Sarasota, FL – Investors in a Sarasota-based hedge fund could be out $350 million, and the man behind it has vanished. Managers of the fund are telling clients that their money is gone, and they do not know if any will be recovered.

Fund principal Arthur G. Nadel, a prominent player in Sarasota social and philanthropic circles, disappeared this week. His wife, Peg, filed a missing person report with law enforcement after finding a suicide note.

Investors — from individuals to the Sarasota YMCA Foundation — in the funds branded Viking, Valhalla and Scoop were stunned this week to learn they may be victims in what could become the largest investment swindle in Southwest Florida history.

Despite the carnage on Wall Street last year, investors were told that their investments had earned more than 8 percent as of November.

Some are already calling the case a “mini-Madoff,” after Bernard Madoff of New York, who has been accused of creating a $50 billion Ponzi scheme that promised similarly large percentage returns.

“I feel abused. I feel beaten. I don’t know who to believe,” said Dr. Brad Lerner, who expects to lose nearly $730,000 in an IRA fund with Nadel and Neil Moody.

Moody, the president of Viking Management, did not respond to interview requests.

In a statement issued Thursday to investors, Moody confirmed the funds appear depleted.

“Unfortunately, just yesterday afternoon we became aware of an extremely serious situation suggesting that the funds may have virtually no remaining value,” Moody wrote.

Moody, who lives part time in Evergreen, Colo., has told several investors interviewed by the Herald-Tribune that the funds’ value totaled $350 million. He said he has contacted the U.S. Securities and Exchange Commission and “all appropriate authorities” to report the situation.

Moody is telling clients that Nadel did all the fund trading, and that Moody had no idea anything was wrong until this week.

Nadel, 75, and Moody, 70, operated under the name Scoop Management Inc. in a double storefront at 1816 Main St., across from the Bank of America building.

Management there appeared in a state of turmoil on Friday. Peg Nadel and son Geoff Quisenberry said they could not comment on the size of the company’s assets under management, the number of clients, how much has been lost, or even whether it is accurate to call them a hedge fund operator.

“The way I want to be represented is we are totally open and cooperative with all our clients and the authorities, and that includes the SEC,” Peg Nadel said. “We have nothing to hide. But until our counsel has a statement prepared for us to make public, we cannot comment on what is happening here.”

She and Quisenberry both denied reports that employees were emptying out the office.

The Nadels were known for their civic activities, serving on boards and donating money.

Habitat For Humanity, Jewish Family & Children’s Services and Girls Inc. all received cash gifts and pledges from the couple in recent years. None had any money invested in the hedge funds.

“We’re very fortunate in that way,” said Rose Chapman, president of Jewish Family & Children’s Services. Moody was co-chairman of the organization’s capital campaign.

“We’ve received gifts from them over the years, but they were all cash,” said Stephanie Faltz, Girls Inc.’s executive director. “We had no funds with them. The Nadels have been very generous. This makes me very, very sad.”

At Habitat For Humanity, the Nadels were the home building charity’s largest donors. Last year, at the group’s “Hammers & Hope” fundraiser, Peg Nadel pledged an equal amount if Habitat raised $250,000.

The Nadels also own the Venice Jet Center, which has been at the center of controversy in Venice over its efforts to expand.

The first hint

Investors interviewed by the Herald-Tribune said they realized something was wrong when they failed to receive their December statements, or when they did not receive requested distributions.

Scoop could not meet a year-end demand for $50 million in withdrawals from investors, Lerner said.

He said he invested $500,000 in the Viking IRA Fund three years ago, and through November it had grown to $729,844. The fund managers claimed the fund had earned 8.56 percent in 2008, down only in October, during a year when Wall Street suffered catastrophic losses.

“I had no reason to believe it wasn’t real,” he said.

Moody contacted him Thursday to say that his money was gone and that Nadel had disappeared.

Lerner, a physician specializing in internal medicine, was one of several investors who filed reports Friday with the Sarasota Police Department.

Another local investor, who requested anonymity, said she had asked for a year-end distribution but was stalled for a few days. Moody on Thursday admitted to her, she said, that “Art Nadel was missing with all the money.” She had invested with the firm for 10 years.

And it is not just individual investors. Local foundations also appear damaged.

Until Thursday, the YMCA Foundation of Sarasota believed that $1.1 million, or 13 percent of its total assets, was generating returns of at least 10 percent per year in the Valhalla Management LLC fund.

Moody, a director of the YMCA and first vice chair, informed YMCA president Karin Gustafson on Thursday that the money is gone. He resigned from the board at the same time, she said.

Moody, also well known in social and civic circles, made an initial donation in January 2005 and bumped the total up by $1 million starting in 2007 and into 2008, Gustafson said.

“Neil made a significant gift but asked that it be invested at Valhalla,” she said.

“With Neil’s fund, because it was outside our investment guidelines, he did a personal guarantee of 10 percent,” she said. In other words, if the fund did not generate at least 10 percent per year, Moody promised to make up the difference.

The YMCA received regular reports from Scoop Management, with the last showing a November balance of $1,188,000.

Gustafson could not describe how the money was invested.

Hedge funds are basically private investment pools for wealthy, sophisticated investors. Many are organized as partnerships with a general partner managing the fund’s portfolio and making investment decisions.

Minimum investments can be high — $100,000 is not unusual — and the funds can be risky. Hedge funds typically target a specific range of performance and attempt to produce targeted returns regardless of the underlying trends of the stock market.

In a 2003 report, Sarasota-based The Wall Street Digest lauded Nadel’s and Moody’s experience, especially Nadel’s “black box” computer trading program.

Some clients have contacted the Williams Parker law firm about their investments.

Lerner says he hopes there will be some concerted effort to recoup investors’ money.

“I’m not optimistic at all,” he said.