J^:* •jk'pTijnit 

Mr. Rji.ffcfi> i'uj'Jbcr suiigcMcd } AA'» il«i!inaljivi ^(f lei .tirpwn Tefcretwe dxic r.-kitf; cTsuscd 

M b-iuiLi ID be m the Riunia) f'niiojiMn Zortc iRJ'Zl ^viihiHH fnvitistinwnul rv^lff^ F.AA 

dn« n.v Btf54U,i an ARC' fpr i>ti; .i!qH.»r1 The ARC a CikMUi&i during mxSfCf piamtiisii. buaad 

Off IbN^ number c>ri:q)cralioA» and iypcfi of «ir«nAuitu%lfaeajr]»n, tndctlnungan KP7. i: is 

».it icitiifmiviti !.,> lien! halt's IIK ,^!i'l• v. Mliiji ibi Rf'/. Slxiuld ;iii aiip^irt 5pnn<i,:i •1t'i:rl'. i.. 

Isiy tunJ luuicne hnmrs iStUiiii ir.i xl'i'",. T1;I? poicnual eri'«initnT5CR:.i': invtuir*: <"t iuch .-_•-; 

miik-rtafcjiig rrviisn ?c aitaJy^c-d 

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ramplointii iiuvf bwHi rec^ivtd aliuui ihe as?: fifnirpon p«ipcri> il Venice Fkirwiu. A« a 

jtuuJL FAA cfliKJycicii a land uss: iiiidti at Vciticc Municipn! AirpL-si za May 2iMW Wf an. 

re>ifvi([||< iJit tnf«rni*»»r-ii uhiaEiiciJ Irmr. iJic aaiiSit itid tspect in i-smu; i t\m, icport in 

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r.f airpoft n-vviMif. wnth respii;; t;> iiwiacroiuiutical OCtivHjte. waKisisteol *.'Ui Mx cir«''.s 

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07/21/2009 17:35 FAX FOWLER WHITE BOGGp 

FOWLER 

Q002/003 

City Exhibit 5 

Atc«*ni4.'>-\ M LA I 

; WHITE BOGGS 

Budon W. Wiand 

811-212-2029 (Tampa) 

954.703.3928 (Fi. Laudeniale) 

Direcl lax: 813-384-2848 

bwiancKff^rowJcnvhilc.com 

July 21, 2009 

Via Facsimile 

Robert C. Anderson 

City Attomey 

Mall & Anderson, P.A. 

.'314 East Venice Avenue Suite E 

Venice, Florida 34285 

rax: (941)480-1446 

Isaac Turner 

Manager, City of Venice 

401 West Venice Avenue 

Venice, FL 34285 

Fax: 941.480.3031 

Re: SEC v. Arthur Nadel, et al. 

M.D. Florida Case No. 8:09-cv-87-T-26TBM 

Gentlemen: 

I have received reports and have now read a news article that at the most recent meeting 

of the City Council, a proposal was suggested that the City Council would reach an agreement 

with mc that I would sell the Venice Jet Center to the City at a price detennined from the highest 

bidder in the marketing efforts that are now on-going to sell the Venice Jet Center. The purpose 

of my letter is to advise you that such an occurrence will be unlikely. 

I have as I have explained to you for a period of many weeks, been pursuing an on-going 

effort to find a qualified buyer for the Venice Jet Center. I have had significant interest from a 

number of different individuals and entities and am confident that within the near future, specific 

proposals from a number of sources will be forthcoming. Once I have completed my 

negotiations with these individuals or companies, 1 will enter into an agreement with the one that 

FOWLER WHITE BOC;<;S P.A. 

T ,\ \\f.\ • f i> R T M V t K >. • T .=. 1.1 .\ n .\ s \ f f • I .k c k s o >; V 11.1. f • F n K i L A i.^ Ii v R n A L f. 

501 EA.ST Kt.vNknv Bm.. . Si.irt 1700 • TAMI'.A. HI.ORIH.X .1.?602 . P.O. lK>.x l-i.l8 • TAM-'A. FL .'.>f'01 

Tni.rHO.N/1. iSl.l' 22S-^411 • FA.\ (813) 229-«3l.' • M ww.fcuvltrwhiic.ciim 
FOWLER WHITE BOGGp ©003/00 3 07/21/2009 17:35 F.KX 

Robert C. Anderson 

Isaac Turner 

July 21,2009 

Page 2 

1 believe is most advantageous for my Receivership. At that time I will proceed to propose 

approval of that transaction by Judge Lazana. 

Any agreement that I might make with the City to sell this property based upon a price 

resulting from these marketing efforts would clearly undermine the marketing efforts as no 

reasonable business person or entity would undertake the expense and effort necessary to analyze 

a potential purchase of the Jet Center with such an agreement in place. Moreover, were I to enter 

into such an agreement without disclosure to the good faith potential purchasers, conducting 

these marketing efforts would be in bad faith and is something I will not engage in. I have kept 

the City advised with respect to the on-going efforts to market this facility, have offered to allow 

the City to participate in those efforts, and have always been open to communication with City 

officials. The lack of response of the City has resulted in substantial expense to the 

Receivership, the necessity of filing a proceeding with the FAA and may result in possible 

additional legal action. 

The purpose of this letter is to make it crystal clear to you and the Council that I view as 

highly unlikely that any circumstances could arise whereby I would undemiine the on-going 

marketing efforts that I have conducted by entering into a Johimie-Come-Lately Agreement with 

the City at the end of the marketing process. Because of the City's recalcitrance to deal with this 

issue, the circumstances as they exist now would require that any offer by the City be 

significantly above offers made by others to purchase the Jet Center in order that I maintain good 

faith with those who have participated in the marketing process. The substantial expenses that 

the City has already inflicted upon the Receivership will also be part of my considerations. 

1 still am willing to discuss with any authorized representative of the City, at any time, a 

potential resolution to the dispute relating to the building of the hangars. 

Thank you very much for your consideration. 

Sincerely^urs, 

'dU_^ ^ 

BurforrW. Wiand 

Receiver 

V 

BWW/djb 

41611976 

Fovt'LER WHIT E BOGG S P.A. 

TAMI' A • FOR T .V( V f R > • T A 1.1. A H A s SE t . JAC K SO N \i i i f • FOR T L AI'II E R » A L I 
City Exhibit 6 

LAW OFFICE S 

BOONE, BOONE, BOONE. KODA & FROOK, P.A. 

p. o. BOX ise e 

VENICE. FLORIDA 342B 4 

E.G. (OAN) BOONE 

JECFER Y A . BOONE 

STEPHEN K. BOONE 

JOHN 5. KOOA 

M Af QARET (PEGGY) S. FROOK 

JAUEST . COLLINS. lANDFLAMMeB 

MOl A MEMBER Of THE FLORIDA •AR) 

ESTABLISHED 1956 

June 16,2008 

STREET ADDRESS: 

lOOl AVENIDA DEL CIRCO 342B S 

• TELEPHONE (84 0 4e»-67i e 

FAX (941) 48B-707 B 

e-mail: adni@boone-law.coni 

VIA EMAIL AND HAND DELIVERY 

Ms. Lori Stelzer, Clerk 

City of Venice, Florida 

Re: Request to be placed on the City Council Agenda for June 26,2008 

Dear Ms. Stelzer: 

Venice Jet Center desires to make one change in its letter to you dated June 13,2008. The 

application will be for constructibn of two 8,000-square-foot hangars rather than one, both 

hangars to be located on the west side of the parcel, as shown on Exhibit "A". Construction of 

necessary paving and retention does not change. 

There is a waiting list for the two hangars. Future hangar construction permits will be applied for 

if and when the need arises. 

All other parts of the June 13, 2008, letter remain unchanged. 

Very truly yours, 

E. G. Boone 

ab 

ccs: City Attomey Bob Anderson 

Mayor Ed Martin 

City Manager Martin Black 

Mr. Roger Jemigan 

Mr. Art Nadel 

(all without enclosure and 

all via email) 
City Exhibit 7 

cfo^-^On "-^ ^ OFFICES 

XV,'^ •M ^ 

BOONE, BOONE, BOONE. KODA a, FROOK, P.A. 

p. O. BOX IS9 6 

VENICE. FLORIDA 3428 4 

E.G. (DANl 600N C STREET ADDRESS: 

JEFFERY A. BOONE ESTABLISHED I9SS lOOl AVENIDA DEL CIRCO 3426 5 

STEPHEN K. BOONE 

JOHNS . KOOA TELEPHONE (941) 488-671 6 

MARGARET (PEGGY) S. FROOK FAX 04I ) 488-707 9 

,....^.,.r ^^...,. ^ «-mail: aclm@boona-law.com 

JAMES T. COLLINS. LAND PLANNER 

INOT A MEMBER OF THE FLORIDA BAR> T|l1v 1 "700 8 

VIA HAND DELIVERY 

Mayor and City Council Members 

City of Venice, Florida 

c/o Fred Watts 

Venice Airport Manager 

150 E. Airport Avenue 

Venice, Florida 34285 

Re: Venice Jet Center - Two Additional Hangars 

Dear Mayor Martin and Council Members: 

We have followed the terms outlined in the letter from City Manager Marty Black dated 

June 23, 2008 (copy enclosed for reference) and with this letter we request permission to 

proceed to building permitting. If all is in order we understand that we are to be on the 

City Coimcil Agenda for the July 22,2008 meeting. 

The permit application to be filed is to construct two 8,000 square foot hangar buildings 

along with necessary paving and retention. The two hangars will be located on the west 

side of the parcel numbered 1 and 5 on the drawing. Please see Exhibit "A" Concept 

Plan attached in twenty copies. The permit has been obtained from the Southwest Florida 

Water Management District for this project. 

We have been requested to show where all hai\gars will be located on this parcel even 

though further hangar construction permits will be applied for if and when the need 

arises. Storm water treatment is shown on the Concept Plan as is the landscape design 

buffering and mitigation techniques, also parking areas, access and circulation features 

and exterior lighting features. No additional signage is being applied for. 

The exterior northern Italian building design will be the same as is presently affixed to 

the recently constructed Venice Jet Center hangar/storage building facing Airport 

Avenue. The design will be submitted for approval before it is applied to the new hangar 

building. 
Mayor and City Cou ii Members 

City of Venice, Florida 

c/o Fred Watts 

July 1,2008 

Page 2 

Our understanding is that City Staff will conduct its technical review in time to meet the 

agenda deadline for the July 22, 2008 meeting. 

The Venice Jet Center lease is dated May 23, 2006, and has 28 years to run. There is 

vacant land within the lease for improvements to be constructed, and the lease 

specifically calls for additional improvements by lessee. Venice Jet Center would not 

have entered into the 30-year lease unless this provision was a part of the lease. 

The "Minimum Standards for the Venice Municipal Airport, Venice, Florida," provides 

for the construction of new hangars by the FBO. 

The "Minimum Standards for Fixed Base Operators, Venice Municipal Airport, Venice, 

Florida," provides for and outlines the conditions for hangars to be built on the airport by 

the fixed base operator. 

Providing hangar space is one of the essential operations of the fixed base operator, and 

there is a sizable waiting list for hangar space both at the City airport office and at our 

office. The City of Venice operates 144 T-hangars with 12 more about to be constructed. 

Under City and FAA mandates, competition is required and discrimination is not 

allowed. 

Representatives from Venice Jet Center, DMK Engineers and Surveyors and Architect 

Mark Beebe will attend the July 22, 2008 meeting to present the request to allow the 

project to proceed. 

Very truly yours. 

E. G. Boone 

EGB/laf 

Enclosures 

ccs: City Manager Martin Black 

Mr. Art Nadel 

Mr. Roger Jemigan 

Architect Mark Beebe 

DMK Engineers and Surveyors 

(all without enclosures) 

N35-12389\ltiCityofVenice070108 

BOONE. BOONE. BOONE, KODA & FROOK. P.A.. ATTORNEYS AT LAW. VENICE. FLORIDA 
Nancy Woodley - RE: Jet Center hangar concept plan 

Page 1 of 1 

City Exhibit 8 

From: "Roger Jemigan" <rwj@venicejetcenter.com> 

To: "Nancy Woociley" <nwoodle@ci.venice.fl.us> 

Date: 7/14/2008 3:46 PM 

Subject: RE: Jet Center hangar concept plan 

Nancy, 

Thanks for your time and your input, it was greatly appreciated. 

Roger Jemigan 

Roger 

Venice Jet Center, LLC 

Home Front Homes, LLC 

Green Buliding Systems 

Tradewind, LLC 

(941) 485-1799 Office 

(941) 866-7552 Fax 

rwj @ venicejetcenter.com 

From: Nancy Woodley [mailto:nwoodle@cl.venice.fl.us] 

Sent: Monday, July 14, 2008 3:41 PM 

To: Martin Black 

Cc: mark@beebedesignstudio.com; Frederick Watts; John Reed; Jack Stevenson; Lori Stelzer; Mary Holcombe; 

Roger Jemigan 

Subject: Jet Center hangar concept plan 

Jack, Mark, Roger (yjc) and I met at 2;30 pm today to clarify the city's need for conceptual plan to meet fire 

code interpretation by Fire Marshal. Concensus was to reduce the number of hangars from 5 to 4 thereby 

meeting state fire code's separation of 50' between buildings of different occupancy. Roger (yjc) will be bringing 

the modified conceptual plan to your office for inclusion in the city manager's report being considered for July 

22th City Council agenda by 8 am on Tuesday, July 15. Tlie" fatal flaw" Fred referred to has been eliminated. 

file://C:\Documents and Settings\nwoodle\Local Settings\Temp\XPgrpwise\487B74BAVe... 8/25/2009 
City Exhibit 9 

VENICEJETCENTER 

GATEWAY TO THE GULF COAST 

18 August 2008 

The Honorable Ed Martin, Mayor 

City Council of the City of Venice 

City Hall 

Venice, Florida 34284 " "^ 

Ladies and Gentlemen: 

I request that this letter accompany the presentation to Council for ten minutes on August 26, 

2008, of our plan to build four aircraft storage hangars on a portion of our leased land at the Airport. 

This plan has been reviewed by all City staff having jm-isdiction, and also both the Outgoing 

and Acting (Jity Managers. It has been found to conform to all applicable planning and building code 

provisions, so that there are no impediments to the issuance of building permits. The Southwest 

Florida Water Management District ("SWFWMD") has issued a permit for construction on the site. 

Consequently, this presentation is for the purpose of advising City Council of the project, and 

answering any questions that may be pertinent under the circumstances. 

Venice Jet Center ("VJC") has operated the Fixed Base Operation and related services for 

approximately two years now, imder a 25-year lease and renewal option that by now is familiar to 

the Council. We have conformed to all provisions of that lease, and in particular to the requirement 

of investing a considerable amount of money in the demolition of two derelict hangar buildings, 

construction of two new ones, and the renovation of the 220 Airport Avenue building. The planned 

construction of the four new hangars is located on the same parcel that contains those two recently 

constructed hangar buildings and the primary FBO building (400 Airport Avenue) that has just been 

completely renovated and considerably enlarged. 

Just prior to the execution of our lease, SWFWMD had issued a permit for hangar 

construction on the very same site on which we plan to construct these four hangars. At that time 

VJC agreed with the proposal of the City Manager that the entire site, including the vacant land, 

should be left together as one parcel, together with the old hangar buildings and the 400 Airport 

Avenue building. We also accepted the suggestion that the lease include a separate parcel of 2.53 

acres at the east end of Airport Avenue for the same reasons. The purpose of this was both to 

continue the fiill existing rental income to the City on the vacant land, and to provide for fiiture 

demand for hangar space. From our point of view, all of this investment for construction required by 

the City lease contemplated the continuing of the building of hangars in a second and third phase. 

There was evidently no need to invest in the FBO renovation if accessory hangars were not available 

to complete the range of FBO services. We would not have eirtered into the lease without this 

understanding. 
Venice Jet Center, LLC: To: Mayor and City Council, con't Page 2 

Since inception of the lease, VJC has carefiilly monitored demand for hangar space, a 

requirement that has not been satisfied for many years. Immediately after completion of the new 

10,000 square foot hangar it was filled, all of the space was utilized, and since then we have had to 

store aircraft outside while turning away storage business. At the present time we have a long 

waiting list for storage space. There has already been some delay in processing our plans due to the 

change of City Manager and the imderstandable time pressure on City staff that resulted. At this 

time, any fiirther delay will result in a very serious loss of revenue to VJC. 

The Acting City Manager has suggested that we make this presentation to the Council to 

communicate our position and answer any questions the Members may have. To that end we 

respectfiilly point out the following matters. 

The fact that oiu- lease required VJC to perform certain construction does not imply that 

additional construction consistent with permitted uses was thereby prohibited. The Permitted Use 

clause and applicable Minimmn Standards rules make that clear. There are no references in the lease 

to a requirement of City Council permission for construction. Requirements in the lease for the 

"City's" approval are clearly standard clauses in every lease that refer to various required City 

departmental approvals. We know of no instance in which vacant land at the airport was leased by 

the City for specific uses, and thereafter the Tenant had to go to City Council for express permission 

to construct a building for a permitted use on that land. The Venice Building Department recently 

issued a permit for VJC to enlarge the footprint and total cubic area of the 400 Airport Avenue by 

approximately 50%. Therefore, our application for hangar building permits, a second phase 

regarding accessory buildings, should receive the same treatment. 

Venice Jet Center has been a good neighbor to the entire City as well as nearby residents, in 

strictiy conforming to the terms and conditions of its lease, and in going fiirther to enhance the look 

and proper fimctioning of the airport. We designed the site and structure of the new hangars to 

provide for hangar walls that will lessen noise, allow for sufficient open space, and a generous 

amount of green screening along Airport Avenue. The four hangars next to the FBO building will 

satisfy demand for the immediate fiiture, and we will wait with the construction of additional 

hangars until we determine that fiiture demand warrants it. 

We believe that the time has come for the "good neighbor" policy to work both ways. We 

have gone into the details of our lease with no intended disrespect for those members of City 

Coimcil who may not ftilly embrace the City's obligations to federal and state authorities as Sponsor 

of the airport. For more than sixty years, this landmark city asset has grown in a slow, organic 

maimer, responding to normal demand for services and shrinkmg in area as a response to the City's 

increasing need for housing. The new neighbors who have recognized that they were moving to a 

location near an airport have become good neighbors. We hope that a majority of this Council will 

join them in recognition of tiie airport's value to the City of Venice and the importance of the good 

wdll of the many people who need it, use it, and earn their living there. 

Thank you for your kind attention. 

Verytrul 

Venice<fet 

By: Jwhur Nadel, Manager 

400 Airport Avenue, Venice, Florida 34284 
\ 

City Exhibit 10 

W^ 

^RECD NOV 0 7 2008^,TY OF VENICE 

BUILDING PERMIT APPLICATION 

ICE 

::^.:;aTY ON rtn an.r 

401 W. VeniM AvaniM, Vanice, Florida 34285 

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City Exhibit 11 

EXCERPT FROM THE JANUARY 13,2009 CITY COUNCIL REGULAR MEETING 

Xin. REQUEST BY VENICE JET CENTER, LLC, TO CONSTRUCT ADDITIONAL 

HANGAR SPACE ON ITS LEASEHOLD 

Jeff Boone, Boone Law Firm, representing the VJC, stated the lease allowed construction of 

hangars on land leased by the VJC and discussed filing the building permit in May 2008 and 

VJC's first presentation before council in August 2008. Mr. Boone added that VJC included 

additional information with the construction plans not routinely required. 

Mark Beebe, project architect, displayed drawings and described plans for construction of four 

80-foot by 100-foot hangars. 

Scott Richie, project engineer with DMK Associates, displayed a site plan and discussed 

SWFWMD permitting. 

Mr. Boone commented that the project was proposed in an area designated for hangar 

construction. 

Discussion followed regarding jet noise and exhaust mitigation; there being a demand for four 

hangars; construction costs; the hangar size being approximately 7,000 square feet; the Sarasota 

County Sheriffs hangar containing office space; hangar storage capacity; Art Nadel being the 

principal owner; construction plans filed with the city; and the leasehold area allowing for 

construction of facilities such as proposed hangars. 

(4:06) E.G. Dan Boone, attomey for the VJC, clarified the owners of the VJC were Art and 

Peggy Nadel. Mr. Boone explained that the lease permitted VJC, as a fixed base operator, to 

build and rent aircraft storage space on Government Use (GU) zoned property. 

Discussion continued regarding designated hangar areas, lease allowances pertaining to hangar 

size, and fire codes limiting the number of hangars. 

Roger Jemigan, Venice Jet Center, advised that Huffman Aviation previously planned to 

construct 20 to 30 t-hangars on the same parcel that VJC was proposing construction of four 

8,0(X)-foot hangars. He continued that VJC owned another 2.53 acre parcel on the east end of the 

field that would fit five additional 8,(X)0-foot hangars. 

Responding to Mr. Simmonds, Jeff Boone indicated the parcel had been under lease since 2(X)6 

and VJC signed the lease to function as a fixed base operator (FBO), and storing ahcraft in 

hangars was standard FBO procedure. 

Discussion followed regarding the VJC losing revenue by not having aircraft storage facilities; 

the entire project costing approximately $1.5 million; financing; designated hangar locations; the 

Federal Aviation Administration (FAA) approving hangar location; lease terms not requiring the 

tenant to file a noise abatement program; VJC taking action to decrease noise; waiting list for 

hangar space; the VJC not being in default of the lease; airport land use; and construction 

permitting. 

(4:39) Mr. Anderson reviewed legal opinions regarding whether or not the city had authority to 

deny the hangar construction request, interpretation of minimum standards, and the lease 
EXCERPT FROM THE JANUARY 13,2009 CITY COUNCIL REGULAR MEETING 

permitting construction of additional hangar space. Mr. Anderson continued the FAA concluded 

that delaying a decision until adoption of the new Master Plan and Airport Layout Plan (ALP) 

was an unreasonable delay of rights afforded to the tenant, and he pointed out the city could face 

substantial risk of losing a legal action. Mr. Anderson commented that violation of FAA grant 

assurances would probably not trigger the reversion of airport property to the city, but the city 

would most likely be removed ft-om federal funding lists, and there might be a demand for the 

retum of funds previously provided to the city. He stated there were maintenance standard 

obligations as long as the auport was city-owned. 

