Murray Huberfeld and a Platinum Laden 45 Pages, He Should be Sharing a Cell with Madoff, Not Given Leniency

huberfeld submission 7 million restitution_page_01
huberfeld, submission, 7 million restitution

Respectfully Submitted, Platinum Was a Ponzi Scheme and Huberfeld is a Serial Fraudster, a Pattern and Practice that Began in the 90’s

https://www.sec.gov/litigation/litreleases/lr15826.txt

We began reporting on Murray Huberfeld and his involvement with the Platinum Partners fraud in 2016. He defrauded investors, full stop. He defrauded a pension fund, COBA. His willingness to repay $7M back to COBA, as set forth in the 45 page call for leniency by his attorneys, is not an act of generosity. In fact, it is a slap on the wrist for someone who has turned defrauding investors, siphoning off money and then starting again into an art form. He admitted to a very minor offense in comparison to what charges could have been served. Moreover, we think the repayment to COBA may very well represent an admission to a different crime. He does not seem to have admitted to defrauding the COBA investors.

The above is a link to the 45 page submission provided by Mr. Huberfeld’s attorneys to the Judge in his sentencing hearing. It makes for nauseating reading, and that is being quite kind. It includes pages and pages of statements by family and friends. It is worth noting that at least two of those friends, included in the myriad of support he received, are convicted felons. If we are defined by the company we keep?

The sprawling display of creative lawyering speaks of apologies and humility and the unusual circumstances of this particular fraud. What made this one different? Murray Huberfeld got caught. He should be punished for a pattern and practice of criminal behavior, one that has defined his life, at least since the 90’s. Murray Huberfled should not be rewarded for his hollow attempts at restitution and alleged quasi-generosity.

He is not living a life of “tsinius” by any means.

Like the others in his litany of Madoff-like Ponzi schemes, he will likely escape unscathed, only to begin another. Contrary to comments by his attorneys, Marty Huberfeld is a criminal mastermind. He is a brilliant architect of intricate schemes. He is well versed in energy regulatory structures, diamond mining, real estate, healthcare and nursing homes. The man is not the naive fool as alleged by his attorneys. Quite the contrary. Well crafted fraudulent schemes are his modus operandi. Platinum partners was just one in a non-exhausted serial of enterprises: Broad, Centrion, Viridian, Black Elk, COBA, and the list goes on and on and on. 

Make no mistake, Murray Huberfeld is no Robin Hood and, contrary to the eloquence of his attorneys, he does not have integrity sweating from his pores as that 45 pages would have us believe. He has used charity to provide the cover of philanthropy and altruism; and we would argue, to launder money. Whatever financial benefit he has given away has not been based upon altruism and bleeding heart generosity. It has been a ruse to cover up behavior far darker, a serial pattern and practice of fraud and lies.

Sadly, Mr. Huberfeld’s plea by his attorneys includes letters and statements, testaments of beneficiaries of Huberfeld’s supposed generosity. He is supported by his friends and family which include other convicted felons. His attorneys have painted a picture of unicorns and rainbows; and it is all remarkably ill-gotten.   

We ask: what about his victims? Do they not matter? What about the family fortunes and lives ruined by his crimes? What about government institutions, the SEC, the tax authorities, the Federal Energy Regulatory Commission, the laws of the land? They have been and continue to be demeaned and disgraced by his actions? Are those to be ignored because one life ruined is outweighed by the 45 pages of fluff provided by his attorneys? 

Those 45 pages are insultingly absent the clarity that Mr. Huberfeld is a serial fraudster. He began in the 1990’s by paying someone else to sit for his SEC licensing exams. He was given a pass, one which paved the way for him to perfect his ability to outwit law enforcement. That should not go unnoticed. We contend that if the past speaks to the future it will not end here.

Murray Huberfeld would not be truly sorry for the depth of the damage he has caused, not only to individual investors, the victims of each of his schemes, but to the integrity of the markets, unless he were given the harshest possible sentence.

We hope the Judge in the case has the moral fortitude and good sense to do just that, to overlook the statements of his supposed beneficiaries, those who were afforded nothing more than the benefits of dirty money, and to finally give him more than a simple slap on the wrist.  

