Platinum Partners' hedge fund bigs face charges in $1B fraud case
Dec 20 2016
In the new indictment, Chief Investment Officer Mark Nordlicht and other execs extracted over $100 million in fees by overvaluing the fund's assets.
Nordlicht and his alleged co-conspirators knew that one of the company's chief funds faced financial trouble as early as 2012, the indictment charged.
A representative for Platinum declined to comment.
The indictment unsealed Monday in federal court in Brooklyn charges Platinum founder and Chief Investment Officer Mark Nordlicht, co-chief investment officer David Levy, and former president Uri Landesman with counts of securities fraud, investment adviser fraud and conspiracy. On or about December 13, 2015, Nordlicht, Landesman, and an unnamed coconspirator sent emails "that contemplated Nordlicht and Co-Conspirator 1 fleeing from the United States and illustrated their knowledge and awareness of the fraudulent scheme perpetrated on Platinum's investors and prospective investors". "It seems like we make some progress and then [redemptions] are relentless nearly". The New York Times reported Platinum executives managed money from prominent families and foundations within the Orthodox Jewish community in New York.
Platinum's management hid the red ink in part by claiming a position in Golden Gate Oil LLC was valued at roughly $170 million.
By 2016, however, the financial crisis had emerged in public view.
Two Platinum Partners hedge funds have sought U.S. Chapter 15 bankruptcy protection as part of an ongoing liquidation effort, according to court documents filed in NY federal court Tuesday.
Joseph Mann, 24, who worked in Platinum's marketing office for three years and solicited investments; Daniel Small, 47, a managing director; and Jeffrey Shulse, 44, a CFO for one of the oil companies Platinum controlled, face the same charges.
It all started to unravel in June when Huberfeld was arrested in a separate case for allegedly bribing the head of New York City's corrections officers' union to put its retirees' savings into Platinum. The U.S. Attorney called it a $1 billion investment fraud.