Discussion ensued regarding hangar space designations in the 2000 ALP. 

Mr. Watts displayed an ALP drawing and noted existing and proposed elements. 

Discussion followed regarding the FAA taking back the airport and airport compatibility with 

surrounding areas. 

(5:17) Tom Gavlick, 130 Rio Terra, handed out an ALP, Terminal Area Plan, and FAA Airport 

Compliance Requirements, and stated the city would be out of compliance with FAA compliance 

requhements if hangar construction was approved. 

Jim Marble, 832 Robert Street, suggested adding an aircraft storage element to the 

Comprehensive Plan and urged the city to maintain a unified waiting list for all aircraft storage 

requests. 

Earl Quandt, 218 Rio Terra, discussed keeping the airport small. 

(5:34) Tom Brener, 1118 Bird Bay Way, commented on noise abatement. 

Walter Hake, 682 Pond Willow Lane, discussed objections to airport expansion. 

Ted Koszarski, 1229 Lucaya Avenue, commented that Mr. Sinamonds may have a conflict of 

interest due to his business relationship with Mr. Boone. 

Jeff Boone explained that Mr. Simmonds did not have a voting conflict of interest on any matter 

that he or the Boone Law Firm was representing. 

Recess was taken fi:om 5:49 p.ntL until 5:59 p.m. 

Jeff Boone displayed enlarged exhibits of the ALP and Airport Terminal Plan submitted by 

Mr. Gavlick and pointed out the ALP consisted of a series of maps depicting areas specified for 

aeronautical development 

Mr. Watts provided additional information with regard to the ALP and plan set, noting that the 

definition of a terminal area did not include what could be built there. 

Mr. Gavlick reiterated that the area in question was designated as terminal and future apron 

areas. 
EXCERPT FROM THE JANUARY 13,2009 CITY COUNCIL REGULAR MEETING 

Jeff Boone stated the proposed leasehold area for the hangars was not in the future apron area, 

and added that his client was opposed to fiirther delays. 

(6:26) Discussion followed regarding postponing the vote until the FAA was made aware of 

arguments presented at today's meeting. 

Mr. Lang moved to approve delaying the vote to February 10, 2009 in order to obtain additional 

input from the Federal Aviation Administration regarding Venice Jet Center's request to 

constmct additional hangar space on its leasehold and constraints of the Airport Layout Plan. 

Seconded by Mr. McKeon. 

ROLL CALL: MS. TAYLOR, YES; MR. MCKEON, YES; MR. SIMMONDS, NO; MR. 

MOORE, NO; MR. ZAVODNYIK, YES; MS. LANG, YES; MAYOR MARTIN, YES. 

MOTION CARRIED. 
EXCERPT FROM THE FEBRUARY 10,2009 CITY COUNCIL REGULAR MEETING 

V. AUDIENCE PARTICIPATION 

(1:43) Tom West, 312 Circle Drive, discussed elected officials responsibiUties. 

John Patten, Venice resident, commented on speaking to council during audience participation. 

Herb Levine, 802 Harbor Drive South, discussed speaking during audience participation. 

Rosemary Vauzanges, 536 Riviera Street, commented on airport development. 

Discussion ensued regarding Venice Jet Center (VJC) investors. 

Vni. STATUS REPORT REGARDING VENICE JET CENTER, LLC (VJC), 

REQUEST TO CONSTRUCT ADDITIONAL HANGAR SPACE ON ITS 

LEASEHOLD (continued later this meeting) 

Mr. Anderson referred to a copy of his February 4, 2009 correspondence to Rebecca Henry, FAA 

Planning Specialist, requesting guidance with regard to approval of the VJC request to constmct 

four additional hangars. He added that the city has not received a responise to date. 

Mayor Martin explained the request included a conflict noted through citizen input with regard to 

Airport Layout Plan violations. Subsequently, this issue was put on hold because the VJC was in 

receivership. Mayor Martin indicated the city was reviewing a letter from the receiver asking 

that the FAA request move forward. 

E. G. Dan Boone, representing Burton Wiand, receiver for the VJC, requested that council take 

action on the hangar request. 

Discussion followed regarding source of funds used to finance the VJC, hangar constmction site, 

sponsor obligations, and what represents violation of FAA regulations. 

Mr. Anderson clarified that he has not been advised by the receiver that he intends to sell the 

VJC, LLC, leasehold. 

(3:22) Mr. McKeon moved to file an entry of appearance on behalf of the City of Venice as 

Landlord and be noticed on all proceedings. 

The motion died for lack of a second. 

Discussion continued regarding being proactive, selling the VJC, receiver taking over a vahd 

lease, pending action against Art Nadel, whether or not the city has standing to file a motion to 

intervene, reprioritizing city attomey tasks, negotiations with the receiver, scheduhng a 

workshop to discuss airport issues, discussions with tenants, delaying a decision on the hangars, 

and decreasing or increasing the value of this asset. 

Tom Gavlick, 130 Rio Terra, suggested informing the FAA of other designated hangar locations 

and requesting if the city had the right to deny the additional hangar request. 
EXCERPT FROM THE FEBRUARY 10,2009 CITY COUNCIL REGULAR MEETING 

Discussion continued regarding receiving notification if the VJC is sold, whether or not the city 

is a creditor, preserving the rights of the city, signing or subletting of lease without consent of 

council, involuntary assignment, leasehold dimensions, city attomey workload and time 

restrictions, and emplojfing outside counsel. 

(3:54) There was consensus to instruct the city attomey to determine whether or not the City of 

Venice has standing to intervene in the U.S. Securities and Exchange Commission action, to 

determine the standing of the City of Venice to intervene in the receivership, and if it is 

determined the city has standing, to move forward with appropriate paperwork in early March 

after the Lorenzo trial. 

VHI. STATUS REPORT REGARDING VENICE JET CENTER, LLC (VJC), 

REQUEST TO CONSTRUCT ADDITIONAL HANGAR SPACE ON ITS 

LEASEHOLD (continued) 

Ms. Lang requested contacting the FAA regarding other designated hangar locations and whether 

or not the city has the right to deny the VJC request for additional hangars. 

Discussion followed regarding clarifying issues with the FAA; alternate hangar locations not 

being identified in the leasehold; leasehold specifying locations for improvements; conveying 

impartiality to the FAA; meeting lease obligations; receiver responsibility to protect and 

maintain the asset; needing approval to constmct hangars; language in the Febmary 4, 2009 letter 

to Rebecca Henry; information provided to Attomey Tom Devine to assist in rendering his legal 

opinion; reviewing January 27 and February 10, 2009 council meeting minutes; FAA response 

not being definitive; new circumstances because of the receivership; additional hangars 

triggering new lease negotiations; providing additional information to the FAA; scheduling a 

workshop to discuss airport direction; hangars promoting additional jet aircraft activity across the 

street from residences; working with DY Consultants; a future vision for the airport; the receiver 

sending notification to the FAA; and the lease not being acquired without council approval. 

(6:54) Mr. McKeon moved to approve scheduling a city council workshop in the morning on 

March 10, 2009 to discuss the long range vision for the airport. Seconded by Mr. Zavodnyik. 

MOTION CARRIED ON VOICE VOTE UNANIMOUSLY. 

There was consensus to include public comment at the end of the March 10, 2009 workshop. 

XH. CITY MANAGER'S REPORT 

Ms. Woodley provided council members with a Contingency Plan for Fixed Base Operator 

Services provided by the Venice Jet Center. 

XVn. REPORT BY MR. MOORE 

Mr. Moore commented on Item 4 of the City Manager's Report and suggested planting 

additional shade trees in Centennial Park. He also commented on landscaping the U.S. ByPass 

41 by the north bridge. 

Ms. Woodley responded that the airport landscaping Request for Proposals was completed and in 

the review process, and added she would review state landscaping regulations with regard to the 
EXCERPT FROM THE FEBRUARY 10,2009 CITY COUNCIL REGULAR MEETING 

U.S. ByPass 41/north bridge area enhancements. 

Discussion followed regarding discussing airport landscaping at the March 10, 2009 workshop, 

Florida Department of Transportation lacking funds to landscape the U.S. ByPass 41/north 

bridge area, enlisting assistance ft-om Venice Area Beautification, Inc., or the Venice Area 

Chamber of Commerce, and budget allocations for landscaping. 

XVm. REPORT BY MR. SIMMONDS 

Mr. Simmonds had no report 

Responding to Ms. Lang, Mr. Watts indicated that Venice Aviation Services was an existing 

fixed base operator maintenance facihty located on Airport Avenue. 

Ms. Woodley recommended discussing the Contingency Plan for FBO Services provided by the 

Venice Jet Center at the March 10,2009 workshop. 
EXCERPT FROM THE MARCH 5,2009 CITY COUNCIL COMPREHENSIVE PLAN 

WORKSHOP 

Land Use and Development - Housing and Neighborhood Development 

Discussion followed regarding staff researching the possible acquisition of airport leases, council 

being proactive in respect to the Venice Jet Center receivership, and addressing these concerns 

during the March 10, 2009 Airport Workshop at the Venice Conununity Center, and consulting 

staff on creating a policy that eliminates conditional use for additional habitable height. 
EXCERPT FROM THE MARCH 5,2009 CITY COUNCIL TOWN HALL MEETING 

IL QUESTIONS/COMMENTS FROM THE AUDIENCE 

Bruce Lebedun, 508 Everglades Drive, Golden Beach Associates (GBA) president, gave the 

membership status and brief history of the GBA, stated their opposition to expanding the Venice 

Jet Center (VJC), desire for a resolution to the short term rental issue, thanked council for all 

their work on the conprehensive plan, and expressed his support in settling the sunshine lawsuit. 

Ted Vaughn, 204 Rio Terra, gave a brief personal history, talked about the airport disclosure 

when he closed on his house, expressed his dismay with the airport noise and his support in 

keeping the airport recreational. 

Herb Levine, 802 S. Harbor Drive, expressed his disappointment with recent articles in local 

newspapers regarding city council. 

Earl Quandt 218 Rio Terra, spoke in favor of setfling the sunshine lawsuit, and commended 

council on their work on the strategic and comprehensive plans, the airport master plan and 

diversifying city advisory boards. 

Ted Koszarski, 1229 Lucaya Avenue, commented on the expertise represented on the city 

council and thanked council for their efforts to keep Venice a beautiful serene place to live. 

Bebe Teichman, 404 Baynard Drive, stated how lovely Golden Beach is to live, talked about the 

amenities in joining the GBA, and that many Golden Beach residents join the GBA to obtain 

those benefits. 

Rosemary Vauzanges, 536 Riviera Street, talked about the sunshine lawsuit, commented on the 

proper recording of information, and suggested the possibility of the city purchasing the VJC. 

Mr. McKeon reported on the items for discussion at the March 10, 2009 airport workshop, 

including airport hangars, long term plan for the airport, and the VJC lease. 

Mayor Martin stated council wants to maintain the airport, the airport workshop wiU be held at 

the Venice Community Center, and welcomed City Manager Isaac Turner. 
EXCERPT FROM THE MARCH 10.2009 CITY COUNCIL AIRPORT WORKSHOP 

HI. DEFINE ISSUES AND LAND USE SCENARIOS 

Mr. Watts displayed a photo of the airport from 1949 and an aerial map illustrating existing 

leaseholds, and noted the airport is zoned Government Use (GU). 

Mr. McKeon displayed aerial maps illustrating potential hangar sites, discussed strategic 

thinking on the proposed hangar locations, the city's allowance of development contiguous to the 

airport, and alternate airport development locations. He suggested council address tiieir desires 

for the 20 year vision conceming hangar development. 

Discussion followed regarding the festival grounds, previous Dufresne Henry airport plans for 

industrial use, relocation of the Venice Jet Center (VJC), funding to move existing facilities, 

level of jet and helicopter activity, development near mnway 4/22, Florida Department of 

Transportation (FDOT) allowing economic development grants up to 80% of the total 

development cost having ftittire industrial activity far away from residential, the proposed 

narrow access road in Area 3, and noise abatement purposes. 

Ms. Mastropieri stated the road in Area 3 would be a secure access road that would not impact 

aircraft operations. 

Discussion continued regarding construction standards of the road, previous discussions on 

airport development. Area 3 being a logical development area, number of existing t-hangars, 

preserving the golf course and festival grounds, chain link fence along with stored vehicles on 

the northeastern airport property giving the appearance of a junk yard, strategic planning, mixed 

use in the area, funding for development planning in other areas of the city, revisiting the 

entranceway to the airport along Airport Avenue, requesting DY to provide conceptual 

framework, funding sources, development of an emergency plan if the VJC is not in operation, 

working with the VJC receiver, the city possibly operating the VJC, aviation fuel sales, and 

possible commercial development. 

Mr. McKeon summarized the discussion stating the shared vision would be to utilize the 

Dufresne Heniy commercial park plan, have the highest priority sti^tegy for Area 3, having a 

long range aviation development plan, using Area 2 as an alternative to Area 3, and maintaining 

the festival grounds. 

Mr. McKeon moved on to the property management segment. He displayed a chart depicting 

current airport leases, reviewed lease expiration dates, vertical improvement clauses, city staff 

working on a new standardized lease, city control of leases, standardized time frame on leases, 

identifying a stracture to reevaluate a lease upon expiration, conducting a fair market value 

analysis, and renegotiating on a five year basis. He displayed and reviewed lease examples and 

talked about streamlining the lease process to make it predictable. 

Discussion followed regarding the continuation of long term leases, city constmcting vertical 

improvements and offering shorter term leases, staff currentiy working on a standard lease, 

whether it is profitable for the city to constmct vertical improvements, the city losing revenue on 

subleases, conditions in the past allowing the lessee to build the vertical improvements, the city 
EXCERPT FROM THE MARCH 10.2009 CITY COUNCIL AIRPORT WORKSHOP 

seeking a bond to construct vertical improvements, beginning with constmcting a terminal in 

Area 3, definition of a terminal, revenues in the airport enterprise fund, and the vision to control 

airport land and vertical assets. 

Discussion continued regjirding the order of the agenda as it pertains to audience participation. 

Mr. Simmonds left the meeting at 9:59 a.ra. and returned at 10:08 a.m. 

IV. MASTER PLAN OVERVIEW 

Mr. Yap outlined DY Consultants' role as listening to city and public concerns, stated everyone 

should remain open minded and reach a consensus between the city and public, and settle the 

questions regarding critical aircraft. 

Ms. Mastropieri reported an aircraft operations count has been implemented that includes six 

cameras on the airfield, explained the cameras operations and data transmission, along with the 

level of data detail and type of aircraft activity captured. She mentioned the target date for next 

airport workshop would be April 7, 2(X)9. 

Mr. Yap outlined the purpose and scope for the next workshop, which encompasses a general 

vision of the airport. 

Discussion followed regarding council consensus to maintain a general aviation airport creating 

a positive atmosphere, determining the major points of agreements and disagreements, reviewing 

the impacts to the community, addressing the adherence of the Auport Layout Plan (ALP), 

recent conversations with the Federal Aviation Administration (FAA), modifications to the 

current ALP in order to execute the master plan, resubmission of the ALP to FAA, contact with 

FAA regarding the VJC, incorporatuig specific language regarding aeronautical and nonaeronautical uses in the ALP, noise related concerns, hehcopter activity, early moming flights, 

talking to pilots regarding noise abatement procedures, coordination of hot line complaints, 

times of complaints and current airport response to complaints. 

Recess was taken from 10:29 a.m. until 10:37 a.nx 
EXCERPT FROM THE MARCH 10,2009 CITY COUNCIL REGULAR MEETING 

IV. VENICE JET CENTER, LLC, REQUEST TO CONSTRUCT ADDITIONAL 

HANGAR SPACE ON ITS LEASEHOLD - FAILED 

Burton Wiand, attomey and receiver for the Venice Jet Center (VJC), explained his role and 

urged council members to approve hangar constmction in order to maximize VJC asset value. 

Mayor Martin summarized council members' concerns regarding the hangars being proposed on 

a location identified for other purposes, guaranteeing the apphcant had financial resources to 

build hangars, and the city having a valid lease with the VJC. 

Mr. Simmonds moved to permit Venice Jet Center, LLC, to construct additional hangar space on 

its leasehold as depicted on the conceptual plan. Seconded by Ms. Taylor. 

Mr. Wiand responded that the VJC lease was entered into by a valid entity, discussions with 

financial institutions regarding availability of construction fiinds was encouraging, and he would 

assure the financial viability of prospective owners. Mr. Wiand invited council members lo visit 

his web site, www.nadelreceivership.com to review court fihngs, etc. 

Mr. Anderson reviewed previous correspondence to Mr. Wiand requesting that the city be kept 

informed of all future developments regarding VJC including, but not limited to, business 

operations, financing and constmction of additional leasehold improvements, and proposals to 

sell or transfer any ownership interest. 

Mr. Wiand responded that access to this information was available, however, a request to be 

"inside the company" could not be granted. With regard to the request relating to finances, Mr. 

Wiand repUed that absent financing, the hangars would not be built Mr. Anderson and Mr. 

Wiand discussed the city's authority under terms of the lease and Mr. Wiand's authority under 

the receivership. Mr. Wiand assured that city officials would be notified when he took steps to 

market the property. Mr. Anderson clarified that council was requesting acknowledgment that 

the city was a player regarding disposition of this asset and wanted assurances that the city would 

be kept informed regarding decisions such as marketing of the asset or change in operations. Mr. 

Wiand reiterated the city could not be a participant in VJC operations while it was in his 

receivership. 

Discussion continued regarding the city being proactive in VJC business operations and the city 

being a potential purchaser. 

Mr. Anderson discussed a second letter written to Mr. Wiand regarding the VJC providing 

sufficient evidence of its financial capabihty to construct the proposed leasehold improvements. 

Mr. Wiand responded it was unlikely he would use investor funds to constmct hangars, and 

pointed out that financing may be forthcoming from a potential new owner. 

Discussion followed regarding the judge makmg the final decision regarding a piu-chaser, 

working cooperatively with auport tenants to develop a 20-year vision, new hangar viability 

study, and hangar rental income not going to the airport enterprise fund. 

Detailed discussion continued regarding the VJC lease containing clauses that permit building 
EXCERPT FROM THE MARCH 10,2009 CITY COUNCIL REGULAR MEETING 

new hangars and require evidence of financial capability to constmct leasehold improvements. 

(4:09) Mr. Anderson indicated that Paragraph 14 of the VJC lease. Use of Premises, came closest 

to affording an opportunity to constmct additional hangars. 

E.G. Dan Boone, representing the VJC, claimed that the minimum standards portion of the lease 

allowed for constmction of additional hangars. 

Mayor Martin suggested guaranteeing financial viability and options to build hangars on a site 

more preferable to the city would clear up a number of issues associated with this project. 

Mr. Wiand indicated he was requesting the release of building permits at this time, and 

questioned whether or not a financial viability clause was included in building codes. He 

continued that hangars would not be built if financing was not available. 

Discussion followed regarding coimcil taking action on this issue, the abihty to constmct 

hangars, increasing the value of this asset approving hangar constioiction subsequent to 

identifying a valid potential buyer, and contingencies regarding financial viabihty. 

Mr. Anderson clarified that Mr. Wiand was requesting the landlord's approval for the tenant to 

construct four 8,000 square foot hangars, that approval would enhance the asset, that the asset 

could be marketed as a fixed base operation with die potential of constmcting the hangars, and, if 

financial capability was shown, the city would issue a building permit. 

Discussion ensued regarding issuing building permits prior to submitting plans and going 

through the application process, recouping investor funding, and responding to Mr. Black's Jime 

2008 letter. 

Mr. Turner indicated that hangar plans were subnnitted, and staff approval was dependent upon 

council endorsing the VJC constmction request 

(4:30) Jim Marble, 832 Robert Street, requested information with regard to hangar financial 

viabiUty. 

Gary Budway, 1953 Setdement Road, requested disclosure of Nadel investors. 

Ted Koszarski, 1229 Lucaya Avenue, questioned if the VJC was acquured with ill gotten gains. 

Mike Rafferty, 989 Cayman Avenue, requested that names of Nadel investors be provided. 

Tom GavUck, 130 Rio Terra, suggested that the city get a legal opinion regarding the validity of 

the VJC lease. 

Bob Bumis, city business ovraer, questioned the need for hangars. 

Walter Hake, 682 Pond WiUow Lane, urged council members not to approve constmction 

without a guarantee of what type of planes would be accommodated. 
EXCERPT FROM THE MARCH 10,2009 CITY COUNCIL REGULAR MEETING 

Bebe Teichman, 404 Baynard Drive, requested that council members approve the construction 

request 

Tom Brener, 1118 Bird Bay Way, questioned whether this was an involuntary transfer of the 

lease. 

Ms. Lang presented questions regarding the NadelC investors, the lease being in default, 

evidence of need, market analysis, and staff recommendations. 

Ms. Woodley explained that staff was instmcted to review concept plans for fatal flaws. After 

eliminating a fifth footprint and reconfiguring to meet Southwest Florida Water Management 

District (SWFWMD), plans went through technical review for Government Use zoning 

violations. Site plans have also been submitted, however, staff will not issue comments until 

council approval of the conceptual plan. 

(5:02) Mr. Wiand commented that investor names were not published and investment funds were 

not used to purchase the VJC, and noted there was no transfer of the lease, that all material 

portions of the lease were observed, and offered assurance of builder viability. 

Discussion followed regarding the motion language. 

ROLL CALL: MR. MOORE, NO; MS. TAYLOR, YES; MS. LANG, NO; MR. ZAVODNYIK, 

NO; MR. MCKEON, YES; MR. SIMMONDS, YES; MAYOR MARTIN, NO. MOTION 

FAILED. 