 

 

ADDITIONAL READING:

https://www.haaretz.com/us-news/.premium-jewish-hedge-fund-execs-charged-in-1-billion-ponzi-scheme-1.5477337

scores-obstfeld-grin-and-more

https://www.institutionalinvestor.com/article/b150xwhg75tcth/platinum-to-manage-centurion-fund

 

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Their Platinum Wives: Dahlia Kalter – Kalter Gilad Cook Islands Trust, OBH 2308 LLC, RRR

uri-landesman

Please, dear reader read carefully. The irony cannot be lost on you that every penny that disappeared from the various Platinum entities, wound up in the wives’ funds, accounts, trusts, real estate holdings, jewelry foundations etc.

Mark Nordlicht has all but convinced the courts that he is penniless. That’s probably true. But Dahlia Kalter Nordlicht? She has way more than 2 nickles to rub together.

Have you forgotten about the Herbert Stettin case from 2011? Have you not considered the defendants in that case and the connections among them?

See for yourselves: 

https://www.law360.com/articles/268406/rothstein-trustee-goes-after-hedge-fund-heads-for-40m

Fast-forward to 2016 and The Talk of the Sound:

Two New Rochelle Men Among Seven Indicted In A $1 Billion “Ponzi-esque” Investment Fraud

The Wall Street Journal reported that Platinum’s investors were focused in the observant Jewish community. Nordlicht and his wife Dahlia Kalter-Nordlicht are active members of Young Israel of New Rochelle, both are board members of the Westchester Torah Academy located in New Rochelle, NY and endowed The Fred Kahane Technological High School, an Americans for Israel and Torah (AMIT) school in Ashkelon Israel.

Three of those arrested attended Yeshiva University, according to The Commentator, the school’s official student newspaper,  Mark (Meir) Nordlicht graduated from Yeshiva University in 1990 with a bachelor’s in philosophy. Uri Landesman attended Yeshiva University in the 1980s. David Levy graduated from Yeshiva University in 2006.

According to news reports, Mark Nordlicht was considering taking out a second $7.5M mortgage on his home.

As the New York City-based hedge fund began to go under in December 2015, Nordlicht wrote that he was thinking about using $7.5 million from a second mortgage on his home to try to keep it afloat, the papers say. He also was considering fleeing the country, they say.

That property could not have been his primary residence in New Rochelle which is estimated to be worth about $1.5 million and is held in a trust. As Platinum Partners faltered, some time between 2012 and 2016, the property at 245 Trenor Avenue was transferred from Dahlia Kalter, Nordlicht’s wife and a past employee of Platinum Partners, to Kalter Gilad Cook Islands Trust Limited.

The property may have instead been one in Florida owned by OBH 2308 LLC, a limited liability company which owns 10295 Collins Ave Unit 2308 at One Bal Harbour Ritz Carlton. The 5,266 square foot apartment, with 4 bedrooms and 5 bathrooms overlooking the ocean, is currently listed for sale at $9,995,000, The realtor describes the property as “the largest unit for sale in the building”.

The Principal of OBH 2308 LLC is Dahlia Kalter.

Nordlicht, Levy, Landesman, SanFilippo and Mann are charged with securities fraud, investment adviser fraud, securities fraud conspiracy, investment adviser fraud conspiracy and wire fraud conspiracy for defrauding investors through, among other things, the overvaluation of their largest assets, the concealment of severe cash flow problems at Platinum’s signature fund, and the preferential payment of redemptions. Nordlicht, Levy, Small and Shulse are charged with securities fraud, securities fraud conspiracy and wire fraud conspiracy for defrauding Black Elk’s independent bondholders through a fraudulent offering document and diverting more than $95 million in proceeds to Platinum by falsely representing in the offering document that Platinum controlled approximately $18 million of the bonds when, in fact, Platinum controlled more than $98 million of the bonds.

