Platinum Partners – Nordlicht, Levy and SanFilippo and A Crime So Complicated No One Understands it

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If Mark Nordlicht, David Levy and Joseph SanFilippo are Acquitted, it will not be Because no Fraud was Committed but Because the Whole Story was Too Confusing, Even for Defense Attorney Baez

Jose Baez is representing Mark Nordlicht in Nordlicht’s fraud trial. Baez is a remarkable and seasoned attorney. He knows the law. He knows his jury. He tests the boundaries of his questions with a bright smile; and he knows how to defend his client with the sheer will of his conviction.  As defense counsel, Baez draws blood from stones. He pulls rabbits from hats. He colors the wings of butterflies while in mid flight; and he sets a scene creating doubt like a Picasso with a paintbrush shading his canvas.

So long as there is doubt, there cannot be a conviction. And the intricacies of the Platinum Ponzi Scheme were so savvy, we would be surprised if there were even a modicum of steadfast clarity for the jurors. We can only hope the government has some more tricks up its sleeves.

Unlike a murder trial where there are black and white lines drawn with very few grey areas, fraud is grey and murky. The waters one needs to navigate to convict a fraudster require a periscope that can see through a curved mirror and a jury that can see through the clouds.

Baez and the counsel for co-Defendants Levy and SanFilippo picked their jury well, not a jury of Platinum’s partners’ peers, but a jury of African Americans and young adults. There may not be a Jew among them. It is hard to tell. 

And the subject matter of the Platinum case, along with the Jewish identity associated with Platinum’s main partners and its investors is ripe for confusion, so much so that today even Baez seemed to falter.

Baez began his cross examination of the witness, Daniel Mandelbaum a former CFO for Platinum, by asking whether he was Hasidic. Mandlebaum responded with an unequivocal, “No”. Baez then attempted to somehow change Mandelbaum’s response by associating Hasidic with a wife covering her hair and a man wearing a kippa. Mandelbaum was almost offended.  A jury, like Baez, would not understand the distinction between Mandelbaum’s Orthodoxy and Hasidim. But the word “Hasidic” carries its own subliminal messages. 

Baez was playing on anti-Semitisim and associations and as such setting the stage for a cultural and religious sort of confusion.

The Platinum Partners’ partners are largely modern Orthodox. Many of them live in the same neighborhood. They share the same simchas (joyous events), attend synagogue together, break bread together raise their children together, gossip with the same people, sit shiva when someone dies and keep up with one another’s increases in wealth. There are very few secrets within this community, something the jury, like Baez will not understand.

And, the investors like the partners were community members, a part of the larger Jewish Zeitgeist, only too eager to hand over their money to Nordlicht whom they trusted. That trust defined the nature of the investment and by implication, the seriousness of the crimes. They were defrauded, and sadly blinded by their own sense of community. 

The investors were wooed by Mark Nordlicht and Murray Huberfeld, David Bodner and David Levy so much so that they did not see the signs, the patterns, the inconsistencies, the numbers and returns that made no sense. They were victims, Jewish or otherwise. Mark Nordlicht knew his craft and his audience; and he dictated and controlled the documents and hence the grift. For Baez, the documents protected Platinum and Nordlicht because they were a measure of “disclosure” a waiver of sorts. For us, they were confusing and confused. They represent an admission of guilt and by deviating from market standard, the fraud committed was all the more criminal.

The overly complicated investment documents, nuanced to give Nordlicht control over every aspect of the investment, including discretionary redemptions,  a/k/a proprietary redemptions were part of Mandelbaum’s discomfit. As a matter of general business course, when redemptions are to be distributed, they are done pari passu with other members of the class of investors requesting redemptions.

By their very nature, redemptions should not be discretionary, not even for a Holocaust survivor. One of the redemptions Nordlicht did satisfy was to a Holocaust survivor. This was not done out of the goodness of Nordlicht’s heart but out of a knowledge that he should not have taken the man’s money in the first place. That’s a story for another day. The goodness of an investment manager’s heart, or lack thereof, is not something that should play into a privately held investment vehicle.  Suffice it to say, proprietary redemptions of the sort advertised in the Platinum Partners’ private placement documents were inherently fraudulent insofar as they provided preferential and discretionary treatment. As such, investors of the same class were not pari passu with others of the same class. That is, by its very nature, a fraud. 

As Baez rightfully pointed out many times, Nordlicht had discretion. NORDLICHT HAD DISCRETION. But he also had the ability to move money from one fund to another virtually unhindered. It was all a shell game.

Mandelbaum was, during his shortlived employment with Platinum, savvy enough to see the problems, Mark Nordlicht controlled everything. There were too few checks and balances.

Baez emphasized that point by sharing screens and screens of Platinum’s various documents. But in his cross examination he stumbled over the mere suggestion that the level of discretion provided to Nordlicht was anything but acceptable. The purpose of disclosures and documents in the securities world is in short “fairness.” Investments, win or lose, high risk or low risk, are supposed to be, at the very least, fair. A jury will never understand that and Baez, as a defense counsel doesn’t have to.  

Baez asked Daniel Mandelbaum about a loan from one Platinum Partners fund to another, demanding to know whether Mandelbaum had the right, during his tenure, to question the propriety of that loan. Sixteen percent (16%) in 2015 was too high. Mandelbaum responded that generally the lender gets to decide the interest rate. The Lender was Platinum a/k/a Nordlicht. The Borrower was Platinum a/k/a Nordlicht. There was no interest rate that would have made legal sense given the financially incestuous nature of the funds and their investors. Sixteen percent was simply a shnorer-type number. Nordlicht might have wanted to choose 18% instead.

At the end of the day, Nordlicht and Platinums’ partners have likely convinced themselves and anyone who will listen that they are being wrongly accused. Why us?  The defense counsel have collectively done a splendid job keeping Murray Huberfeld’s name from being mentioned at Nordlicht’s trial. When Huberfeld is mentioned, the defense insures that his 30 month conviction for bribery is not disclosed to the jury. While Federal rules of evidence may preclude this information from being conveyed to the jury, the fact remains, it was this bribe that tipped the FEDS off to the nefarious and criminal behavior of Platinum Partners’ partners. Keeping the jury in the dark will not change this fact. 

In the event that Nordlict and his fellow Defendants are acquitted, which is not unlikely due to the complexity of the case and the ignorance of the jury, it will not be the last time that the house wins. The house always wins! 

Ultimately, the very fact that Nordlicht had the discretion in all things Platinum, a point drafted into Platinum’s funds’ documents, and emphasized repeatedly by Baez, should tell the whole story. But by and by, the jury gets to decide. We fear that Baez painted a very confusing picture by his own lack of understanding of the documents themselves. It was likely quite intentional. He is a gifted attorney. And if the Defendant’s are acquitted, he will have graduated from the Sorcerer’s apprentice to the Sorcerer himself.

We give Baez credit which cannot be understated. If you are confused, you are supposed to be.  If not, it’s a shame you are not sitting in the jury box.

 

 

One thought on “Platinum Partners – Nordlicht, Levy and SanFilippo and A Crime So Complicated No One Understands it

  1. Mark Nordlicht and the other alleged fraudsters cannot be wrongly accused by the SEC as they were taped saying they intended to leave for Israel via Europe with “the books”.
    The victims were blinded by the fact that the financier was of the same faith and attended the same temple like them & their families and of course could not question his moral values even after the Madoff scandal.
    Interesting by the way to learn that Mark Nordlicht insulted a prosecutor saying the prosecutor had no F…..morals as if he was an ethical and morally reliable professional…

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