XVI. REPORT BY MR. MOORE 

Mr. Moore discussed the validity of the existing VJC lease, if the lease allowed hangar 

constmction, whether or not the lessee defaulted on the lease, and suggested retaining an expert 

to render an opinion. 

Discussion followed regarding the VJC lease being valid, verbiage that allows constmction of 

additional hangar space, minimum standards language, possible fraud during procurement of the 

VJC, and financial viability of a VJC purchaser. 

(6:23) Mr. Simmonds spoke in opposition to obtaining an outside legal opinion. 

Discussion continued regarding purchasing the lease and entering into a lease with an LLC. 

There was consensus to direct the city attomey to engage outside counsel in Sarasota County 

with expertise in commercial leases to render an opinion regarding if the Venice Jet Center lease 

is valid and entities constmction of hangars, if fraudulent funds negate the lease, and the city's 

ability under the minimum standards for financial viabihty. 

Discussion continued regarding the city's interest in purchasing the VJC. 

Mr. Turner indicated that staff began researching the possibihty of purchasing the VJC and 

clarified that staff was not preparing a proposal. 
EXCERPT FROM THE MARCH 10,2009 CITY COUNCIL REGULAR MEETING 

Mr. Anderson cautioned council with regard to taking actions that affect the value of the 

leasehold and becoming an active bidder for the VJC. 
EXCERPT FROM THE MARCH 24,2009 CITY COUNCIL REGULAR 

MEETING 

XVn. REPORT BY MR. MCKEON 

Responding to Mr. McKeon's questions regarding the Venice Jet Center (VJC), Mr. 

Anderson indicated that he, Mr. Turner, and Mayor Martin formulated questions for 

submittal to outside counsel. Mr. Anderson continued with a review of attomey conflict 

of interest checks, noting that his relationship with Northem Tmst did not conflict with 

his representing the city on VJC matters. 

XVm. REPORT BY MAYOR MARTIN 

Mayor Martin brought council up to date on conversations with Bart Vemace, FAA 

Orlando Acting Manager, regarding the FAA permitting take offs and landings of heavy 

planes on Runway 4/22, the extension of Runway 4/22, modifications to the Venice Golf 

Association, and timing of council actions related to the Venice Jet Center. 

Responding to council concerns conceming a Part 16 complaint, Mr. Anderson reviewed 

correspondence to Burton Wiand, attomey and receiver for the VJC, regarding 

responding to council requests for information conceming VJC, LLC. 

In addition, Mr. Turner advised that staff would hold off on inquiries regarding the city 

acquiring the VJC lease until after outside legal counsel rendered their opinion. 
EXCERPT FROM THE APRIL 14,2009 CITY COUNCIL REGULAR MEETING 

XXn. REPORT BY MR. SIMMONDS 

Mr. Simmonds commented on mid-mnway takeoffs affecting traffic counts. 

Mr. Watts indicated that cameras were probably missing a few takeoffs, however, discussions 

were underway with consultants regarding repositioning the cameras. 

Responding to Mr. Simmonds, Mr. Anderson discussed correspondence from Burton Wiand, 

receiver for Venice Jet Center (VJC). 

Discussion followed regarding VJC assets. 
EXCERPT FROM THE APRIL 30.2009 STRATEGIC PLAN WORKSHOP 

F. Strategic Goal No. 6, Maintain a Growing Diverse Ek»nomy 

Mr. Snyder reviewed the strategies of Strategic Goal No. 6 with the exception of Strategy No. 5, 

which was outlined by Airport Director Fred Watts. 

i' 

Discussion ensued regarding approval of two hotels in the vicinity of 1-75 and two on the Island. 

After Mr. Watts' presentation, discussion ensued regarding location of the special events area, 

development interfering with future airport operations, funding the proposed purchase of the 

Venice Jet Center (VJC), taking a proactive position conceming the purchase of the VJC, noise 

abatement program. West Coast Inland Navigation District owning a right-of-way of 

approximately 100 feet west of the Intracoastal Waterway, endangered wildUfe, circus arena 

property, increasing parking, access to U.S. Business 41, relocation of U.S. Post Office into the 

circus arena property, hangar constmction, receiving a VJC marketing packet from Burton 

Wiand, utilizing the VJC as a revenue source, prohibiting certain types of jets, and ensuring that 

circus arena development comphments the proposed Venice Island Resort & Spa development. 

Mayor Martin requested an update from staff with regard to funding sources for redevelopment 

of the circus arena area and access road to U.S. Business 41. 
EXCERPT FROM THE MAY 12,2009 CITY COUNCIL REGULAR MEETING 

XII. CITY MANAGER'S REPORT 

Mr. Turner reviewed a letter and packet of information from Burton Wiand, receiver for the VJC, 

regarding entities interested in purchasing the VJC and its assets. Andy Magenheimer, appraiser 

with Slack, Johnston, and Magenheimer, Inc. recommended against obtaining an appraisal due to 

possible legal action regarding intentional devaluation of the VJC lease. Mr. Tumer asked 

Mr. Magenheimer not to perform the appraisal until issues regarding hangar constmction and 

acquiring an outside opinion from Charles J. Bartiett, Icard Merrill et. al, regarding the lease by 

and between the City of Venice and VJC, LLC, were brought before council. Mr. Turner also 

noted that he and Mr. Magenheimer discussed the right of first refiisal if another entity purchased 

the VJC, and pointed out that Mr. Wiand would probably not be interested in this unless council 

approved the hangar request Mr. Tumer recommended waiting for the outside opinion before 

council proceeded with developing a proposal for acquisition of the VJC. 

Responding to Mr. Zavodnyik, Mr. Tumer indicated that state statutes relative to sunshine laws 

and confidentiality agreements were not applicable to the city having access to materials 

disseminated to potential purchasers of the VJC. 

Discussion followed regarding confidentiality agreements confhcting with Sunshine Laws, 

avoiding potential lawsuits, obtaining the City Attorney's opinion with regard to property 

appraisals, the city interfering with functions of the receiver, and protecting the city's interests. 

Mr. Anderson advised he scheduled a meeting on Friday, May 15, with Mayor Martin and 

Mr. Tumer to discuss signing the confidentiahty agreement and obtaining an appraisal. 

XVra. AUDIENCE PARTICIPATION 

(3:58) E. G. Dan Boone, attomey for the VJC receiver, clarified statements made by John Patten 

regarding previous owners of the VJC. 

Marty Dover, 740 White Pine Tree Road, urged council not to restrict pubUc parking in 

downtown Venice. 

Mayor Martin responded that council asked staff to give priority to developing additional 

parking. 

Herb Levine, 802 Harbor Drive South, asked if Housing and Urban Development (HUD) would 

be involved with Grove Terrace after completion of the redevelopment and if the city would 

continue to collect taxes. 

Ms. Lang responded that HUD would continue to be involved with the property which would be 

owned by the Venice Housing Authority. 

Mr. Anderson indicated that in Ueu of taxes the VHA would make a payment to the City of 

Venice. 

Mr. Levine commented on die short term rental ordinance and the VJC. 
EXCERPT FROM THE MAY 12,2009 CITY COUNCIL REGULAR MEETING 

John Patten, Venice resident, discussed owners of the VJC. 

XrX. ADJOURNMENT 

There being no further business to come before council, the meeting was adjoumed at 4:13 p.m. 
MINUTES OF A SPECIAL MEETING 

CITY COUNCIL, VENICE, FLORIDA 

MAY 26,2009 

A Special Meeting of the City Council was held this date in Council Chambers at City Hall. 

Mayor Martin called the meeting to order at 10:36 a.m. 

ELECTED OFFICIALS AND OTHERS PRESENT 

Roll was called with the following elected officials present: Mayor Ed Martin, Vice Mayor 

Sue Lang, and Council Members Kit McKeon, John K. Moore, John Simmonds, and 

Emie Zavodnyik. Vicki Taylor was absent. 

Also present: City Attomey Bob Anderson, City Clerk Lori Stelzer, City Manager Isaac Turner, 

Finance Director Jeff Snyder, and Recording Secretary Judy Gamel. 

I. COUNCIL DISCUSSION - VENICE JET CENTER (VJC) LEASE 

Mr. Anderson provided background information on outside legal opinions and correspondence from 

Burton Wiand, VJC receiver, and the Federal Aviation Administration (FAA). 

Mr. Tumer requested direction from council regarding obtaining an appraisal of the VJC. 

Mayor Martin reviewed attorney Charles Bartiett's opinion conceming five questions submitted by 

Mr. Anderson on behalf of city council. 

Discussion followed regarding council members' understanding of Section 45 of the VJC lease, 

DemoUtion and Constmction of Improvements, of the VJC lease regarding the lessee's right to 

constmct four additional hangars. 

Mr. Anderson advised that part of the leasehold was undeveloped land and indicated an argument 

could be made with respect to why lease vacant land for 30 years without a plan to develop it for 

aviation purposes. Mr. Anderson also reviewed portions of Mr. Bartiett's letter and indicated there 

was no definitive statement as to whether or not the lease precluded additional hangars or allowed 

additional hangars, and added that litigation was the only way to make that determination. 

(11:02) Ms. Lang discussed motives for acquiring vacant land; lease terms remaining basically 

unchanged in the new land lease approved at the May 23,2006 council meeting; plans for hangars 

not being presented for approval; reasons to deny constmction of additional hangars; and requesting 

financial information from die VJC. 

Mr. Simmonds commented on Rebecca Henry's December 14, 2008, letter and warned of the 

possibility of a Part 16 investigation if the hangars were not approved. 
Mayor Martin mentioned that additional facts were brought out subsequent to Ms. Henry's letter and 

indicated the city and the FAA, not the receiver, would bear expenses for a Part 16 investigation. 

(11:15) Discussion followed regarding the lease requiring submittal of specifications prior to hangar 

construction; submittal of concept plans; demonstrating financial viability; parol evidence; council 

approving hangars subject to subsequent verification of financial viabihty; lease affording the 

discretion to promote VJC's self interest; good faith obligations; the city purchasing the VJC; claims 

of the city intentionally lowering the value of the VJC; demonstrating a need for additional hangars; 

approving additional hangars as part of the Joint Automated Capital Improvement Program (JACIP); 

hangar utilization; FAA acknowledging the need for additional hangars; the lease not being clear in 

defining obhgations of parties; receiver not responding to the city's request for financial data; taking 

a course of action with the least obstacles; and legal action against the city. 

n . AUDIENCE PARTICIPATION 

(12:06) Tom Gavhck, 130 Rio Terra, commented on providing financial viabiUty and Airport Layout 

Plan designations for future hangars. 

Henry Holzapfel, 214 Rio Terra, discussed receiving proof of financial capability, improving lease 

agreements, and deaUng with the FAA. 

Mike Rafferty, 989 Cayman Avenue, handed out and discussed information regarding Venice 

Municipal Airport operations. 

E. G. Dan Boone, representing Burton Wiand, commented on the likeUhood of the city winning 

Utigation, legal costs, submission of concept plans, rebuilding the VJC administration building, 

hangars housing all types of aircraft, and providing evidence of financial capabihty. 

i n . ADJOURNMENT 

There being no further business to come before council, the meeting was adjourned at 12:29 p.m. 

ATTEST: Mayor - City of Venice 

City Clerk 
EXCERPT FROM THE JUNE 9,2009 REGULAR MEETING 

X. REVISIT CITY COUNCIL DECISION REGARDING THE VENICE JET 

CENTER (VJC) REQUEST TO CONSTRUCT ADDITIONAL HANGARS 

Responding to Mr. Moore, Ms. Depew clarified procedure regarding motions to revisit and to 

reconsider previous council action. 

Henry Holzapfel, 214 Rio Terra, urged council to deny the hangar construction request due to 

the existing lease not containing language relating to constmcting additional hangars. 

Randall Greene, 750 Villas Drive, supported denial of the request and commented on problems 

that additional hangars and air ti-affic would create. 

(2:29) Mike Rafferty, 989 Cayman Avenue East displayed and reviewed documents 

representing 257 community members who oppose constmction of aircraft storage hangars 

along Aiiport Avenue. 

Chris Davis, 340 Shore Road, opposed hangar constmction and discussed existing use of the 

proposed hangar site. 

Jim Shortill, 222 Rio Terra, stated that council must make allowances for growth if the auport 

is to prosper. 

Rosemary Vauzanges, 536 Riviera Sfreet, handed out and discussed Federal Aviation 

Administration (FAA) regulations for Part 16 - Rules of Practice for Federally-Assisted Airport 

Enforcement Proceedings. 

E. G. Dan Boone, attomey representing Burton Wiand, receiver for the VJC, informed council 

members that he was speaking on behalf of Mr. Wiand and advised that federal authorities 

authorized Mr. Wiand to file a Part 16 action if hangar constmction was not approved. 

John Patten, Venice resident discussed the existing VJC lease approval process. 

(2:57) Mr. Simmonds displayed and read Linda and Mike Rafferty's e-mail requesting support 

for council's previous denial of the VJC application for new aircraft storage hangars along 

Airport Avenue. Mr. Simmonds also reviewed the Venice Municipal Golf Course lease and 

discussed Part 16 and Part 13 investigation procedures. 

Mr. McKeon commented on the validity of the VJC lease and the request to constmct 

additional hangars, and also discussed the proposed hangar location and the lack of 

communication with Mr. Wiand. 

Responding to Mayor Martin, Mr. Tumer discussed informal communications with Roger 

Jemigan, VJC, regarding proposed hangar locations and providing the city with a right of first 

refusal, and added that Mr. Jemigan never provided a definitive answer. 

Mr. Anderson advised council members conceming communications with Mr. Wiand and 

indicated there were no substantive negotiations regarding the hangar request 
EXCERPT FROM THE JUNE 9,2009 REGULAR MEETING 

Mr. Tumer reported that staff performed a technical review of conceptual plans, elevations, and 

surveys included in the agenda packet and, prior to issuing council approved permits, would 

request final drawings for submission and approval by council. 

Discussion followed regarding FAA reviewing proposed hangar plans, revision by a new VJC 

owner, financial feasibiUty, building permit approval process, proposed hangar relocation, 

modifications to the existing lease, ability of the VJC to engage in negotiations, receiver 

actively marketing the leasehold to a third party, negotiating relocation of proposed hangars 

with VJC purchaser, and requiring city approval of lease assignments. 

(3:22) Mr. Anderson confirmed that the city can perform due diligence when the receiver 

discloses a purchaser and also that the city can request proof of financial capabihty from 

anyone desiring to constmct hangars. 

Mr. Tumer commented on the formal FAA Airport Layout Plan (ALP) revision process. 

Mr. Tumer left the dais from 3:27 p.m. until 3:31 p.m. 

Mayor Martin discussed submitting a hangar concept plan to the FAA with details regarding 

why city did not favor approval, FAA approval of the proposed hangars, lessening the city's 

exposure to possible lawsuits, and retaining options for due diligence and proof of financial 

capability. 

Mr. Anderson discussed the city's option to deal with the actual purchaser of the VJC and the 

actual developer of the hangars versus conditional approval for proposed constmction for the 

purpose of enhancing property value. 

Discussion ensued regarding supposition that the city is delaying constmction approval, Mr. 

Wiand's lack of communication with the city. Part 16 legal action, and FAA directives 

regarding hangar approval. 

Mr. Anderson advised council to expect a Part 16 complaint if the previous denial of the 

hangars request was reaffirmed. 

Council members discussed responding to a Part 16, whether or not the pre-conditions for a 

Part 16 have been met, the city being more proactive, communicating with Mr. Wiand, right of 

first refusal, acquisition of the VJC, and property appraisals. 

(3:54) Mr. Simmonds moved to permit the Venice Jet Center, LLC, to constiiict additional 

hangar space on its leasehold as depicted on the conceptual plan presented today. Seconded by 

Ms. Taylor. 

Mr. Moore submitted that Mr. Simmonds' motion was out of order, and suggested that the 

motion should be to rescind council action of March 10,2009 to deny hangar constmction. 

Mr. Simmonds withdrew the motion. 

Mr. Simmonds moved to rescind the action that council took on March 10, 2009. Seconded by 
EXCERPT FROM THE JUNE 9,2009 REGULAR MEETING 

Ms. Taylor. 

Ms. Lang expressed opposition to the motion to rescind council action of March 10, 2009. 

Mr. Anderson clarified Uiat council action of March 10, 2009 denied constmction of four 

hangars, and in order to reverse that decision, approval to rescind the March 10 vote was 

necessary. 

ROLL CALL: MR. SIMMONDS, YES; MR. MCKEON. NO; MR. ZAVODNYIK, NO; 

MR. MOORE, NO; MS. TAYLOR, YES; MS. LANG, NO; MAYOR MARTIN, NO. 

MOTION FAILED. 

Mr. McKeon moved to du-ect Mr. Anderson and Mr. Tumer to engage in good faith 

negotiations with Mr. Wiand in an attempt to resolve conflicts resulting from today's vote in 

order to reach an outcome mutually beneficial to both the city and Mr. Wiand. Seconded by 

Mr. Zavodnyik. 

Responding to Mr. Anderson, Mayor Martin proposed discussions regarding hangar relocation, 

the city bidding on the VJC, and an option to match the winning bid. 

Council members explored topics open for discussion with Mr. Wiand including enhancing the 

lease value, acquiring the lease, the confidentiality agreement putting the city in conflict with 

pubUc records laws, and bidding on the VJC. 

Responding to Mayor Martin indicating that a vote on Mr. McKeon's motion was not needed 

and that council should direct Mr. Anderson and Mr. Tumer to follow up with a meeting with 

Mr. Wiand, Mr. Simmonds stated he wanted the record to reflect that he objected to anything 

but approval of Mr. McKeon's motion. 

Mr. Simmonds moved that Mr. Anderson and Mr. Tumer not have conversations with Mr. 

Wiand to see if there are solutions. 

The motion died for lack of a second. 

Mr. Anderson clarified that council voted to reaffirm the March 10, 2009 decision denying the 

hangar request and confirmed it was council's direction that he and Mr. Tumer meet with the 

receiver to discuss the VJC. 

Recess was taken from 4:24 p.m. until 4:36 p.m. 
EXCERPT FROM THE JULY 14,2009 CITY COUNCIL REGULAR MEETING 

Vm. CITY ATTORNEY'S REPORT 

Mr. Anderson requested authorization to engage Thomas R. Devine of Kaplan Kirsch, 

Washington D.C, to assist in representation if the city is served with the Part 16 complaint 

regarding the Venice Jet Center. 

Mr. Turner stated the Part 16 complaint had been filed with the FAA in Washington D.C, and 

advised that he concurred with Mr. Anderson's request to hire Mr. Devine. 

Mr. Anderson reviewed Mr. Devine's qualifications, and noted that resolution before service of 

the Part 16 complaint would negate the need to engage Mr. Devine. 

Responding to Mr. Moore, Mr. Anderson explained the city has not had service on the Part 16 

complaint and, therefore, did not have pending Utigation and could not schedule a Private 

Attomey-Client Session. 

Mr. Moore moved to approve City Attomey Bob Anderson's request to engage Thomas R. 

Devine, Kaplan Kirsch, Washington D.C, to assist in representation if the city is served with the 

Part 16 complaint regarding the Venice Jet Center. Seconded by Ms. Taylor. MOTION 

CARRIED WITH MR. SIMMONDS OPPOSED. 

Xn. REQUEST FOR DIRECTION ON CONTENT OF A PROPOSED MEETING 

WITH BURTON W. WIAND REGARDING THE VENICE JET CENTER (VJC) 

Mr. Tumer advised that he and Mr. Anderson met with Burton Wiand, receiver for the VJC, and 

indicated that Mr. Wiand may possibly show interest in settiement terms that include 1) the city 

approving constmction of the four hangars and related constmction as submitted on the site plan, 

2) the VJC demonstrating financial capability prior to the issuing of building permits, 

3) consideration of a specific land swap proposal to constmct hangars on the opposite side of the 

taxiway, and 4) consideration of giving the city the right of first refusal regarding sale of the 

VJC. Mr. Timier continued that Mr. Wiand advised that he was going to file the Part 16 

complaint and would litigate for damages due to hangar constmction not being approved. Mr. 

Tumer requested specific direction from council regarding the proposed settiement terms. 

Discussion ensued regarding resolution of this matter, operating on the assumption that the city 

wiU be served with the Part 16 complaint. Private Attomey-Client Session discussions, and 

whether or not to discuss merits of the Part 16 complaint 

Marshall Happer, 117 Maitellago Drive, recommended that Mr. Anderson and Mr. Wiand 

discuss possible settlement and, if no resolution can be found, judicially determine whether or 

not the receiver is entitied to approval for constmction of four hangars with no rent increase, and 

defend the Part 16 complaint. 

Mr. Tumer left the dais from 5:14 p.m. until 5:18 p.m. 

Jim Marble, 832 Robert Street, discussed Part 16 procedures and the value of the VJC property 

with and without approval to constmct hangars. 
EXCERPT FROM THE JULY 14,2009 CITY COUNCIL REGULAR MEETING 

(5:23) Ms. Lang read a portion of correspondence dated July 1, 2009 from Catherine Lang, 

Federal Aviation Administration Acting Associate Administrator for Airports, to Senator Mel 

Martinez regarding hangar development and financial abiUty of the proponent wishing to build 

hangars being left up to the city. 

Discussion foUowed regarding deUberating about settlement meetings at a Private AttomeyCUent Session and the city's interest in acquiring the VJC leasehold, the appraisal being on hold, 

scheduUng a Private Attomey-CUent Session prior to being served with the Part 16 complaint 

and canceling if there is no service, settUng this issue, not making a decision at this meeting, and 

attomeys discussing a settlement. 

Mr. Simmonds moved to authorize Mr. Turner and Mr. Anderson to discuss with the receiver 

pursuing approving constmction of the four hangars and related constmction as submitted on the 

site plan and the VJC demonstrating financial capabihty prior to the issuing of building permits. 