Nordlicht, Levy, Landesman, SanFilippo, Mann, Small and Shulse will be arraigned later today before United States Magistrate Judge Lois Bloom at the United States Courthouse, 225 Cadman Plaza East, Brooklyn, New York. Shulse’s initial appearance for removal proceedings to the Eastern District of New York is scheduled for this afternoon at the United States Courthouse, 515 Rusk Avenue, Houston, Texas.

The charges were announced by Robert L. Capers, United States Attorney for the Eastern District of New York; William F. Sweeney, Jr., Assistant Director-in-Charge, Federal Bureau of Investigation, New York Field Office (FBI); and Philip Bartlett, Inspector-in-Charge, United States Postal Inspection Service, New York Division (USPIS).

“As alleged, Nordlicht and his cohorts engaged in one of the largest and most brazen investment frauds perpetrated on the investing public, earning Platinum more than $100 million in fees during the charged conspiracy. Platinum Partners purported to be a standard bearer in the hedge fund industry, reporting annual average returns of more than 17 percent since inception in 2003. In reality, their returns were the result of the overvaluation of their largest assets, which eventually led to Nordlicht and his co-conspirators operating Platinum like a Ponzi scheme, where they used loans and new investor funds to pay off existing investors,” stated United States Attorney Capers. “The charges and arrests announced today reflect our steadfast commitment to holding accountable hedge funds on Wall Street who rip off investors for personal gain.”  Mr. Capers thanked the Securities and Exchange Commission, New York Regional Office (SEC) for their significant cooperation and assistance during the investigation.

 

Continue reading

A Platinum Gilded Friendship – Mark Nordlicht and Rob Astorino going back 2013

Astorino 2013

FRIENDS OF ROB ASTORINO

Dear Reader:

As the current criminal trial against Norman Seabrook and others plays out, our previous statements connecting the dots to Mark Nordlicht, Platinum Partners, Echo Therapeutics, Jona Rechnitz, Africa Israel, Black Elk and the current bankruptcy should become more and more obvious.

Anyone who thinks that each movement of Platinum and its ever Philanthropic Partners are exclusive of one another is simply missing the big picture. If someone would take a diamond in exchange for a wide angle lens, perhaps the creditors of Platinum Partners and Echo Therapeutics, the COBA members defrauded of millions  might actually get justice and some of their money back. There are no coincidences. And we believe, it’s all a diamond in the rough.

Mark Nordlicht knows his way around paying money for what he wants. Let’s not be naive. Neither you nor him were born yesterday.

LM

Following Platinum Partners – Links for Receivership

MELANIE L. CYGANOWSKI, RECEIVER c/o Otterbourg P.C. 230 Park Avenue, 30th Floor New York, NY 10169 E-mail: platinumreceiver@otterbourg.com Website: www.PlatinumReceivership.com

August 17, 2017

VIA WEB POSTING

Re:
Securities & Exchange Commission v. Platinum Management (NY) LLC, et al.
United States District Court for the Eastern District of New York
Case No.: 1:16-cv-06848-DLI-VMS

Dear Investors:

I am writing to you as the newly-appointed receiver of Platinum Credit Management, L.P.; Platinum Partners Credit Opportunities Master Fund LP; Platinum Partners Credit Opportunities Fund (TE) LLC; Platinum Partners Credit Opportunities Fund LLC; Platinum Partners Credit Opportunity Fund (BL) LLC; Platinum Liquid Opportunity Management (NY) LLC; and Platinum Partners Liquid Opportunity Fund (USA) L.P. (collectively, the “Receivership Entities” or “Platinum”) (collectively, “Platinum”). As Receiver, I am charged with, among other things, (i) taking control of and managing Platinum’s property and records (the “Receivership Assets”), (ii) taking actions as necessary and appropriate to preserve Receivership property, and (iii) taking actions as necessary and appropriate for the orderly liquidation of the Receivership Assets. The purpose of this letter is to advise you of the initial progress since my appointment and to explain how I intend to respond to your inquiries.

