The Platinum Partners Fraud Scheme is the largest since the Madoff case.

Managers Arrested in Platinum Partners Fraud Scheme

Platinum Partners Fraud Scheme Largest Since Madoff

The founder of the New York-based hedge fund Platinum Partners was arrested this week, along with six others in connection with orchestrating a $1 billion fraud scheme, according to the indictment filed in federal court in Brooklyn. The Platinum Partners fraud scheme includes Mark Nordlicht, founding partner and chief investment officer of Platinum Partners, who was arrested along with David Levy, Platinum’s co-chief investment officer, and Uri Landesman, its former president.

According to the indictment, the three men planned to defraud their investors by overvaluing liquid assets held by their flagship fund. It caused a “severe liquidity crisis” that Platinum tried to address through a series of high-interest loans between its funds, selectively paying some investors before others – a hallmark of a Ponzi scheme. Unfortunately for Platinum Partners and its investors, their plan did not work.

Managers Also Accused of Defrauding Bondholders

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.

Another Platinum Partners associate, Murray Huberfield, who is also a founder of Platinum Partners, 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.

Are you involved in the Platinum Partners Fraud Scheme?

Although most hedge fund managers can be relied upon to provide sound advice and honest information, even savvy investors can be duped. If you lost money investing with Platinum Partners, a hedge fund, or believe you have been the victim of a Ponzi scheme similar to the one described herein, contact a qualified attorney first.

Contact a Securities Fraud Attorney Today

The attorneys at Dimond Kaplan & Rothstein, P.A. have recovered over $100 million from banks and brokerage firms for their wrongful actions. Contact us to schedule an appointment or consultation today.