Seconded by Ms. Taylor. 

Discussion ensued regarding the constmction of hangars being a legally defendable lease option 

for the owner of the VJC, settiement discussions with Mr. Wiand, including the value of the 

hangars in a settiement offer, vahdity of the hangar constmction request, Mr. Wiand stating he 

has no intention of building hangars, financial documentation not being provided by Mr. Wiand, 

problems with the lease, the city's interest in purchasing the VJC, the evenmal owner of the VJC 

constmcting the hangars, and acquiring additional options from Mr. Wiand. 

(6:03) Mr. Zavodnyik suggested including consideration of a specific land swap proposal to 

constmct hangars on the opposite side of the taxiway and considering giving the city the right of 

first refusal regarding sale of the VJC as part of Mr. Simmonds' motion. 

Discussion followed regarding whether or not to discuss settiement terms with Mr. Wiand, hiring 

outside legal counsel with expertise in aviation law and FAA regulations, discussing only 

Utigation stiategy and settiement of pending Utigation at the Private Attoraey-CUent Session, 

scheduling both a Private Attorney-Client Session and an open discussion at the July 28 council 

meeting, and settiement opportunities. 

Mr. Tumer reiterated his request for direction from council, not approval of hangar constmction. 

Mr. Simmonds moved to caU the question. Seconded by Ms. Taylor. 

ROLL CALL: MR. MOORE, YES; MS. TAYLOR, YES; MS. LANG, YES; MR. 

ZAVODNYIK, YES; MR. MCKEON, YES; MR. SIMMONDS, YES. MOTION CARRIED. 

ROLL CALL ON MR. SIMMONDS' MOTION: MS. LANG, NO; MR. MOORE, NO; 

MR. MCKEON, YES; MR. SIMMONDS, YES; MR. ZAVODNYIK, NO; MS. TAYLOR, YES. 

MOTION FAILED WITH A TIE VOTE. 

Mr. McKeon moved to authorize Mr. Turner and Mr. Anderson to discuss with the receiver 

pursuing approval of constmction of the four hangars and related constmction as submitted on 

the site plan, the VJC demonstrating financial capabiUty prior to the issuing of building permit, 

and a land swap proposal to constmct hangars on the opposite side of the taxiway, with the intent 
EXCERPT FROM THE JULY 14,2009 CITY COUNCIL REGULAR MEETING 

to come to a mutually acceptable agreement for approval by city council. Seconded by Mr. 

Simmonds. 

ROLL CALL: MS. TAYLOR, YES; MR. MCKEON, YES; MR. SMMONDS, YES; MR. 

MOORE, NO; MR. ZAVODNYIK, NO; MS. LANG, NO. MOTION FAILED WITH A TIE 

VOTE. 

Mr. Anderson requested that a Private Attomey-Client Session to discuss litigation and 

settiement be scheduled as part of the July 28, 2009 council meeting, assuming that service is 

made on the city on the Part 16 complaint. 

Discussion ensued regarding scheduUng the Private Attomey-CUent Session and open discussion 

as an agenda item. 

Mr. Zavodnyik requested that the aftemoon meeting be devoted solely to the Comprehensive 

Plan. 

Mr. Turner reviewed Comprehensive Plan discussion items and pointed out that budget items 

also required discussion. 

(6:28) Mr. Simmonds moved to approve Mr. Anderson's request to schedule a Private AttomeyCUent Session as part of the July 28, 2009 Special Meeting to discuss litigation strategy and 

settiement if service is made on the city regarding the Venice Jet Center Part 16 complaint. 

Seconded by Mr. Zavodnyik. MOTION CARRIED ON VOICE VOTE UNANIMOUSLY. 

Mr. Tumer clarified that an agenda item would also be included for an open meeting discussion. 
City Exhibit 12 

HALL & ANDERSON, P. A. 

ATTORNEYS AT LAW 

1314 EAST VENICE A VENUE 

SUITE E 

VENICE. FLORIDA 34285 

ROBERTC. ANDERSON 

WAYNEC. HALL* 

Telephone: (941) 480-0999 

Facsimile: (941) 480-1446 

Website: www. Iawvers.com/ha-law 

E-mail: whalKSihall-anderson.com 

randerson&hall-anderson.coni 

'Board Certified With. Trusli. 

and Estates Lawyer 

February 4, 2009 

Ms. Rebecca R. Henry 

Planning Specialist 

U. S. Department of Transportation 

Federal Aviation Administration 

Orlando Airports District Office 

5950 Hazeltine National Drive, Suite 400 

Oriando, Florida 32822-5024 

RE: Venice Municipal Airport 

Dear Ms. Henry: 

Venice Jet Center. LLC is a fixed base operator operating at the Venice Municipal Airport 

pursuant to a lease with the City of Venice dated May 23,2006. On January 13,2009 the .fet Center 

asked the Venice City Council for its approval of a plan for the Jet Center to construct four 8,000 

square foot hangars and related appurtenances on vacant land located within its leasehold. 

1 he approved Airport Layout Plan for the Venice Municipal Airport is a map series prepared 

by Dufresne-Henry, Inc. The map series contains six sheets. I have enclosed a copy of Sheet 2 of 

6 entitled Airport Layout Plan and a copy of Sheet 3 of 6 entitled Terminal Area Plan. On the 

enclosed Terminal Area Plan 1 have shown the three parcels which comprise the Venice Jet Center 

leasehold (outlined in red) and the location of the four proposed hangars (outlined in green). 

Order 5190.6A, Airport Compliance Requirements, dated October 2, 1989 addresses die 

obligations of an airport owner regarding the use of airport property. Section 4-17(f) of the order 

states: 

"Continued adherence to an ALP is a compliance obligation of the airport owner. 

The erection of any sti-ucture or any alteration in conflict with the plem as approved 

by the FAA may constitute a violation of these obligations." 
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City Exhibit 15 

BEFORE THE 

STATE OF FLORIDA 

COMMISSION ON ETHICS 

DATE FILED 

, DECi 1 0 2008 

COMMISSION ON ETHICf.< 

In re SUE LANG. . 

Respondent 

Complaint No. 08-137 

BECM B BY 

DEC f 5 2008 

PUBLIC REPORT AND ORDER DISMISSING CCSSFL^OT?!'* ^ ^^oWmyer 

On Friday, December 5, 2008, the Commission on Ethics met in executive session and 

considered (his complaint for legal sufficiency pursuant to Commission Rule 34-5.002, F.A.C. 

The Commission's review was limited to questions of jurisdiction of the Commission and of the 

adequacy of the details of the complaint to allege a violation of the Code of Ethics for Public 

Officers and Employees. No fiictual investigation preceded the review, and therefore the 

Commission's conclusions do not reflect on the accuracy of the allegations of the complaint 

The Commission voted to dismiss the complaint for legal insufficiency, based on the 

following analysis: 

1. This complaint was filed by Edward Winston Wihnore of Venice, Florida, 

2. The Respondent, Sue Lang, allegedly serves as a member of the Venice City 

Council. 

3. The complaint alleges that the Respondent lives within a mile of the Venice City 

Airport. According to the Complainant, the Respondent has long been an outspoken opponent of 

the Altport and its activities because her home lies near the end of a runway, and under the 
Airport's current FAA designation, jets and turbo-prop aircraft are allowed to use the runways. 

According to the Complainant, the Respondent wants to see jet and large aircraft traffic 

eliminated, and campaigned "on issues discouraging development at the Venice City Ainiort." 

4. Subsequent to her election, the Complainant vmtcs, tiie Respondent 

communicated privately with other Council members and the Mayor on a variety of issues that 

would come before the Council, including issues related to the Aiiport, and used private citizens 

as conduits to convey infonnation she would be prohibited, under Florida's open meetings 

("Sunshine") law, fi-om personally communicating outside a public meeting. 

5. Additionally, the complaint alleges that the Respondent and ttvo other City 

Council members who live close to the Airport rejected an Airport Master Plan and Aiiport 

Layout Plan drafted by a consultant hired by the City Coimcil in 2005, and voted to "engage a 

new engineering firm that will agree to draw the plan to their own specifications." According to 

the Complainant, the Respondent has "voted on issues related to the Master Plan Update and the 

Airport Layout Plan" on numerous occasions. 

6. The Complainant also contends that the Respondent: has attempted "to interfere 

with private businesses located on aiiport property, including voting to direct the City Attorney 

to draft provisions that allow the City to control subleases at the Airport and rejecting business 

signs that had been approved by City stafiP'; has voted against the Venice Municipal Joint 

Automated Improvement Program, which would have fiuided repairs to the aiiport; and has 

sought to influence appointments to the Airport Advisory Board, and ultimately voted to abohsh 

that Board. 
7. Finally, the complaint alleges that the Respondent disclosed infonnation she was 

furnished in a "shade" meeting, "in order to benefit her plan to halt all business opportunities at 

the City of Venice Airport." 

8. Section 112.313(6), Florida Statutes, states: 

No public officer, employee of an agency, or local government 

attomey shall corruptly use or attempt to use his or her official 

position or any property or resource which may be within his or 

her tmst, or perform his or her official duties, to secure a special 

privilege, benefit, or exemption for himself, herself, or others. 

Pursuant to Section. 112.312(9), Florida Statutes, "corruptly" is defined as 

done vfith a wrongful intent and for the purpose of obtaining, or 

compensating or receiving compensation for, any benefit resulting 

from some act or omission of a public servant which is inconsistent 

with the proper performance of his or her public duties. 

9. Section 112.313(6) prohibits the corrupt, intentional use of one's public position, 

property, or resources for jjersonal gain, or to benefit another. 

10. It must be observed at the outset that the Respondent's purported underlying goal 

of limiting or reducing the number and types of aircraft using the Aiiport is not inconsistent vrith 

the proper performance of her public duty. While reasonable minds may differ as to wiiether 

reducing airport fiinctionality is good public policy, it is unquestionably public policy, and as 

such is within the purview of the City Council to determine. Accordingly, the allegations 

regarding Respondent's votes and other efforts, as a Council member, regarding die Aiiport 

Master Plan, the change in engineering firms, and the like, are legally insufficient to allege a 

violation of Section 112.313(6), Florida Statutes. 

11. As to the allegations of Sunshine law violations, to the extent the complaint may 

be read as alleging that die Respondent misused her office by communicating with other Council 
members outside the sunshine on various issues unrelated to the Airport, it is legally insufficient 

to state a violation of Section 112.313(6), Florida Statutes, because no facts arc alleged which 

indicate any benefit to the Respondent or any other person or entity as a result of the 

communications. The Sunshine law. Section 286.011, Florida Statutes, prohibits two or more 

members of a board from meeting and discussing matters on which foreseeable action will be 

taken by die bpard. See. Board of Public Instruction of Broward County v. Doran. 224 So. 2d 

693 (Fla. 1969). However, the Commission has no jurisdiction over this statute. Knowing 

violations of the Stmshine law are second degree misdemeanors, and allegations of violations of 

the law are within the jurisdiction of the State Attorney's Office. 

12. The allegation that tiie Respondent privately communicated with other Council 

members and used citizens as conduits to convey information she was precluded from personally 

communicating does indicate a benefit to the Respondent, in that these communications 

advanced her efforts to reduce Airport usage, which would allegedly benefit her because she 

lives near the Airport. However, in order to violate the law, the conduct must be undertaken "for 

the pmpose of obtauiing a personal benefit. The change in Aiiport activities cannot be said to 

be personal, to the Respondent, because the perceived benefit—reduction in noise and air 

traffic—^would be shared by everyone in the surrounding area. Indeed, according to the 

Complainant, the Respondent campaigned, and was elected, on this platform. As previously 

stated, change in airport usage is a matter of public policy; that the Respondent may enjoy an 

incidental benefit as a result of such change does not alter that fact. Compare. Blackburn v. 

State. 589 So. 2d 431, 435 (Fla. Dist. Ct App. 1st Dist 1991) (mcidental benefit enjoyed by 

county commissioner in using, for her campaign, materials prepared for her use as a 

commissioner does not convert her request to prepare the materials into an illegal act). 

4 
Therefore, notwithstanding that the mechanism she chose may have violated some other 

provision of law, the allegation that Respondent used her position to alter Aiiport activities is 

legally insufficient to allege a violation of Section 112.313(6), Florida Statutes. 

13. The allegations that the Respondent voted on issues related to the Airport 

implicate Section 112.3143, Florida Stamtes, which states, in pertinent part: 

(3)(a) No county, municipal, or other local public officer shall 

vote in an official capacity upon any measure which would inure to 

his or her special private gain or loss; which he or she knows 

would inure to the special private gain or loss of any principal by 

whom he or she is retained or to the parent organization or 

subsidiary of a corporate principal by which he or she is retained, 

other than an agency as defined in s. 112.312(2); or which he or 

she knows would inure to the special private gain or loss of a 

relative or business associate of tiie public officer. Such public 

officer shall, prior to the vote being taken, publicly state to the 

assembly the nature of the officer's interest in the matter from 

which he or she is abstaining from voting and, within 15 days after 

the vote occurs, disclose the nature of his or her interest as a public 

record in a memorandum filed with the person responsible for 

recording the minutes of the meeting, who shall incorporate the 

memorandum in the minutes. 

14. Section 112.3143, Florida Statutes, prohibits a local pubUc officer from voting on 

matters which would inure to her own special private gain or that of a principal by whom she is 

retained. Key to this analysis is that the gain or loss be a "special private" one, because not every 

vote which may affect an official in some way will inure to that official's "special private gain or 

loss." The Commission has said that if the size of the class of persons affected by the measure is 

sufficienUy large, and there is no disproportionate impact on the voting official, the gain or loss 

will not be "special." Nothing in the complaint suggests that the effect of Airport development 

on traffic, noise, or property values will be any different for the Respondent than for any of the 

residences in the surrounding neighborhoods. Under the facts alleged, where the Respondent's 
persotial interests are the same as a substantial number of her constituents and she was elected, at 

least in part, on a platform discouraging development at the Aiiport, we cannot conclude that any 

of the meastires she allegedly voted on would have inured to her "special private" gain. 

Accordingly, the complaint is legally insufficient to allege a violation of Section 112.3143, 

Florida Statutes 

15. The Complainant also alleges a violation of Article II, Section 8(g), Florida 

Constitution. That provision states only that, "A code of ethics for all state employees and 

nonjudicial officers prohibiting conflict between public duty and private interests shall be 

prescribed by law," and does not establish any standard of conduct which an individual would be 

capable of violating. 

16. Regarding the allegation described m paragraph 7—^that the Respondent misused 

confidential infonnation—Section 112.313(8), Florida Statutes, provides: 

DISCLOSURE OR USE OF CERTAIN INFORMATION.—A 

current or former public officer, employee of an agency, or local 

government attomey may not disclose or use information not 

available to members of the general public and gained by reason of 

his or her official position, except for infonnation relating exclusively 

to governmental practices, for his or her personal gain or benefit or 

for the personal gain or benefit of any other person or business entity. 

17. This section prohibits an official from using infonnation not available to the 

general public for personal gam or for the benefit of another. The Complainant does not 

indicate, other than in a vague and conclusory manner, what information was used, how it was 

used, or how its use benefitted the Respondent. Therefore, the complaint is legally insufficient to 

allege a violation of Section 112.313(8), Florida Statutes. 
Accordingly, this complaint is hereby dismissed for feilure to constitute a legally 

sufficient complaint with the issuance of this public report. 

ORDERED by the State of Florida Commission on Ethics meeting in executive session 

on December 5,2008. 

Date 

\.^;crtcC^^ 

Cheryl Forthilli 

Chair, Florida Commission on Ethics 

cc: Mr. Michael J. Roper, Counsel for Respondent 

Mr. Edward Winston Wilmore, Complainant 

CEF/vad 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 1 of 53 

City Exhibit 16 

UNITED STATES DISTRICT COURT 

MIDDLE DISTRICT OF FLORIDA 

TAMPA DIVISION 

SECURITIES AND EXCHANGE 

COMMISSION, 

Plaintiff, 

ARTHUR NADEL; 

SCOOP CAPITAL, LLC; 

SCOOP MANAGEMENT, INC. 

Defendants, 

SCOOP REAL ESTATE, L.P.; 

VALHALLA INVESTMENT PARTNERS, L.P. 

VALHALLA MANAGEMENT, INC.; 

VICTORY IRA FUND, LTD.; 

VICTORY FUND, LTD.; 

VIKING IRA FUND, LLC; 

VIKING FUND, LLC; AND 

VIKING MANAGEMENT, LLC, 

Relief Defendants. 

Case No. 8:09-cv-0087-T-26TBM 

THE RECEIVER'S THIRD INTERIM REPORT 

Receivership Information and Activity from May 15, 2009 through August 12, 2009 

Cari R. Nelson, FBN 0280186 

Gianluca Morello, FBN 034997 

Maya M. Lockwood, FBN 0175481 

Ashley Bruce Trehan, FBN 0043411 

FOWLER WHITE BOGGS P.A. 

P.O. Box 1438 

Tampa, FL 33601 

T: (813) 228-7411 

F: (813) 229-8313 

Attomeys for Receiver, Burton W. Wiand 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 2 of 53 

TABLE OF CONTENTS 

INTRODUCTION 1 

BACKGROUND 2 

I. Procedure and Chronology 2 

II. The Receiver's Role and Responsibilities 5 

A. Operating the Business of the Receivership Entities 6 

B. Taking Possession of Receivership Property 6 

C. Investigating Receivership Affairs and Recovering Funds 6 

D. Reporting on Assets and Liabilities and Implementing Claims 

Process 7 

III. Overview of Preliminary Findings 7 

A. Fictitious Trading Results 8 

B. Depletion of the Hedge Funds' Assets 10 

C. Investor Losses and "Fictitious Profits." 11 

D. Nadel's Trading Activities in the Hedge Funds 12 

ACTIONS TAKEN BY THE RECEIVER 15 

IV. Securing the Receivership Estate 15 

A. Taking Possession of Defendants' Headquarters 15 

B. Securing Receivership Funds 16 

C. Locating Additional Funds 18 

D. Receivership Accounting Report 19 

E. Obtaining Information from Third Parties 19 

V. Asset Analysis and Recovery 20 

A. Expansion of Receivership to Include Additional Entities 20 

1. Venice Jet Center, LLC 21 

2. Tradewind, LLC 23 

3. Laurel Mountain Preserve, LLC; Laurel Preserve, LLC; 

and Laurel Mountain Preserve Homeowners Association, 

Inc 25 

4. Marguerite J. Nadel Revocable Trust UAD 8/2/2007 27 

5. Guy-Nadel Foundation, Inc 28 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 3 of 53 

6. Lime Avenue Enterprises, LLC, and A Victorian Garden 

Florist, LLC 29 

7. Viking Oil & Gas, LLC 30 

8. Home Front Homes, LLC 30 

9. Summer Place Development Corporation 32 

B. Recovery of Real Property 33 

1. Thomasville, Georgia 33 

2. Grady County, Georgia 34 

3. Graham, North Carolina 34 

4. Raleigh, North Carolina 35 

5. Tupelo, Mississippi 36 

6. Newnan, Georgia 36 

7. Fairview, North Carolina 37 

8. Sarasota, Florida (Fruitville Road) 37 

9. Oberlin, Ohio 38 

C. Recovery of Vehicles and Other Items 39 

1. Vehicles 39 

2. Condominium Note and Mortgage 40 

3. Bonds.com Assets 40 

4. Quest EMG Promissory Note 42 

5. Miscellaneous Items 42 

D. Recovery of Profits from Investors 42 

E. Recovery of Assets from Christopher D. Moody and Neil V. 

Moody 44 

1. Viking Oil's Interest in Quest EMG 44 

2. Moodys' Interest in Bonds.com 44 

3. Queen's Wreath Jewels, Inc 44 

F. Recovery of Fees from Recipients of Commissions 45 

G. Other Litigation 46 

VI. Investigating Receivership Affairs and Tracing Receivership Funds 47 

VII. The Next Sixty Days 47 

CONCLUSION 49 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 4 of 53 

INTRODUCTION 

Burton W. Wiand, the Court-appointed Receiver for the Receivership Entities as 

defined herein, hereby files this Third Interim Report (the "Report") to inform the Court, the 

investors, and others interested in this Receivership, of activities to date as well as the 

proposed course of action.' As of the date of filing this Report, the Court has appointed 

Burton W. Wiand as Receiver over the following entities and trust: 

a) Defendants Scoop Capital, LLC ("Scoop Capital") and Scoop Management, 

Inc. ("Scoop Management") (which, along with Arthur Nadel, are 

collectively refened to as "Defendants"); 

b) Relief Defendants Scoop Real Estate, L.P. ("Scoop Real Estate"); Valhalla 

Investment Partners, L.P. ("Valhalla Investment Partners"); Victory IRA 

Fund, Ltd. ("Victory IRA Fund"); Victory Fund, Ltd. ("Victory Fund"); 

Viking IRA Fund, LLC ("Viking IRA Fund"); and Viking Fund LLC 

("Viking Fund") (collectively referred to as the "Hedge Funds'');^ 

c) Relief Defendants Valhalla Management, Inc. ("Valhalla Management"), 

and Viking Management, LLC ("Viking Management") (which, along with 

Scoop Capital and Scoop Management, are collectively refened to as the 

"Investment Managers"); and 

d) Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC; 

Laurel Preserve, LLC; Laurel Mountain Preserve Homeowners Association, 

Inc.; Marguerite J. Nadel Revocable Trust UAD 8/2/07; Guy-Nadel 

Foundation, Inc.; Lime Avenue Enterprises, LLC; A Victorian Garden Florist, 

LLC; Viking Oil & Gas, LLC; and Home Front Homes, LLC. 

The foregoing entities and trust are collectively refened to as the "Receivership Entities." 

This Report is intended to report on information and activity from May 15, 2009, through 

August 12, 2009. Thus, unless otherwise indicated, the information reported herein reflects 

the information in the Receiver's possession as of August 12, 2009. 