On June 23, 2017, the prior receiver, Bart M. Schwartz, resigned. As a result, by Order dated July 6, 2017, the Court appointed me as Receiver for the Receivership Entities. On July 21, 2017, the Court approved the retention of Otterbourg, P.C. as my legal counsel and Goldin Associates LLC as my financial advisor (collectively, the “Receivership Team”). Unless specifically modified, all previous court orders remain in place. A Second Amended Order Appointing Receiver, which sets forth the rights and responsibilities of the Receiver is expected to be entered in the near term. All documents, including a copy of the original Complaint for Injunctive and Other Relief against Platinum and its principals, Mark Nordlicht, David Levy, Daniel Small, Uri Landesman, Joseph Mann, Joseph Sanfilippo, and Jeffrey Shulse, filed by the Securities & Exchange Commission (“SEC”), Temporary Restraining Order, and Order Appointing Receiver can be viewed on this website.

Upon my appointment, the Receivership Team took immediate steps to secure and take control over Platinum’s accounts and books and records and implement cash management procedures. I also implemented procedures for the review and approval of all expenditures. The Receivership Team has prepared a 13-Week Cash Receipts and Disbursements Forecast, performed weekly actual vs. forecasted variance analyses, and is conducting daily and weekly reconciliations of Platinum’s cash and brokerage accounts.

The opening investment portfolio consisted of 90 investments in 69 entities. The assets of the Receivership Entities are diverse, but generally fall into three main asset categories: (i) life settlement investments (e.g., investments in life insurance policies), (ii) litigation finance investments, and (iii) “other” assets, which are primarily concentrated in the metals and mining and energy sectors, in companies that are mostly in the developmental stages. The nature of the Receivership Entities’ investments in the “other” assets varies. The Receivership Team is undertaking a thorough financial and legal analysis of the Receivership Entities’ position(s) in each investment, the rights of the Receivership Entity in the capital structure and pursuant to the operative documents, assessing the maintenance costs of the asset, and options available to the Receiver with respect to the monetization of the investment.

During the short time that I have been in control of the Receivership Assets, certain investments totaling approximately $8.6 million have been liquidated or are on the verge of liquidation. None of these assets has been liquidated in “fire sale” fashion. Indeed, one of them was monetized at par value. I believe that the life settlement and certain of the litigation finance investments are liquid and that there may be additional funds realized from their liquidation in the next several months.

As a general matter, however, I have not found support for the values reflected on Platinum’s books or for certain early indications of value in the Receivership. I look forward to working with Houlihan Lokey Financial Advisors, Inc., which I have retained to provide valuation services, and developing supportable valuation assessments.

I will report on our efforts by filing periodic reports with the Court. The reports will also be posted to this website set forth above. The most recent report: My Initial Status Report to the Court, which was filed on August 10, 2017, provides a more detailed review of the actions taken since my appointment and can be found on this website.

You can send general email inquiries to platinumreceiver@otterbourg.com. Although my staff and I will review all emails we receive, it is not practical for us to respond personally to all messages, not least because it would consume a significant amount of time. Accordingly, we will update the Frequently Asked Questions (“FAQ”)section on this website as needed to reflect your inquiries and our responses.

Thank you in advance for your cooperation and understanding.

Sincerely,

Melanie L. Cyganowski
Receiver

Case Information

RECEIVERSHIP ENTITIES
Platinum Credit Management, L.P.
Platinum Partners Credit Opportunities Master Fund LP
Platinum Partners Credit Opportunities Fund (TE) LLC
Platinum Partners Credit Opportunities Fund LLC
Platinum Partners Credit Opportunity Fund (BL) LLC
Platinum Liquid Opportunity Management (NY) LLC
Platinum Partners Liquid Opportunity Fund (USA) L.P.

