Hedge fund funds and hedge fund manager missing. Another Madoff ponzi scheme?

[Magda Hassan]

Accused Ponzi Fraudster investor linked to

Texas "investment bank" behind DC9 5-ton coke bust
Art Nadel 'Ponzi Pal' Link to 5.5-tom Coke Bust

April 2 2009
by Daniel Hopsicker

[EMAIL="madcownews@gmail.com"]
[/EMAIL]

"The history of men is reflected in the history of sewers. Crime, intelligence, social protest, freedom of conscience, thought, theft, all that human laws have prosecuted was hidden in this pit."

Victor Hugo, Les Miserables

An investor claiming a nearly six million dollar loss in hedge funds of the accused Sarasota Florida Ponzi artist who is also the current owner of flight school Huffman Aviation figured in the story of the St. Petersburg DC9 busted in Mexico's Yucatan with 5.5 tons of cocaine aboard.
Louis D. Paolino, once known as the “Garbage King of New Jersey,” was one of only a handful of entities ever funded by Texas "investment bank" Argyll Equity LLC, the major investor in the company whose DC9 was busted on April 11, 2006 in Mexico’s Yucatan, carrying 5.5 tons of cocaine.
Terrorist ringleader Mohamed Atta probably never met anyone named “Fat Pete” or “Joey Cakes” while learning to fly at Huffman Aviation at the Venice Airport.
But ever-mounting evidence points to the conclusion that the men who owned the flight school—both then and now—have more than a passing acquaintance with organized crime.

Troubling questions about yet another "lone gunman"

Nadel’s decade-long fraud was discovered at almost the same time as Bernie Madoff’s orders-of-magnitude-larger Ponzi scheme. A half-dozen others have since followed.
There appears to be a sudden epidemic of multi-million (and billion) dollar Ponzi fraud. Did someone yell "Olly olly oxen free!" in a voice that can only be heard by 'elite deviant'members of America's new "Masters of the Universe' class?
While Federal investigators pore over the self-proclaimed "Mini-Madoff's books, there are troubling questions emerging over Federal prosecutors "lone gunman" theory about how the dorky Sarasota socialite managed to steal $350 million from investors.
Art Nadel, an unprepossessing piano player in hotel lounges, was somehow able to maneuver himself into a position where he could reach into other people’s pockets—deeply and at will—and relieve them of what was, in too many cases, their life's savings.
Did Art Nadel do it all on his own? Indications so far point in another direction.
“Local philanthropist” was the label often applied to Nadel by the local Sarasota Herald-Tribune.
“Mobbed-up Sarasota businessman" might be a more accurate description.

Hopes for ash dashed.

We learned of Louis Paolino's involvement in Art Nadel's hedge funds in a Sarasota Herald-Tribune story announcing that Paolino has filed suit against two of Nadel fund managers. Paolino, said the Herald-Tribune, (allegedly) lost his entire investment of (allegedly) $5.6 million.
Only the Herald-Tribune didn't put allegedly in front of Paolino's claims, although given the information about his history of lawsuits, which we will take up shortly, they undoubtedly should have.
Nor did the Sarasota Herald-Tribune story bother to trouble their readers with any information, all easily available, about Paolino's highly-colorful background.
A brief description of what the Herald-Tribune omitted:
Without a doubt the one event in Lou Paolino's checkered career for which he will be remembered for his entire life was the infamous Khian Sea garbage barge, which spent almost two years in the news as it sailed around the world looking for someone to take its load of toxic waste.
The man who owned the barge was Louis D. Paolino. He received funding from Argyll Equities LLC, which also invested in the Kovar Crime family of business fraudsters at St. Petersburg FL's SkyWay Aircraft, owners of a DC9 they kept at the Clearwater-St. Pete Airport which would be busted carrying 5.5 tons of cocaine.
"The cursed cargo of the Khian Sea," as it became known, was so toxic that even New Jersey refused to accept it.

Garbage King can't shake 'stench of dead fish'

Paolino's huge freighter was packed to the gills with 14,000 tons of waste from a Philadelphia dump site.
The ship left the territorial waters of the United States, went to the Bahamas, to the Dominican Republic, Honduras, Bermuda, Guinea Bissau, the Netherlands Antilles...
Some ports even turned the ship away at gunpoint.
Eventually the crew mutinied, and two executives of the shipping company went to prison for ordering the crew to dump the ash over the side in the middle of the ocean.
No one would take it...that is, until it got to Haiti.
There, U.S.-backed dictator "Baby Doc" Duvalier issued a permit for the "fertilizer," and 4,000 tons was dumped onto the beach in the town of Gonalves, where it rotted for 12 years.
Baby Doc today lives in the South of France.

"Billionaire Trashman Cant Shake Stench of Garbage"

When Paolino tired of all the fun to be had in the garbage business, he sold his company to billionaire trashman Wayne Huizenga—himself no stranger to accusations of Mob influence—for more than $1 billion.
Waste Management runs, news accounts have demurely reported, “much of New York's extremely lucrative garbage industry.”
When the Huizenga-owned Miami Dolphins played an NFL exhibition game in London several years ago, British tabloids had a vicious field day. "Is Mafia Boss Sitting Next to You On the Bus?" asked one headline.
"Former Garbage King Wayne Can't Shake Stench of Dead Fish,” sang another.
Curiously the other recent owner of Huffman Aviation who has known criminal associates, Wallace J Hilliard, is also in tight with Wayne Huizenga.
Hilliard’s chief aviation mechanic (while Mohamed Atta was attending his flight school) was Dave Montgomery, who told us of witnessing a meeting Hilliard had with Huizenga on the Dolphins owner’s helicopter, which bore the Dolphins logo.
“Hilliard came out and got into the helicopter, and the two men held a meeting that lasted almost an hour, right on the apron,” Montgomery stated, “before Hilliard exited the helicopter and Huizenga took off.”

