Law360, New York (May 15, 2019, 8:56 PM EDT) — A former Platinum Partners executive on Wednesday told jurors he lied to existing and prospective investors in the hedge fund manager’s largest fund, the second former insider to testify at trial about misconduct at Platinum’s highest levels.
Andrew Kaplan, Platinum’s former chief marketing officer, took the witness stand in Brooklyn federal court in the trial of Platinum co-founder Mark Nordlicht, former co-chief investment officer David Levy and former chief financial officer Joseph SanFilippo.
Kaplan, 53, who has pled guilty to securities fraud conspiracy and agreed to cooperate with prosecutors, told the jury he lied to investors and prospective investors in Platinum Partners Value Arbitrage Fund LP about the liquidity of the underlying investments, as well as the fund’s ability to repay investors and the fact that some were receiving preferential treatment.
Jurors also heard conversations between Kaplan, Nordlicht and others that Kaplan had recorded, including one from mid-September 2014 after Platinum had received a negative review by a hedge fund consultant. In the recording, Nordlicht spoke of trying to get more “marketable liquidity.”
“For anyone to invest with us would be a breach of fiduciary duty right now until we straighten this out,” Nordlicht said.
Prosecutors say Nordlicht, Levy and SanFilippo defrauded investors by overvaluing assets and concealing cash-flow problems in PPVA, while Platinum pocketed millions of dollars in fees.