^ While these funds are refened to as hedge funds in this Report, the Receiver's investigation 

has raised serious questions as to whether they were ever operated as legitimate investment 

vehicles. 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 5 of 53 

The Receiver was appointed on January 21, 2009. By January 26, 2009, the Receiver 

established an informational website, www.nadelreceivership.com. The Receiver has 

updated this website periodically and continues to update it with the Receiver's most 

significant actions to date; important court filings in this proceeding; and other news that 

might be of interest to the public. This Report, as well as all previous and subsequent 

reports, will be posted on the Receiver's website. 

BACKGROUND 

I. Procedure and Chronology. 

Defendant Arthur Nadel ("Nadel") was the Hedge Funds' principal investment 

advisor and an officer and director of Scoop Management and sole managing member of 

Scoop Capital. On or about January 14, 2009, Nadel fled Sarasota county and disappeared 

for nearly two weeks. 

On January 21, 2009, the Securities and Exchange Commission (the "Commission") 

filed a complaint in this Court charging the Defendants with violations of federal securities 

laws (the "Commission Proceeding"). The Commission alleges that Nadel used the 

Investment Managers to defraud investors in the Hedge Funds from at least January 2008 

forward by "massively" overstating investment retums and the value of fund assets to 

investors in these funds and issuing false account statements to investors. The Commission 

also asserts that Nadel misappropriated investor funds by transferring $1.25 million from 

Viking IRA Fund and Valhalla Investment Partners to secret bank accounts. The Court 

found the Commission demonstrated 2i prima facie case that Defendants committed multiple 

violations of federal securities laws. 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 6 of 53 

On that same day, on the SEC's motion, the Court entered (i) an Order of Preliminary 

Injunction and Other Relief as to the Investment Managers and all Relief Defendants (Doc. 

7) and (ii) a Temporary Restraining Order and Other Emergency Relief as to Nadel (the 

"Nadel TRO") (Doc. 9). Among other things, these orders enjoined the Defendants and 

Relief Defendants from further violations of federal securities laws and froze their assets. On 

February 3, 2009, the Court entered an Order of Preliminary Injunction and Other Relief as 

to Nadel (the "Nadel Preliminary Injunction") (Doc. 29), the terms of which are essentially 

identical to those of the Nadel TRO. 

Also on the same day the Commission filed its complaint the Court entered an order 

appointing Burton W. Wiand as Receiver for the Investment Managers and Hedge Funds (the 

"Order Appointing Receiver"). {See generally Order Appointing Receiver (Doc. 8).) 

Between January 27, 2009, and August 10, 2009, on the Receiver's motions, the Court 

entered orders expanding the scope of receivership to include additional entities as follows: 

January 27, 2009 (Doc. 17) Venice Jet Center, LLC 

Tradewind, LLC 

February 11, 2009 (Doc. 44) Laurel Mountain Preserve, LLC 

Laurel Preserve, LLC 

Marguerite J. Nadel Revocable Trust UAD 8/2/07 

Laurel Mountain Preserve Homeowner Association, Inc. 

March 9, 2009 (Doc. 68) Guy-Nadel Foundation, Inc. 

^ Both the Nadel TRO and the Nadel Preliminary Injunction required Nadel to make a sworn 

accounting to the Court and the Commission of all funds received by him from any of the 

Defendants or Relief Defendants and a sworn identification of all accounts in which he has 

an interest or has the power or right to exercise control. (Docs. 9, 29.) In response to these 

Orders, on March 31, 2009, Nadel submitted a letter asserting his Fifth Amendment right 

against self-incrimination and refused to provide this information. (Doc. 102.) 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 7 of 53 

March 17, 2009 (Doc. 81) Lime Avenue Enterprises, LLC 

A Victorian Garden Florist, LLC 

July 15, 2009 (Doc. 153) Viking Oil & Gas, LLC 

August 10, 2009 (Doc. 172) Home Front Homes, LLC 

On June 3, 2009, the Court entered an order Reappointing Receiver. (Doc. 140.) The 

January 21, 2009, and June 3, 2009, Orders will be refened to collectively as the "Orders 

Appointing Receiver." Pursuant to the Orders Appointing Receiver, the Receiver has the 

duty and authority to: "administer and manage the business affairs, funds, assets, choses in 

action and any other property of the Defendants and Relief Defendants; marshal and 

safeguard all of the assets of the Defendants and Relief Defendants; and take whatever 

actions are necessary for the protection of the investors." (Orders Appointing Receiver at l2.) 

On January 27, 2009, Nadel sunendered to the FBI in Tampa, Florida. Nadel was 

anested and charged with two counts of securities fraud and wire fraud based on the 

fraudulent investment scheme discussed herein. On January 30, 2009, Magistrate Judge 

Mark Pizzo of the United States District Court for the Middle District of Florida denied 

Nadel's request for a release on bond awaiting trial, deciding instead that Nadel should 

remain in jail based on, among other things, a risk of flight. On or about February 2, 2009, 

Judge Pizzo entered a Detention Order denying bail and a Removal Order requiring that 

Nadel be transfened to the Metropolitan Correctional Center in New York, New York to 

await trial. U.S. v. Nadel, (Case No. 8:09-mj-01039 M.D. Fla. (Docs. 5, 6)). 

On February 26, 2009, Judge Denise Cote of the United States District Court for the 

Southern District of New York agreed to release Nadel on $5 million bail, contingent on a 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 8 of 53 

number of conditions including $1 million in cash, living restrictions, and specific bond 

guarantees. Judge Cote also required Nadel to fully and completely cooperate with the SEC. 

On April 28, 2009, Nadel was indicted on six counts of securities fraud, one count of mail 

fraud, and eight counts of wire fraud. The maximum sentence for each charge is 20 years of 

imprisonment. On April 30, 2009, Nadel pleaded not guilty to the fifteen charges. In June 

2009, Nadel sought a reduction of bail. Judge John G. Koehl agreed to remove the $1 

million cash security and instead imposed a $1 million personal recognizance bond, requiring 

Nadel to find four financially sound co-signers. As of the date of this Report, Nadel has not 

met the conditions for bail and is still being held in the Metropolitan Conectional Center. 

In the Commission Proceeding, on April 6, 2009, Nadel filed his answer and 

affirmative defenses, in which he denied nearly every allegation in the Complaint and set 

forth two affirmative defenses. (Doc. 104.) Nadel also purported to set forth a 

"Counterclaim," which the Court struck on the Receiver's motion. (Docs. Ill, 112.) 

II. The Receiver's Role and Responsibilities. 

The Receiver functions as an independent agent of the court. The United States 

Supreme Court has explained that: 

[a receiver] .. . is an officer of the court; his appointment is 

provisional. He is appointed on behalf of all parties, and not of 

the complainant or of the defendant only. He is appointed for 

the benefit of all parties who may establish rights in the cause. 

The money in his hand is in custodia legis for whoever can 

make out a title to it. .. It is the court itself which has the care 

of the property in dispute. The receiver is but the creature of 

the court; he has no power except such as are confened upon 

him by the order of his appointment and the course and 

practice of the court. 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 9 of 53 

Booth V. Clark, 58 U.S. 322, 331 (1854). Generally, the Receiver is charged by the Court 

with maximizing investors' and creditors' recoveries. To this end, the Court directed the 

Receiver to engage in the following activities: 

A. Operating the Business of the Receivership Entities. 

The Court granted the Receiver the "full and exclusive power, duty, and authority" to 

"administer and manage the business affairs, funds, assets, choses in action and any other 

property of the Defendants and Relief Defendants . ... " (Orders Appointing Receiver at I.) 

B. Taking Possession of Receivership Property. 

The Court directed the Receiver to "[t]ake immediate possession of all property, 

assets and estates of every kind of the Defendants and Relief Defendants, whatsoever and 

wheresoever, located, belonging to or in the possession of the Defendants and Relief 

Defendants .... " (Orders Appointing Receiver TJ 1.) 

C. Investigating Receivership Affairs and Recovering Funds. 

The Court also directed the Receiver to "[i]nvestigate the manner in which the affairs 

of the Defendants and Relief Defendants were conducted and institute such actions and legal 

proceedings, for the benefit and on behalf of the Defendants and Relief Defendants and their 

investors and other creditors as the Receiver deems necessary against those individuals, 

corporations, partnerships, associations and/or unincorporated organizations, which the 

Receiver may claim have wrongfully, illegally or otherwise improperly misappropriated or 

transferred monies or other proceeds directly or indirectly traceable from investors in the 

Defendants or Relief Defendants .... " (Orders Appointing Receiver ^ 2.) 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 10 of 53 

D. Reporting on Assets and Liabilities and Implementing Claims Process. 

The Court further directed the Receiver to "[p]resent to this Court a report reflecting 

the existence and value of the assets of the Defendants and Relief Defendants and of the 

extent of liabilities, both those claimed to exist by others and those the Receiver believes to 

be legal obligations of the Defendants and Relief Defendants." (Orders Appointing Receiver 

^ 3.) As contemplated by the Order, the Receiver will ultimately institute a claims process 

primarily for the benefit of the Receivership Entities' investors who have been defrauded and 

suffered legitimate losses as a result of the activities of Nadel and others. 

III. Overview of Preliminary Findings. 

The Receiver continues the process of reviewing voluminous records from the offices 

of Receivership Entities, as well as records from more than thirty (30) different institutions, 

including banks and brokerage firms. The Receiver also is in the process of obtaining 

documents from additional third parties. The Receiver has formed some preliminary 

conclusions based on his review of a portion of the records received. While these 

conclusions are not final, and may change as the review becomes more complete, the 

Receiver believes they should be shared with the Court, the investors, and other potentially 

interested parties. 

In the Commission's Emergency Motion and Memorandum of Law in Support of 

Temporary Restraining Order and Other Emergency Relief (Doc. 2) and supporting papers, 

the Commission presented evidence showing Nadel defrauded investors through his control 

of the Hedge Funds' advisers and/or managers, Scoop Capital and Scoop Management. 

Through the Investment Managers, Nadel, along with Christopher Moody and Neil Moody, 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 11 of 53 

was ultimately responsible for controlling the Hedge Funds' investment activities. While the 

Commission's evidence showed that Nadel defrauded investors since at least January 2008, 

the Receiver's investigation has uncovered evidence showing that the fraud began at least as 

early as 2003 and in all likelihood before then. 

A. Fictitious Trading Results. 

The Receiver's investigation has revealed that for each Hedge Fund, the Hedge 

Fund's performance as disclosed to investors from at least 2003 forward was based mainly 

on trading results that Nadel purported to have in brokerage transactions cleared through 

Goldman Sachs Group, Inc. (in which money was purportedly traded to generate the 

purported retums Nadel was paying). The retums reported to investors and potential 

investors were based on fictitious performance results that were created by Nadel and then 

included in a database maintained by Scoop Management. These fictitious performance 

results formed the basis of gross misrepresentations to investors. 

Table 1, below, shows a comparison of actual trading results in the Hedge Funds' 

Goldman Sachs accounts to the values represented to investors and to distributions paid. 

Specifically, for each year from 2003 to 2008, the table lists from, left to right (1) the 

pertinent year; (2) the amount of gains the Investment Managers represented that the Hedge 

Funds had achieved that year; (3) the actual combined total gain or loss experienced that year 

in the accounts for the Hedge Funds, per statements from Goldman Sachs; (4) the difference 

between what the Investment Managers represented the Hedge Funds had achieved in 

performance versus the actual trading results in the Goldman Sachs accounts for the Hedge 

Funds (identified as "Difference"); and (5) the actual distributions paid by the Hedge Funds 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 12 of 53 

for the pertinent year, including distributions to investors and management and performance 

incentive fees paid. 

Table 1: Gains/(Losses) 

Year 

2003 

2004 

2005 

2006 

2007 

2008 

Total 

Investment Managers' 

Represented Gains ($) 

23,716,749 

-y 4^50^45.-;. 

61,169,058 

%=30,003^1?I8 

54,665,571 

•;:,. •-; mm^94 i 

272,840,295 

Hedge Funds 

Actual Amounts($) 

17,237,008 

4,637,878 

5,739,301 

(18,549,355) 

(24,989,307) 

.a493.^4 ) 

(18,418,129) 

Difference ($) 

6,479,741 

42.312,467: 

55,429,756 

68,553,133 

79,654,879 

38^^28,44^ 

291,258,424 

Distributions ($) 

16,729,147 

49,329^387 

75,078,840 

75i444;^2r 

60,034,321 

.,v 73,443,310 

350,059,127 

As Table 1 shows, for 2003 through 2008, the Hedge Funds' performance as 

represented to investors was significantly overstated and thus, false. Specifically, for the 

years 2003 to 2008, the Investment Managers represented that the Hedge Funds' trading 

activity generated more than $272 million in gains when, in reality, the Hedge Funds' 

investment accounts actually lost approximately $18.4 million. Further, while the Hedge 

Funds lost approximately $18.4 million for this same period, more than $350 million was 

paid by the Investment Managers in distributions to investors and to themselves and others as 

fees. As this table shows, from at least 2003 through 2008, the Investment Managers were 

making distributions and paying fees that the investment performance of the Hedge Funds 

never supported. 

The Investment Managers also were crediting fictitious profits to accounts where the 

accountholders were not taking distributions. These fictitious profits were likewise 

unsupported by the Hedge Funds' investment performance and served only to further 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 13 of 53 

increase the Hedge Funds' insolvency. This negative cash flow made the eventual collapse 

of Nadel's enterprise inevitable. 

In short, the investment retums and performance as represented to investors were 

based on grossly overstated performance numbers created by Nadel, and the results reported 

to investors were fiction. The true results of the trading activity that actually occurred were 

never included in data reported to investors or potential investors. 

B. Depletion of the Hedge Funds' Assets. 

Evidence also shows that the Hedge Funds directly or indirectly paid substantial fees 

to Scoop Capital and Scoop Management, to other Receivership Entities, and to other third 

parties in the form of management, advisory, and/or profit incentive fees and "finder" fees. 

As reflected in Table 2, below, according to the Hedge Funds' documents, from 2003 

through 2008 they paid approximately $97,168,122 in total fees. Profit incentive fees were 

paid to Scoop Management, Viking Management, Valhalla Management, and third parties, 

based on a percentage of profits that never occuned. Such payments significantly depleted 

the Hedge Funds' assets and diverted those assets to Scoop Capital and Scoop Management, 

which were controlled by Nadel, and to Valhalla Management and Viking Management, 

which were controlled by Neil and Christopher Moody. 

10 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 14 of 53 

Table 2: Fees Paid from Hedge Funds to Investment Managers and Others 

Performance 

Year Management Fees Incentive Fees Total Fees 

2003 

2004 

2005 

2006 

2007 

2008 

1,521,377 

3,644,188 

5,057,633 

5,^56,646 

6,206,972 

6,771,232 

5,929,187 

11,737,586 

15,292,264 

1|;500,945 

13,666,393 

9,083,698 

7,450,565 

15,381,774 

20,349,897 

18,257,590 

19,873,365 

15,854,931 

Total 28,958,048 68,210,074 97,168,122 

Significant sums from the proceeds of Nadel's scheme also made their way into other 

accounts controlled by Nadel and/or his wife. Marguerite "Peg" Nadel. As of December 31, 

2008, according to the balance sheet for Scoop Management, Scoop Management had 

transferred approximately $17,177,896.56 to accounts owned either individually or jointly by 

the Nadels. These amounts are in addition to the amounts Mrs. Nadel received from Scoop 

Management as compensation. According to its balance sheet. Scoop Management also 

transferred approximately $6,433,804.40 to other entities controlled by Nadel. To date, the 

Receiver has not uncovered any source of income for Nadel or his wife (during the time of 

Nadel's scheme) that was not in some manner funded with money from that scheme. 

Documentation and other information that the Receiver has collected shows that 

money derived from the scheme was used by Nadel to purchase and/or fund other businesses. 

The Receiver has expanded the Receivership to include additional businesses controlled by 

Nadel. (See discussion of expansion in Section V.A, below.) 

C. Investor Losses and "Fictitious Profits." 

To date, the Receiver has discovered and identified approximately 371 investors who 

invested slightly more than $397 million. Based on documentation analyzed to date, it 

11 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 15 of 53 

appears that investors have out-of-pocket losses of approximately $168 million. The 

Receiver has also discovered that some investors were paid more than their total investments. 

These overpayments were of "fictitious profits." To date, the Receiver has discovered 

approximately $39 million in such fictitious profits. The Receiver has initiated efforts to 

recover these fictitious profits, and those efforts are discussed in Section V.D, below. 

Further, it appears that, although separately numbered investor accounts were used in 

communications with investors and brokerage accounts were used for each Hedge Fund, in 

reality there were not separate funds. Due to the method Nadel used to trade securities, 

distinctions made between the individual Hedge Funds and between investor "accounts" have 

little meaning. The documents reviewed reveal that Nadel treated the Hedge Funds as a 

single source of money regardless of the Hedge Fund with which investors purportedly 

invested. The Receiver has reached the preliminary conclusion based on available research 

and evidence that investor funds were commingled in Nadel's and the Receivership Entities' 

accounts. 

D. Nadel's Trading Activities in the Hedge Funds. 

In the Executive Summaries disseminated to investors, Nadel represented that the 

Hedge Funds were generating the annual returns reflected in Table 3, below, primarily 

through trading in the quadruple Qs.** 

" The temi "Quadmple Qs" (ticker symbol: QQQQ) refers to the NASDAQ-100 Tracking 

Stock, an exchange-traded fund ("ETF") listed on the NASDAQ intended to track the 

NASDAQ index. 

12 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 16 of 53 

Table 3: Fund Performance as Represented in Executive Summaries 

Year 

2002 

2003 

2004 

2005 

2006 

2007 

2008* 

Valhalla 

21.59% 

ALSWo 

28.96% 

30.19% 

19.99% 

19.24% 

10.97% 

Victory 

40.93% 

42.52% 

30.30% 

25.90% 

18.94% 

19165% 

11.82% 

Viking 

26.98% 

46.42% 

30.46% 

27.40% 

19.08% 

20.60% 

11.43% 

Viking IRA 

26.88% 

45.23% 

29.93% 

26.36% 

18.93% 

20.55% 

11.52% 

Victory IRA 

N/A 

30.43% 

32.16% 

27.31%* 

19.50% 

20.02% 

11.72% 

Scoop 

Real Estate 

N/A 

n/A 

48.67% 

32,14% 

21.15% 

21.75% 

12.31% 

* Results are for an incomplete year. 

While Nadel did trade in quadruple-Qs, he did not achieve for the Hedge Funds the 

amount of retums he represented to investors. Rather, based on the documents the 

Receiver's financial expert has analyzed to date, the Hedge Funds as a whole lost significant 

sums. Specifically, Table 4, below, shows the actual account profits and losses for the 

Hedge Funds for the indicated time. 

Table 4: Actual Profits and Losses for the Hedge Funds 

Account Name 

Scoop Real Estate Ltd. 

2/1/04-12/31/08 

Valhalla Investment Partners, LP 

10/01/02-12/31/08 

Viking Fund LLC 

3/01/03-12/31/08 

Viking IRA Fund Ltd. 

3/01/03-12/31/08 

Victory Fund, Ltd. 

6/01/02-12/31/08 

Victory Fund, Ltd. 

2/01/03-8/31/03 

Victory IRA Fund, Ltd. 

Hedge Fund Total 

Account 

Profit/(Losses) 

($6,637,880) 

$2,863,875 

($8,073,752) 

($2,053,443) 

$1,825,701 

($66,776) 

($5,941,164) 

($18,083,439) 

Overall Annualized 

Rate of Return 

-33.35% 

3.98% 

-19.40% 

-24.53% 

-16.70% 

-18.45% 

-18.63% 

13 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 17 of 53 

Between 2002 and 2008, the highest annualized rate of return Nadel appears to have 

achieved was approximately 4%, while the rest of the Hedge Funds experienced annualized 

retums of-16.70% to -33.25%. Although these actual performance numbers demonstrate the 

disparity between what Nadel and others were claiming the Hedge Funds were achieving and 

the retums the Hedge Funds were actually achieving, the performance of each individual 

Hedge Fund is not significant because it appears that Nadel arbitrarily allocated daily results 

of trading transactions among the Hedge Funds. This activity resulted in the commingling of 

the Hedge Funds' assets and makes the performance results of each individual Hedge Fund 

immaterial. In short, Nadel was losing significant sums of money while representing that he 

was achieving annual retums from 18.93% to 48.67% (for years with full activity). 

Further, as shown in Table 5, below, while the Hedge Funds' accounts experienced 

losses, all but one of Nadel's personal accounts and other accounts maintained essentially for 

the benefit of Nadel and in the sole control of Nadel (collectively refened to herein as 

"Nadel's Accounts") experienced significant gains. 

Table 5: Actual Profits and Losses for Nadel's Accounts 

Account Name 

Scoop Capital LLC 

12/01/04-12/31/08 

Scoop Management 

10/01/02-12/31/08 

Arthur Nadel 

6/01/02-10/31/08 

Marguerite Nadel 

8/01/07-1/30/09 

Nadel's Accounts Total 

Account 

Profit/Losses 

$11,331,464 

$737,141 

$10,781,029 

$10,033 

$22,859,667 

Overall Annualized 

Rate of Return 

49.37% 

36.72% 

71.62% 

-15.49% 

14 
Case 8:09-cv-00087-FlAL-TBM Document 176 Filed 08/17/2009 Page 18 of 53 

The trading activity in the Hedge Funds' accounts and Nadel's Accounts appears to 

have been essentially the same, and trading in those accounts was done concunently. 

Virtually all trading allocated to every account was in quadruple-Qs. Given the dramatic 

differences in trading results in Nadel's accounts as compared to the Hedge Funds' accounts 

and preliminary information received by the Receiver conceming Nadel's trading practices, 

the Receiver believes that this evidence may indicate that Nadel engaged in a fraudulent 

practice known as "cheny picking." In cherry picking, the trader allocates profitable trades 

to himself and unprofitable trades to clients. See, e.g., S.E.C. v. K. W. Brown and Co., 555 F. 