Garbage King of Jersey? Fuggedaboutit!

As we began to examine Nadel’s business associates, we immediately came upon a name we knew from what we had thought was another story altogether...
We first heard the name Louis Paolino in connection with the American-registered DC9 from St. Petersburg FL busted in Mexico’s Yucatan while carrying 5.5 tons of cocaine, on April 11, 2006.
Several years ago Louis Paolino became the grateful recipient of a $6 million loan from a mysterious private equity firm called Argyll Equities LLC, in Boerne, TX, and La Jolla, CA.
It was one of only three loans the secretive company is known to have made. Another was infamous SkyWay Aircraft.
SkyWay Aircraft was a complete fraud which existed primarily to facilitate a pump & dump stock play. SkyWay had no product, no market, and no prospects.
But that didn't stop the avalanche of self-congratulatory press releases touting deals that never happened with companies and individuals who did not, in fact, exist.
Eventually SkyWay was “busted out”—had its assets looted—in 2003 and 2004.
Although Argyll’s investment in SkyWay diminished daily, the company still might have proved attractive in other ways.

"Homeland Security been berry berry good to me!"

Skyway owned several DC9 airliners, ostensibly for demonstrations of technology that the company would never possess. Observers at Clearwater-St. Pete International Airport speculated that there had to have been another reason.
There was.
The firm provided an excuse for keeping several intercontinental aircraft handy.

One of SkyWay's two DC9's had been painted to impersonate—complete with phony Government Seal on the door—an official aircraft from the Dept. of Homeland Security.
Although this DC9 sat on the tarmac at Clearwater-St Pete International Airport for over a year, just one hundred yards from the major U.S. Coast Guard Gulf Coast interdiction facility, no one at the Coast Guard facility apparently noticed the ruse.
Then while flying back from a rendezvous in either Columbia or Venezuela—accounts vary—the DC9 had been caught carrying 5.5 tons of cocaine, at an out-of-the-way rural airport on Mexico’s Yucatan Peninsula.

The third time's the charm. What? Another drug smuggler!?

Argyll Equities' only funded three deals. Their third plunge into the world of investment banking-- after SkyWay Aircraft and Louis Paulino--was arranging a $17 million loan for a Mexican businessman, who then provided "significant capital," according to Chilean news accounts, to “Chilean narcotics trafficker Manuel Vicente Losada."
This news came out after Losada was arrested in the Chilean capital of Santiago. He had been “linked to a shipment of five tons of cocaine which U.S. drug enforcement officials in Miami intercepted over six years ago on the MV Harbour as it headed toward Guantanamo Bay.”
(The italics are ours. We were stunned.)
Why were Caribbean dopers steering a course for a highly-secure U.S. military facility?
Perhaps someday we will know. Then, too, perhaps someday pigs will fly.

Sue me Sue You Sue Sue Sue

It seemed unlikely that Louis Paolino, a highly-intelligent and well-connected Philadelphia native, would have been unaware, before filing suit against Nadel's fund managers, of the elementary fact that Art Nadel had stripped out all the money in his hedge funds.
However, a glance at Paolino's past performance leads to the suspicion that the lawsuit might be strictly pro forma...
Paolino files lawsuits against almost everyone he is in business, or does business, with. It seems to be some kind of protective device.
Assembling a full description of Paolino's lawsuits might strain the resources of America's criminal records system...Several examples will have to suffice. Among the more interesting: Paolino sued Argyll (in a RICO civil claim, no less.)
He also sued Argyll attorney John Francyzk (who we will return to in upcoming stories) who has an interesting connection with the notorious Teamster Central State's Pension Fund.

"Philanthropic" maybe. But not a nice man.

As first revealed by Sarasota Private Investigator Bill Warner, Nadel was already in business with associates of organized crime by the early 1970’s.
Nadel was a principal in a company called Florida Nursing Corp. His partner, Howard Sturman, was at the center of a corporate takeover that led to racketeering charges against members of the Genovese Crime Family.
With an assist from one of the invaluable citizen-researchers who will someday make newspapers like the Sarasota Herald-Tribune obsolete, we discovered that newspaper descriptions of Nadel's "charitable feelings" may have been overdone.
In 1971, Nadel was acting as attorney for a New York company seeking to evict several hundred residents of a company town alongside a lime calcification plant previously owned by U.S. Gypsum in Cheshire, Massachusetts.

The plant, which had been in continuous operation for over 100 years, was purchased by Nadel’s client, North Brewster Inc.
The eviction was highly controversial.
“Twenty-one families, many of them poor, with large numbers of small children, have been living in company housing on the site, renting 5 rooms for $25 a month, or 10 rooms without heat for $50,” reported the local North Adams Transcript.
“Do you care about these people facing eviction?” one of the family’s representatives asked Nadel, during a meeting called to ask the new owners for more time.
“Why should I?” replied Arthur Nadel.
What a sweetheart. We bet he fit right in in Sarasota.

NEXT: The War for Control of the Venice FL "Plaza"