The Remarkable Truths About Platinum Partners and the Traps Set to Ensnare Naive or Trusting Investors [Opinion]

“Rav Safra was approached to sell something he had and was offered a price which suited him, but he was unable at the time to signify his consent because he was reciting his prayers and was unable to interrupt them. The prospective buyer, under the impression that the rabbi had rejected his bid, kept on increasing the price but the rabbi insisted on selling for the original price to which he had consented “in his heart.” Naturally, this kind of exemplary conduct was not intended for all, otherwise it would not have been recorded for a saintly man like Rav Safra.
But the stern injunctions throughout Jewish literature against cheating and dishonesty in business affairs and in other areas of life are directed toward every Jew, as when the prophet says of his people: “They have taught their tongue to speak lies, they weary themselves to commit iniquity” (Jeremiah 9:4).”
https://www.myjewishlearning.com/article/truth-and-lies-in-the-jewish-tradition/

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The Illusions We Want to Believe About People – Platinum Parnters

Simply Because an Investment Manager is Invested in the Fund he Manages Does not Mean he Cannot Defraud Other Investors in the Same Fund –

[OPINION Edited 7.2.19 11:46am]

In his closing statement, Jose Baez, the attorney for Mark Nordlicht asked rhetorically, how Mark Nordlicht could have defrauded investors when he himself was invested. “For you to believe he defrauded them, he would have had to defraud himself,” Baez said.

Read more at: here.

But that is a far cry from the realities of our financial markets. That was the bait for the trap Nordlicht set for investors. Most hedge fund managers are also investors who have money invested in their own schemes, not enigmatic but rather a show of legitimacy intended to entice new money. If Nordlicht had not been invested, he would have lacked credibility and would not have attracted investors. 

Baez, an incredibly gifted attorney, presented a remarkably simplistic view of hedge funds and private equity funds to the jury. Fund managers don’t just invest and get returns on their investments. They earn (a loaded word in the case of Platinum) management fees and dozens of other benefits, depending upon how the fund is established. Nordlicht was well compensated during his Platinum tenure. There were so many funds, so many scams, so many left bereft of their financial futures and Nordlicht was enriched.

The fact that Mark Nordlicht had deferred compensation of $55,000,000.00 at the end of the day, which he allegedly lost as a result of the fall of his empire, does not speak to what money he had received up until that point – on the order of tens of millions. He had been paid management fees and other benefits that were not clearly elaborated during the trial. He had been enriched when the fund was prospering. The problem was, Nordlicht’s kingdom was made of glass.

Baez claimed that the government told lies, many investors made money. The fact that many investors profited from their investment is not mutually exclusive of those defrauded in the scheme. Were that to be the case, Madoff would be a free man.

Hedge Fund Managers nearly always invest in their funds. Investors frequently make money in fraudulent schemes, never the wiser to having been initially defrauded. This is not uncommon. Hedge fund managers can simultaneously defraud investors and have their own money locked up in the fund; and it is an absurdity of epic proportions to assume that because they are invested, they are judgement proof for the unthruths they tell their investors. Many of Madoff’s investors got very wealthy on Madoff’s trickery, whether they knew of frauds committed or otherwise. 

With respect to Platinum, the “deferred compensation” and the other money Nordlicht had tied in the fund, the role he played in keeping each entity wholly compartmentalized, the return of the money to the Holocaust survivor as a preferential withdrawal were all part of the show. These particulars, are evidence of guilt as opposed to innocence, they point to the premeditation involved. That they added a perception of honesty, credibility and integrity was an illusion created to ensnare new investors. And he should be held to account. 

When a hedge fund manager, a private equity company, an investment group defrauds investors it undermines the integrity of the entire financial investment culture. When Jewish hedge funds do it, they undermine the worldview of Judaism and Jewish morality. Both have unintended consequences and each must be addressed with an equal level of gravity. 

If the defendants are acquitted of the charges against them, both with respect to the Platinum Partners Value Arbitrage Fund and with respect to Black Elk, there will be little need to have a Securities and Exchange Commission in place because their acquittal will invite market participants to follow in the footsteps of the defendants in the current case. Moreover, an acquittal will pave the way for these men to do the same again, just in a different format. It will render each defendant now and in the future impervious, virtually untouchable. In addition, an acquittal will leave each defrauded investor with little recourse and it will set a bad example for the future of Jews, particularly those honest among us engaged with and perhaps more honestly, married to the financial world. 

In the late 1990’s Murray Huberfeld and David Bodner (two of the earliest investors in Platinum and their precursor entities) paid someone to take their SEC registration exams. To an outsider looking in, this payment was not only a sign  of a wholesale willingness to cheat the system but something more nefarious. It was a show of fundamentally and unequivocally morally bankrupt behavior. 

Huberfeld and Bodner were let off with little more than a slap on the wrist, setting an example for future generations, placing them in the bubble of the impervious, two of the untouchables. Nordlicht, Levy, SanFilippo and the others have been  disciples, learning a craft. The stage Huberfeld and Bodner set for all in their sphere of influence was a profoundly public license to skirt the laws, or more accurately to plow right through them. 

It is now nearly twenty five years since those events; and history repeats itself.  All of the men involved in these grand and elaborate schemes have mentored others. They, along with their Platinum understudies, have repeatedly exhibited a pattern and practice of skirting the laws, shared by so many Jewish men within their social sphere.

It is about time that the legal and judicial system put an end to it. The honest should not be forever left at the mercy of the half-truths of those who have no problem telling them, and have the money to defend themselves on the rare occasion they get caught.  

8 thoughts on “The Remarkable Truths About Platinum Partners and the Traps Set to Ensnare Naive or Trusting Investors [Opinion]

    • To be honest, we have a hard time believing that he is actually dead. That may seem outrageous but the papers were way too silent regarding his death as were community and family announcements. In theory he should have been taken to Israel for burial which would have been announced. Having said this, this is just a going theory – more of a conspiracy theory and there is little proof of our conjecture in that regard.

    • There’s going to be nothing left. Class action… ha… These guys have money in trusts and family money and more family money. There won’t be anything for you… sorry.

  1. when is the last time you heard of any haredi demonstration against unethical business practices, as opposed to ones against the internet or idf conscription (which draw several hundred thousand people)? i think that may be a hint as to where this matter sits in the haredi consciousness, all gmora quotes notwithstanding…

      • One would like to think that if the Jury finds Nordlicht innocent that the Judge would declare a mistrial. At the very least Nordlicht’s defense spelled out their conspiracy theories during the opening and closing arguments even though being told explicitly by the Judge not to do so.

        • There are a few things that the judge could do. It is our belief that either the jury will hang or the jury will not convict. We would be very impressed if the jury were able to see through the theatrics (quite literally) of the defense attorneys, between Casablanca and It’s a Wonderful Life added to the show (explain in a post to come out today). That is not to belittle the jury or somehow demean them, the matters involved have been so complicated and even the Government was not able to create a simple picture. We suspect that the jury just will not be able to get there. Hopefully the judge will then declare a mistrial (as requested by the Defense counsel) and the case will get tried again. One can only hope.

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