Supp. 2d 1275, 1302-1307 (S.D. Fla. 2007) (holding that "cherry-picking" day-trading 

scheme operated by officers constituted scheme to defraud under Securities Exchange Act). 

Analysis of the trading activity and cash flows is ongoing. However, in light of the fact that 

Nadel traded the same investments for all Hedge Funds and the accounts he owned and/or 

controlled for his benefit and that there was a wide disparity between the results allocated to 

the Hedge Funds' accounts and those allocated to Nadel's Accounts, there is no apparent 

logical explanation other than the improper diversion of profitable transactions by Nadel. 

ACTIONS TAKEN BY THE RECEIVER 

Since his appointment on January 21, 2009, the Receiver has taken a number of steps 

to fulfill his mandates under the Order Appointing Receiver, described in Section 11, above, 

IV. Securing the Receivership Estate. 

A. Taking Possession of Defendants' Headquarters. 

On the day of his appointment, the Receiver took possession of the Receivership 

Entities' offices at 1618 Main Street, Sarasota, FL 34236 (the "Office"). The Office was 

15 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 19 of 53 

used by Nadel as the headquarters for administering his control of the Investment Managers, 

Hedge Funds, and other Receivership Entities. The Receiver secured the premises by 

changing the locks and inventoried all of the physical property at the premises. The Receiver 

provided change of address notifications to the United States Postal Service and Federal 

Express, as well as all known service providers to the Receivership Entities. The Receiver 

also ended the Office's lease; turned over the keys; and sold the office fumiture and other 

items for $3,500.00. All of the documents from the Office have been moved to the Tampa 

office of Fowler White Boggs P.A. ("Fowler White"). 

The Receiver also removed several servers and computer-related equipment from the 

premises that were used by Nadel and the entities he controlled. The Receiver retained 

experienced forensic information technology experts with the firm E-Hounds, Inc. ("EHounds"), to assist in securing and analyzing the electronic data on the computers. EHounds personnel have possession of the equipment, have secured the data, and are 

underway in their forensic analysis. 

B. Securing Receivership Funds. 

At the outset of the Receivership, approximately $556,758.33 in cash and cash 

equivalents in financial accounts titled in the name of the Hedge Funds and Investment 

Managers were identified and frozen pursuant to the Nadel TRO and the Preliminary 

Injunction, itemized as follows: 

.^m^^mm:::^-: fc"... 

Scoop Management 

Valhalla Investment Partners 

Victory IRA Fund 

$30,343.53 

$16,248.68 

$134,101.58 

16 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 20 of 53 

VictotyFund; 

Viking IRA Fund 

VildngFund ; 

Viking Management 

$80,686.71 

$70,212.65 

= $56,896.07 

$8,897.25 

In addition, cash and cash equivalents in financial accounts titled in the name of other 

Receivership Entities at the time those entities were brought into receivership were 

approximately $626,828.06, itemized as follows: 

1/27/09 (E># 17) 

1/27/09 (Doc. 17) 

,2/11/09 (Doc. 44) 

2/11/09 (Doc. 44) 

mim(im-M 

i n 1/09 (Doc. 44) 

3/9/09(1^68) 

3/17/09 (Doc. 81) 

3/17/09 (Doc, 8B^ 

7/15/09 (Doc. 153) 

smmm^a.^'Z) 

V^nipe Jet Centerj LLC 

Tradewind, LLC 

Laurel Moimtain Preserve, LLC 

Laurel Preserve, LLC 

Mni^erite J. Nadel Rev. Tmst 

Laurel Mtn. Preserve Homeowner Assoc. 

Guy-Niuiel Foorafetipn, hic. 

Lime Avenue Enterprises, LLC 

A ViotortM Garden Florist, LLC 

Viking Oil & Gas, LLC 

Home Front fiMmes, LLC 

$69,761.41 

$77,782.72 

$5,328.03 

$22,640.22 

$381,142^14 

$0.00 

$58,092.49 

$1,623.89 

$10,456.96 

$0.00 

n^* 

Thus, total cash at the inception of the Receivership and as the Receivership was expanded to 

include each additional Receivership Entity indicated was approximately $1,183,586.39.' 

Upon his appointment, the Receiver was initially concerned that the Receivership 

Entities might hold positions in volatile securities that would require an exit strategy to avoid 

or minimize losses. The Receiver immediately investigated the nature of the Receivership's 

holdings and determined that no such exit strategies were required because almost all of the 

relatively liquid holdings were in cash or cash equivalents. 

In light of the imminent sale of Home Front Homes, LLC (discussed in Section V.A.8, 

below), the Receiver does not maintain full authority over this checking account. Therefore, 

the Receiver does not include the balance of this account for fund accounting purposes. 

* This amount does not include any sum for non-cash or non-cash equivalent assets the 

Receiver has recovered. For a discussion of these assets, please refer to Section V, below). 

17 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 21 of 53 

The Receiver coordinated with the SEC to move swiftly to freeze all funds of which 

they were aware. The Receiver and his attorneys engaged in a preliminary review of 

documents and other information for the purpose of identifying institutions that potentially 

held relevant financial accounts or lines of credit. The Receiver immediately forwarded 

copies of the asset freeze orders to the pertinent institutions and confirmed that they 

understood their obligations under the freeze orders. 

Receivership funds are cunently being held in five institutions: (1) Northem Trust 

Bank, N.A.; (2) Wachovia Bank, N.A.; (3) Branch Banking and Trust Company ("BB&T"); 

(4) Bank of Coweta; and (5) Thomasville National Bank. VJC also maintains an 

insignificant amount of funds in a small operating account with Bank of America. All 

Receivership funds are cunently being held in non-interest bearing accounts. The Receiver 

is contemplating the most appropriate action to take with respect to these funds in light of the 

cunent state of the economy and financial institutions. He will likely consolidate the funds 

into one to three institutions and will explore the relative benefits and risks of moving the 

funds into interest-bearing accounts and/or revenue-generating investments. 

C. Locating Additional Funds. 

One of the Receiver's highest priorities is to locate and recover any additional funds. 

The Receiver has retained a forensic accounting firm to assist in tracing funds. As of the date 

of this report, the Receiver has also identified and recovered an additional $120,000^ as well 

' This amount is comprised of two $60,000 payments the Receiver recovered from two 

individuals. The Receiver determined that the transfers made to these individuals in the 

amount of $60,000 each were an improper diversion of investor funds and obtained court 

orders to recover these funds. 
Case 8:09-cv-00087-F^L-TBM Document 176 Filed 08/17/2009 Page 22 of 53 

as a certificate of deposit ("CD") issued by Northern Trust Bank for approximately $1.5 

million. There is also a loan with Northem Trust for $1.5 million with a maturity date of 

December 1, 2011. The Receiver is considering the best course of action to take with respect 

to the Northem Trust CD and loan. The Receiver will continue to diligently investigate and 

will update the Court and the investors if additional funds are located. 

D. Receivership Accounting Report. 

Attached as Exhibit A to this Interim Report is a cash accounting report showing the 

amount of money on hand at inception of the Receivership (January 21, 2009) less operating 

expenses plus revenue through June 30, 2009. This cash accounting report does not reflect 

non-cash or non-cash equivalent assets. Thus, the value of all property discussed Section V, 

below, is not included in this accounting report. From May 1, 2009, through June 30, 2009, 

the Receiver received $424,280.08 in business income from ongoing operations of some 

Receivership Entities;^ $23,900.54 in cash and securities; $54,082.50 in interest/dividend 

income; $200,000 in business asset liquidation; and $589,313.17 in third-party litigation 

income. (Ex. A.) 

E. Obtaining Information from Third Parties. 

Since obtaining control of the Receivership Entities, the Receiver and his 

professionals have had discussions - including continuing discussions - with a number of 

people associated with Nadel and/or the Receivership Entities, including 

* Officers of some of the Receivership Entities 

o ^ 

As discussed in Section V.A, below, much of the entities' business income is derived from 

rental payments. The Venice Jet Center's income is derived from fiael sales and storage of 

aircraft. 

19 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 23 of 53 

* Persons responsible for maintaining the financial books of Receivership 

Entities 

* Persons responsible for operating the business of Receivership Entities 

* Persons responsible for performing accounting services, and 

* Persons responsible for administering the Hedge Funds. 

The Receiver and his professionals have also reviewed documents located in the 

Office; documents obtained from the accountant for several Receivership Entities; 

information stored on the Receivership Entities' computer network; documents obtained 

from other businesses controlled by Nadel; documents obtained from financial institutions 

and other third parties, including lawyers and others who assisted Nadel's businesses with 

their transactions; and information available in the public record. 

V. Asset Analysis and Recovery. 

A. Expansion of Receivership to Include Additional Entities. 

As a result of the review of these records and of the discussions noted above, the 

Receiver sought and successfully obtained the expansion of the Receivership to include: 

Venice Jet Center, LLC; Tradewind, LLC; Laurel Mountain Preserve, LLC; Laurel Preserve, 

LLC; Laurel Mountain Preserve Homeowners Association, Inc.; the Marguerite J. Nadel 

Revocable Trust UAD 8/2/07; the Guy-Nadel Foundation, Inc.; Lime Avenue Enterprises, 

LLC; A Victorian Garden Florist, LLC; Viking Oil & Gas, LLC; and Home Front Homes, 

LLC. Along with Summer Place Development Corporation, these entities will hereinafter be 

refened to collectively as the "Additional Entities."' The Receiver's investigation revealed 

' The Receiver gained control of Summer Place Development Corporation by virtue of Scoop 

Capital's ownership interest in that entity. However, for various reasons, a formal order 

expanding the Receivership to include this entity has not been sought. 

20 
Case 8:09-cv-00087-F^L-TBM Document 176 Filed 08/17/2009 Page 24 of 53 

that the Additional Entities were purchased and/or funded with money derived from Nadel's 

fraudulent investment scheme. 

The following discussion of the Additional Entities includes a description of assets 

the Receiver has acquired as a result of the businesses' inclusion in the Receivership; known 

encumbrances related to those assets; and actions taken by the Receiver with respect to those 

assets. Where possible the Receiver has included estimated values of these assets. However, 

given the state of the U.S. economy at the time of this Report and the possibility for 

additional information not yet uncovered by the Receiver, it is important to note that any 

such estimations, valuations or appraisals are subject to change. Due to the poor state of the 

real estate markets, the estimates provided may differ markedly from the actual amounts 

realized upon the selling of any real property. 

1. Venice Jet Center, LLC. 

Venice Jet Center, LLC ("VJC"), is a Florida limited liability company formed in 

April 2006. Nadel was its managing member and registered agent, and its principal address 

is the Office. The assets of VJC were purchased with proceeds of Nadel's scheme, and over 

time additional proceeds of the scheme were transfened to VJC. VJC is a viable business 

with potential to generate assets for the Receivership estate. 

On January 27, 2009, the Court expanded the Receivership to include VJC. VJC is a 

fully operating fixed-base operator, or "FBO," and includes a flight school, fueling service, 

hangar rentals, and a cafe. Since the Receiver's appointment as Receiver of VJC, he has 

taken control of it and is continuing to operate the business. The Receiver is continuing 

VJC's longstanding pursuit of a permit to build new hangars at the VJC. The Receiver 

21 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 25 of 53 

believes that the permit to build more hangars, which was requested well before the 

Receiver's appointment, will make the VJC more attractive to potential purchasers and 

ultimately will increase the value of the business. 

Part 16 Complaint Against Citv of Venice 

The Receiver has encountered some problems in connection with the ongoing 

management of the VJC. The City of Venice (the "City"), in contravention of its lease and 

specific direction from the Federal Aviation Authority ("FAA"), has refused to grant VJC 

authorization to develop four hangars at the VJC facility. The City officials have publicly 

announced their intent to terminate the VJC's lease with the City and take over VJC's 

operations. The Receiver continues to vigorously resist any unwananted interference by the 

City with what appears to be a substantial and valuable property right of VJC (and of the 

Receivership estate). On May 14, 2009, the Court granted the Receiver's request for leave to 

file a complaint against the City of Venice pursuant to Thle 14 of the Code of Federal 

Regulations, Part 16. (Doc. 132.) On or about July 2, 2009, on behalf of the VJC, the 

Receiver served the complaint on the City and filed it with the FAA's Office of the Chief 

Counsel (Docket No. 16-09-05). The City's answer to the complaint is due on or before 

September 2, 2009, per an extension granted by the FAA. The Receiver is also 

contemplating filing a lawsuit against the City based on its conduct with respect to 

Receivership assets. 

The Receiver has possession and control of a building owned by VJC located at 400 

Airport Avenue East, Venice, Florida, 34285 (the "VJC Building"). The VJC Building has 

one known encumbrance: a loan with Northem Trust Bank, N.A., on which there is a 

22 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 26 of 53 

remaining balance of $1,963,790.00. The Receiver has conducted marketing efforts 

regarding the VJC and the VJC Building. Parties interested in purchasing this property 

should contact the Receiver. 

2. Tradewind, LLC. 

Tradewind, LLC ("Tradewind") was formed in Delaware in January 2004 and 

registered for the first time in Florida in March 2008. Nadel was Tradewind's managing 

member and registered agent and its principal address is the Office. Tradewind owns and 

controls five planes and one helicopter and owns 31 airport hangars at the Newnan-Coweta 

County Airport in Georgia (the "Georgia Hangars"). The Receiver's investigation revealed 

that Tradewind was funded with money from Nadel's scheme. Tradewind is a viable 

business with potential to generate assets for the Receivership estate. 

On January 27, 2009, the Court expanded the Receivership to include Tradewind. 

Tradewind is a fully operating business. Since the Receiver's appointment as Receiver of 

Tradewind, he has taken control of it and is continuing to operate the business. Tradewind 

collects approximately $28,000 in monthly rent (mainly from the hangars) and incurs varying 

monthly expenses, which include land rent, loan payments, payroll, and various utilities. The 

Receiver is entertaining offers to purchase this business or any of its assets. 

The Receiver has possession and control of the Georgia Hangars, which have one 

known encumbrance: a loan with the Bank of Coweta with a remaining balance of 

approximately $950,953.41, and monthly payments of $8,055. There is also monthly rent of 

$3,079.89 due to the Newnan Coweta Aviation Authority. The Receiver has been making 

these monthly payments as he believes they are in the best interest of the Receivership. 

23 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 27 of 53 

The Receiver also acquired possession and control of the five planes and helicopter. 

The following table shows the year, model, and known encumbrances relating to each 

aircraft. 

[:^:,--md0-:-::^ 

Piper PA28/140 

Cessna 152 

Learjet 31A 

Citation 

Baron 

Schweizer 300 

;;,ypr 

1971 

1978 

1996 

1992 

1977 

1997 

Aircrare i> 

Airplane 

Airplane 

Airplane 

Airplane 

Airplane 

Helicopter 

«v • •• • ••;#; • •'• iCnown - £ttii^mbran(»»'- - ... t ? 

None. 

None. 

Loan with General Electric Capital 

Corporation ("GECC") entered into on May 

17, 2006, for approximately $2.4 million. 

Loan with VFS Financing, Inc. ("VFS") 

entered into on May 23, 2008, for 

approximately $2.1 million 

None. 

None. 

il^onT^b y 

Re^lv«r 

Settled with 

GECC; 

disposed of Learjet 

Settled with VFS; 

disposed of 

Citation 

Sold 

On April 17, 2009, the Court authorized the sale of the Schweizer helicopter for 

$200,000.00. (Doc. 108.) On May 1, 2009, the Court authorized the Receiver's settlements 

with GECC and VFS to dispose of the Learjet and the Citation, respectively, in full 

satisfaction of the respective loans. (Doc. 119.) Because it appeared that the aircraft were 

valued significantly less than the amount of the loans on the aircraft, the Receiver determined 

that these settlements were in the best interest of the receivership. The Receiver's 

determination to abandon these aircraft was due in large part to the expense of continued 

maintenance of the aircraft and difficulties in marketing the aircraft. 

The Receiver is cunently evaluating the value of the other three aircraft and, although 

they are titled in the name of Tradewind, plans to include them as additional assets of the 

VJC. 

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3. Laurel Mountain Preserve, LLC; Laurel Preserve, LLC; and 

Laurel Mountain Preserve Homeowners Association, Inc. 

Laurel Mountain Preserve, LLC ("Laurel Mountain"), was formed in Florida in 

December 2003. Nadel was Laurel Mountain's manager and member, and its principal 

address is the Office. Laurel Mountain was "withdrawn" as a limited liability company in 

January 2006. 

Laurel Preserve, LLC ("Laurel Preserve"), was formed as a North Carolina limited 

liability company in February 2006. Nadel was Laurel Preserve's registered agent and 

manager, and its principal address is the Office. Additionally, Laurel Preserve's "Registered 

Office" address was a home in Fairview, North Carolina titled in the names of Nadel and his 

wife. Although Laurel Preserve's 2006 Operating Agreement identifies Nadel and his wife 

as members of Laurel Preserve with each having made a "capital contribution" of $750, the 

Laurel Preserve 2007 federal income tax retum identifies Scoop Capital as owner of 100% of 

Laurel Preserve. The Laurel Mountain Preserve Homeowners Association, Inc. (the 

"HOA"), is a North Carolina non-profit corporation formed in March 2006. Nadel was the 

HOA's registered agent, and its principal address was the Fairview, North Carolina home. 

Documentation reviewed and information obtained by the Receiver shows that Laurel 

Preserve holds title to approximately 420 acres near Asheville, North Carolina in Buncombe 

and McDowell counties, intended for development of home-sites (the "Laurel Mountain 

Property"). The Laurel Mountain Property was originally purchased by Laurel Mountain in 

2003 and then "sold" to Laurel Preserve in February 2006. Laurel Mountain provided 

financing for that purchase in the form of a $2,900,000 loan to Laurel Preserve. According 

to documentation retrieved from the Office, Laurel Mountain and Laurel Preserve received 

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Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 29 of 53 

significant funding in the form of "loans" from Scoop Capital, Scoop Management, 

Tradewind, Nadel and Mrs. Nadel and BB&T Bank. 

On February 11, 2009, the Court expanded the Receivership to include Laurel 

Mountain, Laurel Preserve, and the HOA. Since the Receiver's appointment as Receiver of 

these entities, he has taken control of them and is working on marketing for sale the Laurel 

Mountain Property. This property currently does not generate any income. 

The Laurel Mountain Property encompasses 29 lots, including 23 estate-sized and 6 

cottage-sized lots. There is also a cabin home on this property that, according to the 

Buncombe County Property Appraiser, is valued at $319,800. The Laurel Mountain 

Property's infrastructure is fully developed: infrastructure and utilities are currently in place 

and are fully functional. The Laurel Mountain Property has three known encumbrances. The 

first encumbrance is a $360,157.37 loan from BB&T Bank. The second encumbrance is a 

$1,900,000 interest only loan from Wachovia Bank, N.A. There is a monthly payment of 

$5,149.66 due on this latter loan and the Receiver presently is not making payments on this 

loan. 

The third encumbrance is an easement of approximately 169 acres of the Laurel 

Mountain Property, which was granted to a land conservancy in 2005 (the "Conservancy 

Easement"). It appears that this donation was made in part for the Nadels' own tax benefit. 

The Receiver has determined that it would likely be in the best interests of the Receivership 

to recover this easement from the conservancy as it may generate an exponential increase in 

the value of the full acreage. The Receiver plans to file an action to recover the Conservancy 

Easement in the near future. 

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The Receiver has consulted with a realtor who previously listed the Laurel Mountain 

Property and is entertaining offers to purchase or proposals to market this developed property 

either by lot or in its entirety. The Receiver is still evaluating the cunent value of this 

property, but it appears that the value is higher than the amount of the encumbrances. Parties 

interested in purchasing this property should contact the Receiver directly. 

For more information regarding the Laurel Mountain Property, please visit 

http://www.laurelmountainpreserve.com. 

4. Marguerite J. Nadel Revocable Trust UAD 8/2/2007. 

The Marguerite J. Nadel Revocable Trust Under Agreement Dated 8/2/2007 (the 

"Trust") was created on August 2, 2007. The trustee is identified as Mrs. Nadel. The 

Receiver's investigation revealed that the Trust was funded entirely with proceeds of Nadel's 

scheme through (1) a transfer of $500,000 from Scoop Management in August 2007 and (2) a 

transfer of $150,000 from Scoop Capital on the day before Nadel fled. It also revealed that 

Nadel controlled the account in which the money held by the Trust purchased and sold 

securities. Significantly, as alleged in the criminal complaint against Nadel, in an apparent 

note Nadel left for his wife before fleeing, he instructed her to "use the trust (yours) to your 

benefit as much and as soon as possible." United States v. Nadel, Case No. 09 MAG 169 

(S.D.N.Y.), Compl. ^ 17, attached as Exhibit 14 to the Receiver's Declaration in Support of 

Second Unopposed Motion to Expand receivership (Doc. 37-15). 

On February 11, 2009, the Court expanded the Receivership to include the Trust. 

Since the Receiver's appointment as Receiver of this Trust, he has taken control of its bank 

account. The Receiver has used these funds for Receivership costs and expenses. 

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5. Guy-Nadel Foundation, Inc. 

The Guy-Nadel Foundation, Inc. (the "Foundation"), is a Florida non-profit 

corporation formed in December 2003 for "charitable, educational and scientific purposes." 

Nadel was its incorporator and registered agent and, according to the Foundation's 2006 

federal tax retum, also its President. The Foundation's principal address is the Office. 

On March 9, 2009, the Court expanded the Receivership to include the Foundation. 

Since the Receiver's appointment as Receiver of the Foundation, he has taken control of it 

and is working on marketing the real property owned by the Foundation. 