CASE NUMBER
1:16-cv-6848 (DLI)(VMS)

COURT
United States District Court for the Eastern District of New York

JUDGE
Chief Judge Dora Lizette Irizarry

DATE FILED
December 19, 2016

LEGAL COUNSEL TO RECEIVER
Otterbourg P.C.
230 Park Avenue
New York, NY 10169
Phone: 212-661-9100
Fax: 212-682-6104
Attention: Adam C. Silverstein
Erik B. Weinick

FINANCIAL ADVISOR TO RECEIVER
Goldin Associates LLC
350 Fifth Avenue
The Empire State Building
New York, NY 10118
Phone: 212.593.2255
Fax: 212.888.2841
Attention: Marc Kirschner
William Edwards

RELATED CASES
1:16-cr-00640-DLI USA v. Nordlicht et al
1:16-cr-00640-DLI-1 Mark Nordlicht
1:16-cr-00640-DLI-2 David Levy
1:16-cr-00640-DLI-3 Uri Landesman
1:16-cr-00640-DLI-4 Joseph Sanfilippo
1:16-cr-00640-DLI-5 Joseph Mann
1:16-cr-00640-DLI-6 Daniel Small
1:16-cr-00640-DLI-7 Jeffrey Shulse

Docket Items for the above cases can be located at the PACER portal for the Eastern District of New York, located here.

A Platinum Exchange with the SEC – Civil Enforcement Case v. Criminal Case

Platinum Will Get SEC Docs While Criminal Case Advances

Law360, New York (July 10, 2017, 2:42 PM EDT) — A New York federal judge paused a civil enforcement case against the hedge fund Platinum Partners on Friday at the request of prosecutors while a related criminal case goes forward, rejecting complaints by several defendants that they would be deprived of the chance to learn about the government’s case against them.

As often happens, the U.S. Securities and Exchange Commission’s case against Platinum and executives accused of playing a role in a scheme to inflate the value of its investments was stayed for a criminal prosecution. All but two of the defendants asked for discovery to continue anyway, but U.S. District Judge Dora Irizarry said even limited document exchanges would threaten the defendants’ right against self-incrimination.

Besides, the judge’s order said, federal prosecutors have committed to turning over materials they get from the SEC, which will allow the defendants to prepare for the civil case during the criminal case. So far, she noted, government lawyers said they’ve turned over 13.5 million documents, with more to come.

“In effect, the only discovery that will not be had in this civil matter is ‘testimonial’ type discovery, such as depositions, as proposed by [several of the] defendants,” the judge wrote. “Opposing defendants can hardly be heard to complain that they will be deprived of discovery in this civil matter.”

The pending decision was mentioned briefly at a hearing Friday where the main item was the judge’s decision to sack the SEC’s receiver, Bart Schwartz of Guidepost Solutions LLC, after concluding that he improperly transferred millions from an escrow account to fund an investment the feds called “risky.”

In the underlying case, prosecutors and the government litigators accuse Platinum of covering up a liquidity crisis at one of its investment funds and lying to lenders to Black Elk Energy Offshore Operations LLC, a drilling company it owned, about the company’s health. Managers hid the hedge fund’s troubles until it filed for bankruptcy last year.

Kevin O’Brien of Ford O’Brien LLP, whose client Joseph Sanfilippo was a chief financial officer at one of Platinum’s funds, said Monday that the order was good news. Even though the case was stayed, he said, it was in some sense “only partial” because the defendants would still receive SEC documents.

……. To obtain the document from it’s original forum see http://www.law360.com

The case is Securities and Exchange Commission v. Platinum Management NY LLC et al., case number 1:16-cv-06848, in U.S. District Court for the Eastern District of New York.

A Platinum Receiver – The Filings so Far and the Connections to be Made

On December 19, 2016, the United States Attorney’s Office for the Eastern District of New York announced the indictments of seven individuals who were then or were previously associated with Platinum Partners.  The same day, the U.S. Securities and Exchange Commission filed a civil complaint in the United States District Court for the Eastern District of New York against the same individuals, along with certain Platinum corporate entities.  Together with its complaint, the SEC asked the Court to appoint a Receiver over several Platinum entities affiliated with Platinum Partners Credit Opportunities Master Fund LP and Platinum Partners Liquid Opportunity Master Fund LP.  The Court appointed Bart M. Schwartz as Receiver.  Important filings in these cases are linked below.  This page will be updated regularly.

U.S. Securities and Exchange Commission Filings

Echo Therapeutics Inc, one in a String of Platinum Decimated Companies…. Answering Some Questions.

