Platinum and Diamonds and Seabrook, oh my!

 

ZERO MOSTEL IS NOT SINGING, HOPEFULLY SEABROOK WILL

LostMessiah, April 15, 2016

“I like to describe ourselves at Platinum Partners as entrepreneurial traders. We select and promote entrepreneurs who have an understanding of how to structure transactions in a way that caps the limit to the downside while giving us all kinds of upside opportunities,” says Uri Landesman, president and managing general partner of the New York-based firm.

Jona Rechnitz is nothing if he is not crafty. He has his hands in a treasure trove of diamonds, real estate holdings, investments; you name it, he’s probably in it. He is what one might refer to as a “savvy investor.” Others might call him a predatory investor. It really depends upon perspective.

His closest friends, if there is such a thing in his world, have called him “philanthropic.” It would appear that many of his connections come through his philanthropic circles (note Huberfeld below).

Is it philanthropy if your donation to an organization is purely for the returns on those donations, oops investments? A question for another day.

Then there’s Norman Seabrook the president of the Correction Officers’ Benevolent Association, a union. In his position, Seabrook had access to the union’s money and some authority to invest that money (wisely). Seabrook and Rechnitz were apparently well acquainted through Rechnitz’s involvement in Mayor de Blasio’s Inaugural Campaign, amongst other things. At least it would stand to reason that they were well acquainted if Seabrook was willing to invest $10M in union/pension funds in an investment suggested by Rechnitz.

And then there’s Murray Huberfeld, a hedge fund manager (and philanthropist). His name is associated with Centurion Funds and others. For the purposes of this $10M in COPA money, the Platinum Fund is where the money floated (grew), then sank.  Huberfeld and Rechnitz were associated with one another through their mutual love for philanthropy (money). Huberfeld’s funds were boasting steady returns, even when the rest of the world’s markets were tanking. Who could resist?

Rechnitz, while not legitimately brokering a transaction (at least not registered to have been brokering a transaction) made an introduction between Seabrook (the guy with the COPA funds) and Huberfeld (the Platinum guy). Rechnitz convinced Seabrook (steered him) to invest the money in Platinum and a shidduch was born.

(For those who are not familiar with the term, a “shidduch” is a match and a shadchan is a matchmaker. It is like the song from Fiddler on the Roof: “Matchmaker, matchmaker, make me a match, find me a find, catch me a catch. Matchmaker, matchmaker, look through your book. And make me a perfect match.” You know the song.)

When the veil comes off, however, sometimes the bride is not what the groom expected. As it would happen, similarly was the case with Seabrook and Platinum. Only the dowery on this match was $10M and an investigation.

Mr. Seabrook, did you ever ask Rechnitz if he invested in Platinum or how much he was getting to make the shidduch (broker the transaction)?

There’s more to the story of Huberfeld and Platinum. For that we will need to introduce Mark Nordlicht (another philanthropist) and the “scheme to profit from the imminent deaths of terminally ill patients.” For now we have the CliffNotes version.

 The Wall Street Journal reports:

April 14, 2016

Businessman Helped Steer $10 Million of Union Money to Hedge Fund

“Jona Rechnitz, a Brooklyn real-estate investor, referred Norman Seabrook, the president of the Correction Officers’ Benevolent Association, to Platinum Partners, the people said.”

“The investment put a large percentage of the union’s money in a firm that has had a mixed stretch. Platinum generally has reported steady returns. Last December it blocked investors from withdrawing some of their money in one fund that contains hard-to-sell assets, according to people familiar with the matter. Such moves have been rare in the hedge-fund world since the financial crisis.”

 

“Last year, prosecutors subpoenaed the correction officers’ union for an array of financial and travel records involving Mr. Seabrook, including the circumstances around the union’s investment in a hedge fund.

The New York Times reported at the time that Platinum and a subsidiary, Centurion Credit Management, were cited in that investigation. Reuters reported the union investment in Platinum earlier this week.

Mr. Rechnitz had ties to Platinum at the time of the investment, according to people familiar with the matter.

Centurion’s founder, Murray Huberfeld, ran Platinum’s credit fund until several years ago, was a part-owner of the firm and remains an investor in Platinum. Mr. Huberfeld and Mr. Rechnitz are acquainted through Jewish philanthropic circles, the people said.

Platinum employs an unusual strategy among hedge funds. Rather than bet solely on stocks or bonds, it says its investments include loans secured by life-insurance policies, esoteric energy markets and financing deals tied to litigation.

Mr. Rechnitz isn’t listed in Platinum’s public investment-adviser registration as an official marketer for the firm. It isn’t clear if he was paid or otherwise compensated for the union referral.

The federal probe has examined, among other things, a Manhattan civil suit filed in 2015 by a former union executive, William Valentin, according to people familiar with the matter. Mr. Valentin alleged that he was pushed out of the union’s leadership after he raised questions about Mr. Seabrook’s investment of $10 million of union money into an unnamed hedge fund that he said was in financial distress.”