The Receiver has gathered information that indicates the Foundation was funded with 

proceeds of Nadel's scheme, which were transfened directly from Scoop Capital or 

indirectly through transfers from the Nadels' personal accounts. In addition, in December 

2003 and December 2004, the Foundation was deeded approximately 22 lots located in North 

Carolina from Laurel Mountain and Nadel and his wife. These lots are essentially adjacent to 

each other. The lots appear to have been purchased by Laurel Mountain and the Nadels as 

part of the same general transaction in which Laurel Mountain purchased the Laurel 

Mountain Property. At the time of those transactions, Nadel was already perpetrating his 

scheme, and essentially all of the Nadels' income was derived from that scheme. 

Additionally, the Receiver has possession and control of two small parcels of 

unimproved land in Thomasville, Georgia (this land is separate from the Thomasville 

Property discussed in Section V.B.I, below) owned by the Foundation. The Receiver has not 

yet determined the value of this property. Parties interested in purchasing this property 

should contact the Receiver. 

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6. Lime Avenue Enterprises, LLC, and A Victorian Garden Florist, 

LLC. 

Lime Avenue Enterprises, LLC ("Lime") was formed in Florida in August 2006, and 

Nadel was a managing member of Lime. Lime owns a building located at 599 North Lime 

Avenue, Sarasota, Florida 34237 (the "Lime Building"). Lime purchased the Lime Building 

in August 2006. Public records and other information reviewed by the Receiver indicate that 

Lime was formed by Nadel and Mrs. Nadel (who also was a manager of Lime) for the 

purpose of purchasing the Lime Building. The Lime Building houses a flower shop, which is 

owned by A Victorian Garden Florist, LLC ("Victorian Garden"), which was formed in 

Florida in April 2005. The Receiver's investigation revealed that Lime and Victorian Garden 

were funded with proceeds from Nadel's scheme. 

On March 17, 2009, the Court expanded the Receivership to include Lime and 

Victorian Garden. The Receiver has possession and control of the Lime Building. The Lime 

Building has one known encumbrance: a mortgage owed to the individuals who sold the 

building to Lime on which the balance is approximately $600,000. 

The Receiver also took control of the business and determined that ownership of the 

florist was not in the best interest of the Receivership. The flower shop did not have 

sufficient revenue to cover its expenses, thus the Receiver originally planned to close the 

business. The Receiver has allowed the prior owner to operate the flower shop and will 

likely seek approval from the Court to abandon this business. The Receiver is presently 

attempting to negotiate a resolution of the mortgage relating to the Lime Building. 

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The Receiver also has possession and control of two vans owned by Lime: a 1999 

Ford van and a 2003 Dodge van. The Receiver does not have an estimation of value of these 

vans at this time, and there are no known encumbrances on these vans. 

7. Viking Oil & Gas, LLC. 

Viking Oil & Gas, LLC ("Viking Oil") is a Florida limited liability company formed 

in January 2006 by Neil V. Moody and Christopher D. Moody (the "Moodys") to make 

personal investments in an oil and gas venture. Its principal address is the Office. The 

Receiver's investigation revealed that Viking Oil was funded with proceeds from Nadel's 

scheme. The funds invested in Viking Oil were used to purchase an investment interest in 

Quest Energy Management Group, Inc. ("Quest EMG"). Between February 2006 and April 

2007, through Viking Oil, the Moodys invested $4 million to fund a working interest in 

Quest EMG. 

As discussed in Section V.C.4, below, the Receiver also has possession of promissory 

note from Quest EMG and two individuals to Valhalla Investment Partners in the amount of 

$1,100,000. 

On July 15, 2009, the Court expanded the Receivership to include Viking Oil. Since 

the Receiver's appointment as Receiver of this entity, he has taken control of it and is 

determining the most prudent course of action to take with respect to the working interest in 

Quest EMG. The Receiver is presently seeking to hire a consultant to value this investment. 

8. Home Front Homes, LLC. 

Home Front Homes, LLC ("Home Front Homes"), is a Florida limited-liability 

company that was formed in 2006. Nadel was the sole managing member of Home Front 

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Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 34 of 53 

Homes, and Scoop Capital owned a majority membership interest in it By virtue of this 

controlling interest, the Receiver assumed control over Home Front Homes before it was 

placed in receivership. Home Front Homes is engaged in the business of manufacturing, 

marketing, and selling energy-efficient homes. Home Front Homes is an operating business. 

The Receiver instituted litigation to preserve the value of Home Front Homes for the 

Receivership estate. Home Front Homes, LLC v. Brian C. Bishop, Case No. 2009-CA2037NC (12th Jud. Cir., Sarasota County, Florida). On behalf of Home Front Homes, the 

Receiver sued Brian C. Bishop, a former employee who also had an ownership interest in 

Home Front Homes for breach of non-compete covenants in his employment agreement and 

of a purchase agreement (wherein Home Front Homes purchased the assets, goodwill, and 

customers of Mr. Bishop's company. Home Front, Inc.), as well as breach of a promissory 

note and tortious interference with a business relationship. Since ending his employment 

with Home Front Homes, Mr. Bishop had started a competing business in direct violation of 

his non-compete agreement and had solicited Home Front Homes customers. 

This matter has been settled and the litigation is no longer pending. Mr. Bishop was 

ordered to comply with the restrictive covenants, and the company forgave certain purported 

debt owed from Mr. Bishop to Home Front Homes, which debt appeared uncollectible. 

Information available to the Receiver indicates that Bishop has been violating the Court's 

order against him with impunity. The Receiver will likely institute contempt proceedings 

against Bishop in the immediate future. 

Following the litigation with Mr. Bishop, the Receiver (as Receiver for Scoop 

Capital) gained control of a 75% interest in Home Front Homes. On or about August 4, 

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2009, the Receiver entered into an agreement to sell Home Front Homes in exchange for 

$800,000 as follows: $600,000.00 by wire transfer as well as a secured promissory note in 

the principal amount of $200,000.00. On August 10, 2009, the Court expanded the 

Receivership to include Home Front Homes. (Doc. 170.) The proposed sale will provide 

$280,000 to the Receivership, which includes the promissory note, and will give the 

purchasers the opportunity to resolve claims of creditors of Home Front Homes. The 

remainder of the sale proceeds will be paid to M&l Bank to satisfy a $3 million loan that was 

secured by the assets of Home Front Homes. The Receiver will obtain Court approval to 

finalize the sale of Home Front Homes and will file a motion for approval in the immediate 

future. If the Court approves the sale, the closing will take place, and the promissory note 

will be due and payable eighteen months thereafter. 

9. Summer Place Development Corporation. 

Summer Place Development Corporation ("Summer Place") is a Florida company 

that was formed in 2005 for the purpose of "any and all lawful business." The Receiver has 

not sought a formal order expanding the Receivership to include Summer Place. However, 

as of January 20, 2007, Nadel was a managing member of Summer Place, and Scoop Capital 

owns a fifty-percent interest in Summer Place. By virtue of this fifty-percent interest, the 

Receiver has not assumed full control over Summer Place, but is working with the other 

managing member and fifty-percent owner in directing the operation of Summer Place for 

the benefit of the Receivership estate. 

Summer Place is the owner of a proposed affordable residential housing development 

site in Manatee County, Florida. Summer Place is an operating business. The Receiver 

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intends to sell Scoop Capital's equity interest in this entity in a manner which would be most 

beneficial to the Receivership estate. Parties interested in marketing or purchasing this 

business should contact the Receiver directly. 

B. Recovery of Real Property. 

In addition to the assets discussed in conjunction with the expansion of the 

Receivership in Section V.A, the Receiver has also recovered a number of other assets, most 

of which are in the process of being valued, assessed, and otherwise analyzed for liquidation, 

disposition, or other action. Again, given the state of the U.S. economy at the time of 

submission of this Report, the Receiver emphasizes that any estimates, appraisals, or 

valuations are subject to change because of market forces. In particular, due to the poor state 

of the real estate markets, the estimates provided in this section may be significantly different 

from the amounts realized upon selling such real property. 

1. Thomasville, Georgia. 

The Receiver has possession and control of approximately 14 acres in Thomasville, 

Georgia (the "Thomasville Property"). The Thomasville Property encompasses 45 lots, 44 

of which are vacant. A home on one of the Thomasville Property lots was built by Home 

Front Homes. After the purchase of the Thomasville Property, approximately $750,000 of 

infrastructure was added. The Thomasville Property's infrastructure is fully developed: 

infrastructure and utilities are cunently in place and are fully functional. First Realty & 

Appraisal Services, Inc., prepared appraisal reports of two lots on the Thomasville Property. 

As of February 5, 2009, the lot with the home on it was valued at $123,500. Also as of 

February 5, 2009, a vacant lot on the Thomasville Property was valued at $ 14,000. 

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The Thomasville Property has two known encumbrances. The first encumbrance is a 

$600,000 loan, on which a $571,816 balance is due. All interest has been paid for the year 

2008, and no interest is due until December 2009. The second encumbrance is a loan for 

$141,366 for the construction of the house. Both of these loans mature in December 2009. 

The Thomasville Property cunently is not generating any income. 

The Thomasville Property is ready for sale with 45 lots having all utilities, roads, and 

other improvements. Parties interested in purchasing this property should contact the 

Receiver. 

2. Grady County, Georgia. 

The Receiver is in possession of approximately 37.5 acres owned by Scoop Capital in 

Grady County, Georgia (the "Grady Property"). According to Grady County public 

records, the land value of the Grady Property in 2008 was $151,125. The Receiver is 

cunently determining the best course of action to take regarding this land. Parties interested 

in marketing or purchasing the Grady Property should contact the Receiver directly. 

3. Graham, North Carolina.'" 

The Receiver has possession and control of a building located at 841 South Main 

Street, Graham, North Carolina 27253 (the "Rite-Aid Building"). This building was 

purchased for $5,310,000 and is cunently being leased to a Rite-Aid Pharmacy for 

*" The properties described in this subsection and the following subsections (4), (5), and (6) 

appear to have been purchased through Scoop Real Estate Fund. However, in light of the 

commingling of assets among all Receivership Entities, these properties appear to be 

appropriately attributed as general assets of the Receivership estate. 

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$33,073.08 per month under an absolute net lease." The Rite-Aid Building has one known 

encumbrance: a $2,655,000 interest-only loan with Wachovia Bank, which matured in June 

2009, on which there is a remaining balance of approximately $2,677,461.64. The Receiver 

is making no payments on the loan. Parties interested in purchasing the Rite-Aid Building 

should contact: 

Jim Hamilton C. Whitney Knoll 

Director Senior Managing Director 

Holliday Fenoglio Fowler, L.P. Holliday Fenoglio Fowler, L.P. 

3414 Peachtree Road, NE 3414 Peachtree Road, NE 

Suite 736 Suite 736 

Atlanta, GA 30326 Atlanta, GA 30326 

Telephone: (404) 942-2212 Telephone: (404) 942-3192 

Mobile: (404) 219-7383 Mobile: (404) 664-4493 

Fax: (404) 942-2181 Fax: (404) 942-2181 

Email: ihamilton(S),hfflp.com Email: wknoll(g)hfflp.com 

4. Raleigh, North Carolina. 

The Receiver has possession and control of a building located at 4905 Waters Edge, 

Raleigh, North Carolina 27060 (the "EDS Building"). This building was purchased for 

$1,900,000 and is cunently being leased to Electronic Data Systems ("EDS"), a technology 

services provider, for $29,688.54 per month under a double net lease.'^ The EDS Building 

has no known encumbrances. Parties interested in purchasing the EDS Building should 

contact: 

" Under an "absolute net lease," a tenant is required to pay all operating expenses of the 

property, and the landlord receives a net rent. 

'^ Under a "double net lease," the tenant pays all taxes and insurance expenses that arise from 

the use of the property. The tenant pays rent, and the landlord pays maintenance expenses. 

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Jim Hamilton 

Director 

Holliday Fenoglio Fowler, L.P. 

3414 Peachtree Road, NE 

Suite 736 

Atianta, GA 30326 

Office: (404)942-2212 

Mobile: (404)219-7383 

Fax: (404)942-2181 

Email: jhamilton(g),hfflp.com 

C. Whitney Knoll 

Senior Managing Director 

Holliday Fenoglio Fowler, L.P. 

3414 Peachtree Road, NE 

Suite 736 

Atlanta, GA 30326 

Office: (404)942-3192 

Mobile: (404)664-4493 

Fax: (404)942-2181 

Email: wknoll(2)hfflp.com 

5. Tupelo, Mississippi. 

The Receiver has possession and control of a building located at 2433 West Main 

Street, Tupelo, Mississippi 38801 (the "Starbucks Building"). This building was purchased 

for $941,000 and is currentiy being leased to Starbucks (Store #8809) for $5,745.83 per 

month under an absolute net lease. The Starbucks Building has no known encumbrances. 

Parties interested in purchasing the Starbucks Building should contact 

John A. Skicewicz, CCIM 

Coldwell Banker Commercial NRT 

1988 Gulfto Bay Blvd. 

Clearwater, Florida 33765 

Office: (727) 642-3965 

Fax: (727)466-4119 

Toll Free: (800) 775-1696 

6. Newnan, Georgia. 

The Receiver has possession and control of a gas station located at 5 McCollum 

Station, Newnan, Georgia 30265 (the "Gas Station"). This gas station was purchased for 

$2,450,000 and is cunentiy being leased to a Shell Gas franchisee for $10,800 per month. 

The tenant defaulted on his lease, and an eviction proceeding has been filed against him. The 

Gas Station has no known encumbrances. Parties interested in purchasing the Gas Station 

should contact: 

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Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 40 of 53 

John A. Skicewicz, CCIM 

Coldwell Banker Commercial NRT 

1988 Gulfto Bay Blvd. 

Clearwater, Florida 33765 

Office: (727) 642-3965 

Mobile: (727) 642-3965 

Fax: (727)466-4119 

Toll Free: (800) 775-1696 

7. Fairview, North Carolina. 

On March 30, 2009, the Court granted the Receiver's motion (Doc. 98) for possession 

of property located in Fairview, North Carolina (the "Fairview Property"). (Doc. 100.) On 

June 14, 2004, Nadel and his wife purchased the Fairview Property for $335,000.00. The 

Fairview Property was a secondary residence of the Nadels that is located in the mountains of 

North Carolina near the large property owned by Laurel Preserve, LLC (see Section V.A.3, 

above). The Fairview Property has one known encumbrance: a loan with BB&T Bank on 

which there is a remaining balance of approximately $248,560.62 

Parties interested in purchasing the Fairview Property should contact: 

The Armour Team 

Mike and Nona Armour 

Keller Williams Professionals 

86 Asheland Avenue 

Asheville, NC 28801 

Mike Annour: (828) 771-2342 

Nona Amiour: (828) 771-2336 

http://armourteam.homesandland.com. listing ID #13704540 

8. Sarasota, Florida (Fruitville Road). 

On July 8, 2009, the Court granted the Receiver's motion (Doc. 146) for possession 

of property located at 15576 Fruitville Road in Sarasota, Florida (the "Fruitville Property"). 

(Doc. 148.) To purchase the property, Nadel paid a $5,000 deposit on March 5, 2003, and 

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Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 41 of 53 

$201,163.93 at closing. The Fruitville Property was purchased entirely with Ponzi-scheme 

proceeds. The Fruitville Property is residential property that was purchased by Nadel and 

Mrs. Nadel, was deeded to their trusts, and was rented to third parties. The Fruitville 

Property has one known encumbrance: a loan with Northern Trust on which there is a 

remaining balance of approximately $180,130.86, Parties interested in purchasing the 

Fruitville Property should contact: 

John A. Skicewicz, CCIM 

Coldwell Banker Commercial NRT 

1988 Gulfto Bay Blvd. 

Clearwater, Florida 33765 

Office: (727) 642-3965 

Mobile: (727) 642-3965 

Fax: (727)466-4119 

Toll Free: (800) 775-1696 

9. Oberlin, Ohio. 

The Receiver recently became aware of a condominium in Oberlin, Ohio (the 

"Oberlin Property"). The Oberlin Property was purchased on or about September 23, 2003, 

with the funds of Intex Trading Corp. ("Intex")'^ and was originally titled in Nadel's name. 

On or about September 2, 2004, title in the Oberlin Property was transfened to the 

Clark/Nadel Revocable Trust. On or about October 9, 2008, Nadel as Trustee of the 

Clark/Nadel Revocable Trust transfened title in the Oberlin Property to Nadel's son, Chris 

Nadel. On or about July 15, 2009, Chris Nadel and his wife. Amy L. Nadel, executed a 

'^ Nadel created Intex and at all times was its sole director and officer. Intex was the 

General Partner of Scoop Investments, Ltd., which is the predecessor of Victory Fund. On 

November 27, 2002, Scoop Investments, Ltd. was renamed Victory Fund, Ltd. On 

December 20, 2002, Intex was replaced by Receivership Entity Scoop Capital as Victory 

Fund's general partner. 

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quitclaim deed, which transferred all right, title, and interest in the Oberlin Property to the 

Receiver. There are no known encumbrances on the Oberlin Property. Parties interested in 

purchasing the Oberlin Property should contact the Receiver directly. 

C. Recovery of Vehicles and Other Items. 

1. Vehicles. 

The Receiver assumed control of three vehicles: (1) 2008 Mercedes-Benz E63 

("Mercedes"); (2) 2009 Volkswagen EOS ("Volkswagen"); and (3) Maserati Grand Turismo 

("Maserati"). These vehicles were used by Neil and Christopher Moody. The Mercedes and 

Volkswagen were leased by Valhalla Management. Because there was no value to these 

vehicles and only the continuing obligation of lease payments, the Receiver sunendered them 

to the leasing company without penalty and without the lessor retaining any claim to 

Receivership assets. The Maserati was leased by Viking Management. As with the 

Mercedes and Volkswagen, because there was no value to this vehicle and only the 

continuing obligation of lease payments, the Receiver sunendered the Maserati to the leasing 

company without penalty and without the lessor retaining any claim to Receivership assets. 

There is also a 1998 Jeep Wrangler valued at less than $5,000. The Receiver entered 

into an agreement to sell the Jeep to a dealership for $4,500 and is in the process of resolving 

issues related to the title of the Jeep. 

On July 7, 2009, the Court authorized the Receiver to bring into receivership a 2006 

Subaru Legacy Outback. The Subaru was purchased with proceeds of Nadel's scheme. Mrs. 

Nadel delivered the Subaru to the Receiver. Parties interested in purchasing this vehicle 

should contact the Receiver directly. 

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2. Condominium Note and Mortgage. 

On April 30, 2009, the Court granted the Receiver exclusive interest in a note and 

mortgage for a condominium located in Sarasota, Florida. (Doc. 116.) The condominium's 

owner, an employee of the florist {see Section V.A.6, above), had executed a promissory note 

payable to Mrs. Nadel for $126,556.24. The note was secured by a mortgage held by Mrs. 

Nadel. On February 9, 2009, Mrs. Nadel assigned the note and mortgage to Nadel's former 

criminal-defense attomeys, Cohen, Jayson & Foster, P.A., who subsequently assigned the 

note and mortgage to the Receiver, per the Court's order. The principal balance due under 

the note is $124,637.64, with $5,457.66 due in outstanding interest. The condominium's 

owner is in default and the Receiver is preparing to initiate foreclosure proceedings. 

3. Bonds.com Assets. 

The Receiver's investigation revealed that Ponzi scheme proceeds were used to fund 

a number of assets related to Bonds.com, Inc. ("Bonds.com"). 

The Receiver has two promissory notes that were executed by Valhalla Investment 

Partners, L.P., and Bonds.com. One of the notes is for $400,000.00 with 9% interest secured 

by the domain name www.bonds.com. Bonds.com has paid all of the interest due on that 

note, and the parties amended and revised it in a manner that is in the best interest of the 

Receivership. That note is due on October 31, 2009, per a six-month extension granted by 

the Receiver. The other note is for $203,800.00; is due to mature on September 22, 2010; 

and is still owing and outstanding. The $203,800 note is a convertible note that can be 

converted into an equity interest in the company at the Receiver's option. 

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Christopher D. Moody had assets related to Bonds.com Group, Inc. ("Bonds.com"), 

as follows: 

1) Three million, one hundred sixteen thousand, one hundred seventy-one 

(3,116,171) fully paid and non-assessable common shares of stock in 

Bonds.com; and 

2) A secured convertible promissory note made by Bonds.com on September 22, 

2008, in the amount of $1,236,836, and a secured convertible promissory note 

made by Bonds.com on December 12, 2008, in the amount of $50,000 

On August 5, 2009, on the Receiver's motion, the Court entered an order transfening all 

right, title, and interest in Christopher D. Moody's stock and notes to the Receiver. On or 

before August 14, 2009, the Receiver will be filing a Schedule 13D (commonly known as the 

"Beneficial Ownership Report") with the U.S. Securities and Exchange Commission to 

report beneficial ownership of stock received from The Christopher D. Moody Revocable 

Trust. In addition, also on or before August 14, 2009, the Receiver will be filing a Form 3 

(Initial Statement of Beneficial Ownership of Securities) for the stock, as required under the 

Securities Exchange Act of 1934. 

Neil V. Moody also has stock in and notes from Bonds.com of a similar nature to 

Christopher Moody's relevant assets: 

1) Six hundred sixty-six thousand, six-hundred sixty-seven (666,667) shares of 

stock in Bonds.com; and 

2) A secured convertible promissory note made by Bonds.com in the amount of 

$250,000 that is due in September 2010. 

41 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 45 of 53 

The Receiver is still investigating the nature of Neil V. Moody's interest in Bonds.com, and 

the Receiver will move the Court for an order transfening all right, title, and interest in Neil 

V. Moody's stock and notes to the Receiver, if appropriate. 

Wanants, which give the holder rights to acquire more shares on a fully diluted basis, 

also were issued in conjunction with the Moodys' notes with Bonds.com. The Receiver is 

still investigating these grants of wanants. 

4. Quest EMG Promissory Note. 

As mentioned above in Section V.A.7, the Receiver also has a promissory note from 

Quest EMG and two individuals to Valhalla Investment Partners in the amount of 

$1,100,000. Interest is being paid on this note. 

