Platinum and Black Elk, Jury Finds Platinum’s Partners Innocent of Ponzi Scheme but Guilty in Black Elk

Mark Nordlicht, center, outside federal court in the Brooklyn borough of New York on Jan. 12, 2017.

Platinum’s Co-Founder Nordlicht Is Found Guilty of Conspiracy and Fraud

Platinum Partners co-founder Mark Nordlicht was convicted of defrauding investors in what prosecutors likened to a Ponzi scheme and once called one of the biggest investment frauds ever.

The verdict was returned Tuesday by a federal jury in Brooklyn, New York.

When Platinum’s flagship hedge fund was on the brink of collapse, Nordlicht and other executives concealed the truth from investors to stave off withdrawals and bring in fresh capital, prosecutors said. The government, which initially called it a $1 billion investment fraud, ultimately argued to jurors that Nordlicht and his co-defendants cheated investors out of millions, after the trial judge narrowed the scope of their case.

For more than a decade, Platinum Partners boasted some of the headiest numbers in the hedge fund industry, including 17% average gains through 2015 for the flagship fund, Platinum Partners Value Arbitrage. The U.S. said the fraud also involved two other funds Nordlicht operated.

Nordlicht, former co-chief investment officer David Levy, and Joseph SanFilippo, who was chief financial officer of the Value Arbitrage fund, were accused of using loans and money from new investors to pay off old ones, as Ponzi schemes do, prosecutors claimed.

In a second scheme, the U.S. charged that in 2016, Nordlicht and his alleged co-conspirators inflated the value and liquidity of unprofitable oil projects to exalt a fund that “held no more value than a tarnished piece of cheap metal.” Prosecutors called it “one of the largest and most brazen investment frauds perpetrated on the investing public.” The U.S. alleged that Nordlicht and Levy diverted the proceeds of asset sales tied to Black Elk Energy, one of the largest companies in Platinum’s portfolio.

Nordlicht was convicted of three counts tied to the Black Elk scheme: one of securities fraud, one of conspiracy to commit securities fraud, and one of wire fraud conspiracy. He was cleared of the Platinum fraud charges.

Levy was convicted of the same charges. SanFilippo was acquitted of all charges.

Liquidity Crisis

At the trial, which began April 23, prosecutors called as witnesses several former Platinum employees who had agreed to testify about their role in the alleged fraud. Among them was Andrew Kaplan, the former chief marketing officer, who pleaded guilty and secretly recorded telephone calls and meetings with Nordlicht and others, which were played for the jury.

Even as a liquidity crisis gripped the fund in January 2015, Assistant U.S. Attorney Alicyn Cooley argued, Nordlicht and his team exaggerated its prospects to get a fresh infusion of cash, promising the fund’s value would be up 8% by April of that year.

“They announced this made-up number when the fund was about to go under,” Cooley said. “The concept is, if you tell a lie because you hope things will work out, it doesn’t change the fact that you told a lie.”

Nordlicht’s lawyer, Jose Baez, told the jurors in his closing argument that the case was a “disgrace” and that it was the prosecutors who were lying — to them. Baez said there was no evidence Nordlicht intended to commit fraud and instead had a “good faith” belief that he could resolve the fund’s woes.

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5 thoughts on “Platinum and Black Elk, Jury Finds Platinum’s Partners Innocent of Ponzi Scheme but Guilty in Black Elk

  1. @Caroline, unfortunately u have misunderstood my point, so i’ll spell it out. eg in australia several years ago, a member of adass yisroel (uo) was up on v serious, large scale, long-term money-laundering using jewish charity funds etc, the whole community rallied to his cause, came to court, provided character refs, young couples were encouraged to mortgage their houses to pay for his legal costs; the supreme court judge blasted the community for their apparent (& as we know: actual!) complete disregard for the huge criminality of this guy, as usual he became the victim in their eyes. more recently, rubashkin (google if somehow u don’t know the name) was on a world speaking tour, welcomed with open arms all over, preaching his miraculous aleph-beit-gimel/abc : emunah, bitahon, gmilus hasodim: nothing about complying with the laws of the land, how he will never do the wrong thing again: he also was the victim…

    i trust u now understand, but if u don’t, as many others pretend not to, please seek help.

  2. @Zephaniah Waks,
    Most outstanding scientists and doctors not to mention top entrepreneurs are Jewish so does it mean that all scientists doctors & entrepreneurs are Jews ? No so it is the same with fraudsters & crooks.

    Every community has its bad apples who either fall because of Greed or Illegal Sex.

    • @Caroline – doctors, lawyers are professions that are viewed respectably. It used to be when you looked for a good doctor, the response was to find someone Jewish or Asian. Now there is a lean towards finding Indian doctors, particularly cardiologists. Let’s not kid ourselves into believing that we do not stereotype because its human nature. But, when you “advertise” as an observant Jew and then proceed to defraud a community of your own and others, you are shining a bright light on the worst of the community. And, when you walk around and actually listen to what people are saying, really listen, you read about a fraud and the immediate response is, “The guy must be some Jew.” That is a tragedy. It’s why Trump’s anti-Muslim and anti South American campaign works so well. He is playing on stereotypes. Nordlicht ran money through reputable endeavors in order to clean his reputation and potentially his money. But his defense attorneys knew that his best chance was an African American jury pool. There’s a reason. Between Madoff, Platinum, Rubashkin, Esformes, Rothstein, Huberfeld, etc. etc. etc. all being observant Jews with brilliant fraud schemes, one can only wonder if there is something in the culture teaching us that this is okay. LM’s response – NO. But it is on surprise when we receive emails asking the question.

  3. You are doing a great public service to the Jewish Community, your petty critics notwithstanding. Madoff, Weinstein, Platinum, Epstein et al are very, very powerful people, each at the very top of the power & offending levels, & Jewish. Do the power brokers in the Jewish Community not understand that this will cause anti-semitism, & their silence about it, & sometimes worse, will exponentially multiply it?

    • They either don’t know about or care about the collateral anti-Semitism because that is their mantra even for this blog, that the blogger is an anti-Semite/self-hating Jew. It is an easy fall back position. Thanks for the compliments. This is a labor of love, quite honestly. If our community would whip its own into shape, we might actually be viewed as respectable.

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