The founder of the New York-based hedge fund Platinum Partners was arrested this week, as prosecutors unveiled an indictment charging him and six others with orchestrating a $1 billion fraud.
Mark Nordlicht, founding partner and chief investment officer of Platinum Partners, was arrested after federal charges contained in an indictment were filed. Others arrested include David Levy, Platinum’s co-chief investment officer, and Uri Landesman, its former president.
According to the indictment, the Platinum Partners fraud scheme planned to defraud investors by overvaluing liquid assets held by their flagship fund. It caused a severe liquidity crisis that Platinum Partners tried to remedy through high-interest loans between its funds, selectively paying some investors before others – a hallmark of a Ponzi scheme.
The three men along with Jeffrey Shulse, former CEO of Platinum Partners majority-owned Black Elk Energy Offshore Operations LLC in Texas, also stand accused of defrauding the energy company’s bondholders.
Murray Huberfield, a Platinum Partners associate, was charged in federal court with orchestrating a bribe with Norman Seabrook, head of the New York prison guards’ union, to secure a $20 million investment.
Platinum Partners was founded in 2003, and had $1.7 billion under management as of this past year. The fund reported profits of more than 8% in 2015 and 7% from January through April 2016. They are now liquidating their hedge funds, and two funds have received bankruptcy protection already.
Call a Los Angeles Securities Fraud Attorney Today
If you think you may have a connection to the Platinum Partners fraud scheme or have a connection with one of their associates, or if you have suffered a loss because you relied on a hedge fund whose manager made false statements, you may have certain legal rights that require your immediate attention.
Contact an experienced Los Angeles securities fraud attorney today for a consultation to discuss your rights and options.