5. Miscellaneous Items. 

The Receiver has also recovered a myriad of other items that he may be able to sell, 

including a variety of fumiture, fixtures, computers, and miscellaneous supplies. The 

Receiver will make reasonable efforts to maximize the amount he is able to recover from the 

possible sale of all of these items. 

D. Recovery of Profits from Investors. 

As discussed in Section lll.C, above, the Receiver has determined that some 

purported investor accounts received monies in an amount that exceeded their investments. 

To date, the Receiver has discovered approximately $39 million in such ficthious profits. 

The Receiver has spent substantial time identifying recipients of these fictitious profits and 

intends to proceed with recovering these fictitious profits to redistribute them more equitably 

among investors holding legitimate and allowed claims. 

42 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 46 of 53 

The Receiver has begun efforts to recover these funds. In April 2009, the Receiver 

sent letters to 85 investors, each of whom, according to the records in the Receiver's 

possession, made "fictitious profits" by receiving monies from Hedge Funds in an amount 

that exceeded his or her investments (the "Profiteers"). These 85 investors' total amount of 

fictitious profits is $16,206,672.38. With the SEC's approval, the Receiver offered to settie 

with each Profiteer for payment by the investor of 90% of his or her fictitious profits. 

Collectively, if accepted and approved, these settlements would yield $14,586,005.14. As of 

August 12, 2009, the Court has approved ten (10) Profiteer settlements totaling 

$1,337,158.58. With respect to these initial 85 letters, those who do not settle with the 

Receiver should anticipate that litigation will be commenced in the immediate future. Should 

those investors wish to resolve these claims, they should do so promptiy. Once litigation is 

commenced, the opportunity to settle at a 90% discount will no longer be available. 

In anticipation of initiating lawsuits, the Receiver filed a Motion to Reappoint 

Receiver (Doc. 139). That motion was granted on June 3, 2009. Except in situations where 

individuals had, or should have had, knowledge of the fraudulent investment scheme, or 

otherwise did not act in good faith, the Receiver will seek to recover fictitious profits but not 

the amount equivalent to the principal investment. 

The Receiver continues to work to identify additional profiteers to recover the 

remaining $18,793,327.62 and intends to send settlement offers to additional profiteers in the 

near future. 

43 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 47 of 53 

E. Recovery of Assets from Christopher D. Moody and Neil V. Moody. 

From the Receiver's investigation to date, it appears that a significant portion of 

activities of certain Hedge Funds were managed and directed by Christopher D. Moody and 

Neil V. Moody (the "Moodys"). Together, the Moodys received approximately $42 million 

in fees from certain Receivership Entities. 

In April 2009, the Receiver initiated contact with the Moodys' counsel. On April 17, 

2009, the Receiver received a letter from the Moodys agreeing that they would not transfer 

any assets of value owned by them, nor would they remove any such asset from the state of 

Florida without prior written notice to the Receiver. To date, the Moodys have cooperated 

with the Receiver to achieve an orderly turnover of assets that were funded with Ponzischeme proceeds. The following assets have been identified by the Receiver as having been 

funded with such proceeds. 

1. Viking Oil's Interest in Quest EMG. 

Through their control of Viking Oil, the Moodys had an investment with Quest EMG, 

an oil and gas venture. On July 15, 2009, the Receiver gained control of Viking Oil and its 

interest in Quest EMG. Please see discussion at Section V.A.7, above, for more details. 

2. Moodys' Interest in Bonds.com. 

The Moodys each had stock in and promissory notes from Bonds.com. Please see 

discussion above at Section V.C.3, above, for more details. 

3. Queen's Wreath Jewels, Inc. 

The Receiver's investigation, aided with the cooperation of the Moodys, revealed that 

the Moodys invested $400,000 in Queen's Wreath Jewels, Inc. ("Queen's Wreath"), with 

44 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 48 of 53 

each of the Moodys receiving a 20% interest in the company. The Moodys also made several 

loans to Queen's Wreath. The funds used to acquire the Moodys' ownership interest in 

Queen's Wreath and to make the loans were primarily transfers from Receivership Entities. 

On or about April 7, 2009, Queen's Wreath transfened ownership of the remaining jewelry 

to the Moodys in exchange for their interest in the company and in satisfaction of all 

outstanding loans, with the understanding that Queen's Wreath would retain the jewelry on 

consignment. 

The jewelry cunently is being jointly held by another receiver and by Queen's 

Wreath pursuant to the court's order in the proceeding styled Paolino v. Neil V. Moody and 

Christopher D. Moody, Case No. 2009-ca-OO 1876 (Cir. Ct. 12th Jud. Cir., Sarasota County, 

Fla.). The Receiver is preparing to file a motion in the Commission Proceeding to recover 

the jewelry; it will be filed within the next five business days following this Report. 

* * * 

The Moodys have a number of assets that would add significant value to the 

Receivership estate, including interest in other companies, houses, vehicles, and boats. 

These assets are being identified and steps are being undertaken to marshal these assets. 

F. Recovery of Fees from Recipients of Commissions. 

Information available to the Receiver reveals that at least four individuals who, 

individually or through one or more entities, received commissions as "compensation" with 

respect to solicitation of investors in the Receivership Entities. In June and July 2009, the 

Receiver sent demand letters seeking to recover a total of $7,616,331.72 in both commissions 

and false profits from these particular individuals and entities. The letters offered to settle for 

45 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 49 of 53 

the amount of commissions received without interest. To date, no settlements have been 

entered into with these individuals and entities. The Receiver is preparing to initiate lawsuits 

to recover this money for the benefit of the Receivership estate. 

G. Other Litigation. 

The Receiver has had contact with the law firm of Johnson, Pope, Bokor, Ruppel & 

Bums, LLP ("Johnson Pope") regarding the Institution of a class action against Holland & 

Knight, LLP ("H&K"), the law firm that prepared the private placement memoranda used to 

solicit investors into the Nadel scheme. On March 20, 2009, Johnson Pope on behalf of 

investor Michael Sullivan and others similarly situated, instituted a class action suit against 

H&K, Michael Sullivan v. Holland & Knight LLP, Case No. 09-cv-0531-EAJ (M.D. Fla.). 

The Receiver has had communications with Johnson Pope with respect to instituting this 

class action. Should Johnson Pope be successful in this litigation, the Receiver expects that 

investors who suffered losses as a result of the fraudulent scheme will be able to pursue a 

valid claim. 

The Receiver also desires to initiate an action against H&K on behalf of the Hedge 

Funds. The Receiver has entered into a contingency fee agreement whereby Johnson Pope 

will pursue professional malpractice claims by the Hedge Funds against H&K, seeking 

damages of more than $50 million. On August 12, 2009, the Court approved the Receiver's 

contingency fee agreement with Johnson Pope. (Doc. 175.) It is anticipated that a complaint 

against H&K will be filed within a week following the date of this Report. 

The Receiver continues to examine the actions of other professionals and businesses 

that provided services to Receivership Entities to determine whether he needs to take 

46 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 50 of 53 

additional steps with respect to any of those professionals and businesses to recover assets for 

the receivership. 

VI. Investigating Receivership Affairs and Tracing Receivership Funds. 

The Receiver has retained the services of PDR Certified Public Accountants 

("PDR"), forensic accountants, to assist in investigating and analyzing the flow of funds both 

into and out of the Receivership Entities, and to assist in locating additional funds, if any. 

The Receiver has also retained the services of Riverside Financial Group ("Riverside"), 

financial analysts to assist in investigating and analyzing all of the trading activity. In 

conjunction with the Receiver, PDR and Riverside are further attempting to identify 

additional individuals and/or entities who may be in possession of Receivership funds. PDR 

will also assist in determining the amount of each investor's loss. 

VII. The Next Sixty Davs. 

The Receiver has received useful information from investors and third parties during 

the course of the receivership. A number of people have contacted him with respect to the 

location of assets. The Receiver would like to thank those parties for their efforts. For 

anyone who may have information that they believe would be of use to the Receivership, the 

Receiver encourages those parties to bring that information to the Receiver. 

The Receiver has received only a portion of the documents he has subpoenaed from 

third parties. It will be necessary to obtain and review all such documents in order to 

complete an understanding of the flow of funds through the Receivership Entities, to identify 

any additional sources of recovery, and to prepare an accounting. The Receiver is working 

47 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 51 of 53 

diligently on this task, but without knowing the volume of documents he expects to receive, 

it is difficult to estimate the time needed for completion. 

During this process, the Receiver is also compiling and analyzing individual investor 

accounts. This is a necessary task to assess and administer investor claims. The Receiver 

will likely ask all investors to send him copies of all documentation related to their 

investments in the Hedge Funds. He will review and analyze all documents relating to each 

investment to determine the amounts owed, if any, to each investor. The Receiver does not 

expect to commence the claims process until late 2009 or early 2010. The Receiver will 

provide a more definitive time estimate as his analysis progresses. 

The Receiver is also reviewing information to determine if any third parties may have 

liability either to the Receivership estate or investors. In this regard it should be anticipated 

that the Receiver will bring actions in the future. 

The Receiver will continue to attempt to locate additional funds and other assets and, 

if appropriate, will institute proceedings to recover assets on behalf of the Receivership 

Entities. In an effort to more fully understand the conduct at issue and in an attempt to locate 

more assets, the Receiver will continue to conduct interviews and/or depositions of parties 

and third parties with knowledge. 

The Receiver will also continue the operations of all ongoing businesses of the 

Receivership Entities to maintain and, if possible, enhance their value. The Receiver will 

continue to market properties for sale and entertain offers for purchase. 

48 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 52 of 53 

CONCLUSION 

Creditors and investors in the Receivership Entities are encouraged to periodically 

check the informational website (http://www.nadelreceivership.com/) for cunent infonnation 

conceming this Receivership. The Receiver and his counsel have received an enormous 

amount of emails and telephone inquiries and have had to expend significant resources to 

address them. To minimize those expenses, creditors and investors are strongly encouraged 

to consult the Receiver's website before contacting the Receiver or his counsel. However, 

the Receiver continues to encourage individuals or attomeys representing investors who may 

have information that may be helpful in securing further assets for the Receivership estate or 

identifying other potential parties who may have liability to either the Receivership estate or 

investors directly to either email ksalo@fowlerwhite.com, or call Kathy Salo at 813-228-

7411. 

Dated this 17th day of August 2009. 

Respectfully submitted, 

s/ Burton W. Wiand 

Burton W. Wiand, Receiver 

49 
Case 8:09-cv-00087-RAL-TBM Document 176 Filed 08/17/2009 Page 53 of 53 

CERTIFICATE OF SERVICE 

1 hereby certify that on August 17, 2009, 1 electronically filed the foregoing with the 

Clerk of the Court by using the CM/ECF system. 1 further certify that 1 mailed the foregoing 

document and the notice of electronic filing by first-class mail to the following non-CM/ECF 

participant: 

Arthur G. Nadel, 

Register No. 50690-018 

MCC New York 

Metropolitan Conectional Center 

150 Park Row 

New York, NY 10007 

s/ Carl R. Nelson 

Cari R. Nelson, FBN 0280186 

cnelson(5)fowlerwhite.com 

Gianluca Morello, FBN 034997 

gianluca.morello@fowlerwhite.com 

Maya M. Lockwood, FBN 0175481 

mlockwood@fowlerwhite.com 

Ashley Bruce Trehan, FBN 0043411 

ashlev.trehan(a)fowlerwhite.com 

FOWLER WHITE BOGGS P.A. 

P.O. Box 1438 

Tampa, FL 33601 

T:(813) 228-7411 

F:(813) 229-8313 

Attomeys for the Receiver, Burton W. Wiand 
Case 8:09-cv-00087-FiAL-TBM Document 176-2 Filed 08/17/2009 Page 1 of 2 

Standardized Fund Accounting Report 

for Consolidated Nadel Entities - Cash Basis 

Receivership; Civil Court Docicet No. 8:09-cv-87-T-26TBM 

Reporting Period 05/01/09 to 06/30/09 

|Fund Accounting (See Instructions): 

'Line 1 

Line 2 

Line 3 

Line 4 

Lines 

Lines 

Line 7 

Lines 

Line 9 

iLine 10 

Line 10a 

Line 10b 

Line 10c 

Line 10d 

Line 10e 

Line 10f 

Line 10g 

Line 11 

Line 11a 

Beginning Balance (As of 05/01/09): 

[Increases in Fund Balance: 

Business Income 

Cash and Securities 

Interest/Dividend Inconfie 

Business Asset Liquidation 

Personal Asset Liquidation 

Third-Party Litigation Income 

Miscellaneous - Other 

Total Funds Avallablfe (Line 1 - 8): 

Decreases in Fund Balance: 

Disbursements to Investors 

Disbursements for Receivership in Operations 

Disbursements to Receiver or Other Professionals 

Business Asset Expenses 

Personal Asset Expenses 

Investment Expenses 

P 

1. Attorney Fees 

2. Litigation Expenses 

Total Third-Party Litigation Expenses 

Tax Administrator Fees and Bonds 

Federal and State Tax Payments 

Total Disbursements for Receivership Operations 

Disbursements for Distribution Expenses Paid by 

the Fund: 

Distribution Plan Development Expenses: 

1. Fees: 

Fund Administrator 

Independent Distribution Consultant (IDC) 

Distribution Agent 

Consultants 

Legal Advisors 

Tax Advisors 

2. Administrative Expenses 

3. Miscellaneous 

Total Plan Development Expenses 

Detail Subtotal Grand Total { 

424,280.08 

23,900.54 

54,082.50 

200,000.00 

-

589.313.17 

-

1,557,431.16 

1,291,576.29 2,849,007.451 

2.388.57 

337.328.76 

356.491.45 

-

1,587.32 

$697,796.10 $697,796,101 

';; 

•! '^ ' 

'Line 1 Doesn't include $1.5m Scoop Capital CD/will be paying $1.5m loan 
Case 8:09-cv-00087-F^L-TBM Document 176-2 Filed 08/17/2009 Page 2 of 2 

standardized Fund Accounting Report 

for Consolidated Nadel Entities - Cash Basis 

Receivership; Civil Court Docket No. 8:09-cv-87-T-26TBM 

Reporting Period 05/01/09 to 06/30/09 

Fund Accounting (See Instructions): { 

Line 11b 

Line 12 

Line 12a 

Line 12b 

Line 13 

Line 14 

Line 14a 

Line 14b 

Line 14c 

Distribution Plan Implementation Expenses: 

1. Fees: 

Fund Administrator 

IDC 

Distribution Agent 

Consultants 

Legal Advisors 

Tax Advisors 

2. Administrative Expenses 

3. Investor Identification: 

Notice/Publishing Approved Plan 

Claimant Identification 

Claims Processing 

Web Site Maintenance/Call Center 

4. Fund Administrator Bond 

5. Miscellaneous 

6. Federal Account for Investor Restitution 

(FAIR) Reporting Expenses 

Total Plan Implementation Expenses 

Total Disbursements for Distribution Expenses 

Paid by the Fund 

Disbursements to Court/Other 

Investment Expenses/Court Registry Investment 

System (CRIS) Fees 

Federal Tax Payments 

Total Disbursements to Court/Other: 

fbtal Fiincjsiilsbureed (Llries 9-ll j 

Ending Balance (As of 06/30/09) 

Ending Balance of Fund - Net Assets: 

Cash & Cash Equivalents 

Investments 

Other Assets or Uncleared Funds 

Total Ending Balance of Fund - Net Assets 

Detail Subtotal Grand Total 

j ' 

• • • : • ••:•.-..'...' / vA . • .,••.; • 

7v 2.151,211.35 

2,151.211.35 

2.151.211.35 

2,151,211.35 
City Exhibit 17 

L A W OFFICE S 

"P^«* BOONE, BOONE, BOONE, KODA & FROOK. P.A. 

• ^ , V f ^ p. O. BOX IS9 6 

'/VEB^^ 

VENICE. FLORIDA 3.*sa.4 

STREET A.DDFIESS: E.G. <DAN> BOONE 

JEFFER Y A. BOONS ESTABLISHED I06 6 ,QQ | AVENID A DEL CIRCO 3428 5 

STEPHE N K. BOONE 

JOH N S. KODA 

TELEPHONE (9-41) 480-671 6 

MARGARET (PEGGY) S. FROOK FAX 04I ) 4a8-707 » 

e-mail: adcn@boone-law.coin 

June 13, 2008 JAMC S T . COLLINS , LAND PLANNER 

tNOT A MCMBCR OF THE TLORIOA BARl 

VIA HAND DELIVERY 

Ms. Lori Stelzer, Clerk 

City of Venice, Florida 

Re: Request to be placed on the City Council Agenda for June 26,2008 

Dear Ms. Stel2«r: 

Our firm represents Venice Airport Leaseholder Venice Jet Center, LLC. 

A place on the June 26,2008, Agenda is requested as a result of a meeting with various City of 

Venice officials on May 30, 2008, who told Venice Jet Center representatives that they are under 

instructions from City Council that prohibit consideration of new hangar construction unless 

permission is received from City Council to allow a building permit application to be filed. 

The purpose for appearing on the Agenda is to request permission from City Council to process a 

building permit application for an eight thousand sqtiare foot hangar, along with necessary 

paving and retention. See Exhibit "A" attached in 10 copies. The permit has been obtained from 

the Southwest Florida Water Management District for this project. 

The Venice Jet Center lease is dated May 23,2006, and has 28 years to run. There is vacant land 

within the lease for improvements to be constructed, and the lease specifically calls for additional 

improvements by lessee. Venice Jet Center would not have entered into the 30-year lease unless 

this provision was a part of the lease. 

The "Minimum Standards for the Venice Municipal Airport, Venice, Florida," provides for the 

construction of new hangars by the FBO. 

The "Minimum Standards for Fixed Base Operators, Venice Mtmicipal Airport, Venice, Florida," 

provides for and outlines the conditions for hangars to be built on the airport by the fixed base 

operator. 
Ms. Lori Stelzer, Clerk 

Page 2 

June 13,2008 

Providing hangar space is one of the essential operations of the fixed base operator, and there is a 

waiting list for hangar space. The City of Venice operates 144 T-hangars with 12 more about to 

be constructed. Under City and FAA mandates, competition is required and discrimination is not 

allowed. 

Fifteen minutes is requested for representatives from Venice Jet Center, LLC, DMK Engineers 

and Surveyors and Architect Mark Beebe to present the request to allow the project to proceed. 

Very truly yours. 

E. G. Boone ^ 

ab 

ccs: City Attomey Bob Anderson 

Mayor Ed Martin 

City Manager Martin Black 

Mr. Roger Jemigan 

Mr. Art Nadel 

(all without enclosure) 

f:\N35\123S9\llr City 061308 

BOONE , BOONE. BOONE . KODA Gr FROOK . P.A., ATTORNEY S AT LAW, VENICE. FLORIDA 
City Exhibit 18 

CIT Y O F VENIC E 

401 W. Venice Avenue Venice, FL 34285 

(941) 486-2626 Fax (941) 480-3031 

Suncom: 516-4382 

OFFICE OF THE CITY MANAGER 

"City on the Gull" 

June 23,2008 

Mr. E.G. Boone, Esq. 

1001 Avenida Del Circo 

Venice. FL 34285 

'mb 

RE: Venice Jet Center Proposed Additional Hangars 

Dear Mr. Boone: 

Thank you for your letters of June 13 and 16, 2008 requesting the opportunity to appear 

before Mayor and City Council regarding proposed hangars on property under lease to 

the Venice Jet Center and seeking their approval to 'file for building permits'. Under the 

terms of the existing lease, three components were identified as the minimum 

improvements necessary under the terms of the lease. Fred Walts, Airport Director has 

confirmed that the demolition of two existing hangars, construction of at least 10,000 

square feet of new hangar space and the re-facing of existing stmctures with a Northem 

Mediterranean architectural design have been completed. The concept for these 

improvements was reviewed by Mayor and City Council during their review and ultimate 

approval of the lease. 

In addition to provisions of the lease that require that improvements be approved by the 

city, the subject property lies within the GU-Govemment Use zoning district. The 

provisions of this district require that the Mayor and City Council approve a concept plan 

prior to development proceeding. With this in mind and as reviewed with city staff at the 

May 30, 2008 meeting, please submit a concept plan that reflects the extent of 

improvements desired by the Venice Jet Center at a sufficient detail to allow for a 

technical review that includes generahzed building locations, stormwater treatment 

facihties locations, exterior building design (consistent with the Northern Mediterranean 

design specified in the lease), buffering and mitigation techniques (including concept 

landscape design), parking areas, access and circulation features, proposed signage and 

exterior lighting features. Identification of the basis for determining the market needs for 

the proposed project and its consistency with airport minimum standards will be met 

should also be provided. Upon receipt of these materials, city staff will be able to 

complete a technical review to ensure that Mayor and City Council do not consider a 

concept plan with fatal technical flaws. At the May 30 meeting, staff identified fire code 
Mr. E.G. Boone 

Page-2-

June 23, 2008 

compliance parameters and specific concerns for buffering to the north that should be 

addressed in your submittal. 

Please note that your letter indicates that staff is under direction from City Council that 

prohibits consideration of the building permit apphcation filed for the subject property. 

As indicated above, until such time as a concept plan (as required by the city zoning 

code) for the proposed improvements is approved by Mayor and City Council, your chent 

is precluded from proceeding to building permitting. 

If a complete submittal is received by city staff (please direct your submittal to Fred 

Watts, Airport Director for processing) on or before close of business on July 7, 2008, 

staff would anticipate scheduhng the request for Mayor and City Council consideration at 

their July 22, 2008 meeting. The concept plan sheets submitted with your original letters 

can serve as abase for adding the additional information requested to aide in Mayor and 

City Council consideration. 

Sincerely, 

Martin P. Black. AICP. ICMA-CM 

City Manager 

MB/rek 

Cc: Charter Officers 

Fred Watts 

Mr. Art Nadel, Venice Jet Center