Platinum’s River of Lies and Nordlicht and Co’s Ability to Part the Red Sea – “the Gambit Worked” – [LAW360]

Law360, New York (June 25, 2019, 9:24 PM EDT) — A federal jury in Brooklyn on Tuesday heard of how the former top executives of Platinum Partners schemed with a dozen other co-conspirators tied to the hedge fund manager to defraud existing and prospective investors by telling lie after lie about a liquidity crisis at Platinum’s flagship fund.

Jurors heard the first part of closing arguments from Assistant U.S. Attorney Alicyn L. Cooley, who argued as cash flow problems left Platinum Partners Value Arbitrage Fund unable to pay all redemptions to investors, Platinum insiders mounted a campaign of deception to retain investor money and to raise new cash for the fund.

Platinum co-founder Mark Nordlicht, former co-chief investment officer David Levy and chief financial officer Joseph SanFilippo — who have been standing trial on fraud and conspiracy charges since late April — each played a critical role in the scheme, Cooley said.

“They chose the path of deception and by doing that they committed fraud,” Cooley told the jury.

Prosecutors say Nordlicht, Levy and SanFilippo were part of a conspiracy that stretched from 2014 to 2016 to defraud investors by lying about PPVA’s liquidity crisis, its practice of making preferential redemption payments to certain key investors and insiders as well as high interest, interfund loans Platinum was arranging to keep PPVA afloat.

Cooley further argued that the executives and their co-conspirators falsely told investors that PPVA was a diversified fund, when in reality its biggest investments were in failing oil and gas companies.

“By 2014, this diversified, liquid hedge fund did not exist,” Cooley said.

Despite painting a rosy picture of PPVA to existing and prospective investors, Cooley said the conspirators knew full well of the problems inside the fund. She cited a June 2014 email between Nordlicht and PPVA president and Platinum partner Uri Landesman — who was also charged but died before trial — in which Nordlicht cited the liquidity crisis at PPVA and said it was becoming impossible to manage the outflows of cash from the fund.


8 thoughts on “Platinum’s River of Lies and Nordlicht and Co’s Ability to Part the Red Sea – “the Gambit Worked” – [LAW360]

  1. These was added to the court docket a couple of days ago:
    “MOTION for Acquittal, MOTION for New Trial DEFENDANT DAVID LEVY’S POST TRIAL MOTIONS by David Levy.”
    “MOTION for Acquittal, MOTION for New Trial by Mark Nordlicht.”

  2. Nordlicht will most likely get some prison time as a result of this trial. Maybe five years?

    The SEC trial is up next and hopefully they learned from the DOJ. If the SEC does a better they can claw back the money Nordlicht received in Management fees. Tricky part would be finding it all especially since Dahlia and Father are attorneys that specialize in hiding/protecting money for their clients.

    The Cayman Islands suit is also in the queue and they will get another whack at the piñata. Hopefully they too learn from the DOJ’s mistakes.

    • That is definitely the hope. The DOJ did a terrible job of compartmentalizing the frauds and explaining it to people who simply were clueless. That they managed to do so with BE was simply a factor of BE and the simplicity of the scheme. Did not know that about Kalter. That is an interesting piece of information. Thanks for the comments.

    • They got the jury they wanted. They have now set the stage for the next group to do the same thing. The attorneys for the SEC/DOJ did a crap job on this, on painting a clear picture and on laying it out for jurors who were rightfully confused. Black Elk was easy, obvious. PPVA, not so much. The verdict is a travesty but better than nothing.

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