A Platinum Verdict – Black Elk Guilty, PPVA Scheme Not Guilty

MarkNordlicht

Jury finds Platinum Partners founder guilty in fraud trial

The verdict was handed up by a jury in federal court in Brooklyn following a nine-week trial. Platinum’s former co-chief investment officer, David Levy, was convicted of the same conspiracy and securities fraud charges.

A third defendant, former Chief Financial Officer Joseph SanFilippo, was cleared of all charges against him.

Prosecutors charged Nordlicht, Levy and SanFilippo with fraud in December 2016, saying they and others at Platinum bilked investors out of “millions and millions of dollars” in two different schemes.

In one scheme, the three men were accused of lying to investors about the health and liquidity of its flagship fund, Platinum Partners Value Arbitrage. Prosecutors said Platinum operated “like a Ponzi scheme” by using new money to fund redemptions by earlier investors, a practice referred to internally as “Hail Mary time.”

The jury, however, rejected those charges, finding all three men not guilty.

In the second scheme, according to prosecutors, Nordlicht and Levy defrauded bondholders in Black Elk, an oil exploration company Platinum owned, by diverting money from asset sales to Platinum ahead of Black Elk’s 2015 bankruptcy. The jury found them guilty of two counts of conspiracy and one count of securities fraud related to that scheme.

SanFilippo was not charged with taking part in the Black Elk scheme.

Lawyers for Nordlicht and Levy were not immediately available for comment.

Kevin O’Brien, one of SanFilippo’s lawyers, said in an email: “Joe is thrilled by the jury’s verdict of acquittal, which affirms what we have consistently maintained, that this case never should have been brought.”

Platinum’s assets are being liquidated under the oversight of court-appointed receivers.

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