The below is an article that was posted in Valuewalk. The author asks some obvious and reasonable questions. Taken in a vacuum, one might wonder. However, when viewed through the looking glass of Platinum corporate savagery, the answers to those questions take on a whole new perspective.

Our comments are in red. – LM

Echo Therapeutics Inc (ECTE) – A Stock With No Revenue And A Short Catalyst

Platinum Partners is the largest investor in Echo Therapeutics (common, warrants, pref and debt). Below is the author’s take on the stock itself, but it raises some bigger questions regarding Platinum such as:

  1. why was platinum (a $1 billion fund) repeatedly investing in such a micro cap stock. Because as part of Platinum’s strategy, Platinum acts as the savior “institutional investor,” proceeds to increase value through name recognition, to take control, divest the company of its most valuable assets and equity and then to tank the stock and leave nothing for investors. Most likely in bankruptcy, Platinum repurchases the company at a substantial discount or holds onto the assets and sells them.
  2. How did Platinum value its investment in the warrants and preferred as there is no “market” for these illiquid investments. The value is an arbitrary number intended to guide other investors who view Platinum’s investment as a benchmark. As you know there were some questions about how Platinum valued some of its other investments. See Black Elk and Optionable, Echo Therapeutics and dozens if not hundreds of others. They all follow the same pattern of setting a benchmark, enticing other investors to increase capital thereby increasing value and then tanking the company by divesting it of its assets through a series of tender offers, mergers, special purpose vehicles or strategic partners. In Echo’s case it was a Chinese partner who made promises of Chinese FDA approval to appear legitimate.
  3. Did Platinum invest in ECTE while at the same time preventing Platinum investors from withdrawing from the fund (aka failing to honor redemption requests). Most likely or they created a class of shares in which they too were investors and then voted one class over the other thereby diluting the equity for the second class. That was followed by removing the value through a series of tenders, mergers, corporate takeovers, strategic partnerships…

Echo Therapeutics Inc (ECTE) – An Overvalued Stock

Echo Therapeutics (ECTE) has no revenue, is losing money, is facing delisting from the Nasdaq exchange, needs capital, recently filed a shelf offering (very late in the day on a Friday!) and faces competition from much larger industry competitors. According to the latest 10Q, the company had only $42k of unrestricted cash (not much cushion for a company that burns over $1mm per quarter) yet boasts an equity market cap of almost $35 million (using the 20 million shares, which includes convert pref,…most data sources like yahoo and Bloomberg use only 11 million shares outstanding). The company also expects to have negative cash flows for the foreseeable future as it funds its operating losses and capital expenditures. Echo Therapeutics is up 25% YTD and up 100% from its 52 week low. This was not the case initially. The software had value. The company was a Platinum target from start to finish.

To make it an even more attractive short candidate, consider that its largest shareholder is Platinum Partners, the fund that one of its executives has been accused of paying bribes to a union boss in exchange for an investment and the same fund that yesterday the FBI raided on reportedly as part of an investigation into Platinum’s valuation of its hard to value illiquid assets. It has also been reported that Platinum will be liquidating some or all of its funds (which makes the short even more interesting). Finally, it has been reported that Platinum failed to honor redemption requests from investors and that Platinum has defaulted on a $30 million loan from New Mountain Capital…in other words, Platinum appears to have some very serious problems and their future is uncertain. Platinum Partners gets involved to give the company seeming legitimacy, name recognition, institutional investor interest thereby enticing other investors.

Furthermore, Platinum’s investment (and ECTE’s market cap) are larger than it might initially appear as most of Platinum’s investment is in the form of convertible Preferred stock, so the number of shares outstanding is, theoretically larger than it appears on the cover of the 10q. In addition there are Blockers limiting the number of shares that the preferred can be converted into, so the ownership table in the proxy table understates Platinum’s true ownership, although the footnotes give more accurate information. Precisely why their pattern of corporate savagery works.

Echo Therapeutics is trying to develop a non-invasive (aka no needles), wireless, continuous glucose monitoring system. You can see the latest presentation at http://echotx.com/investors/investor-relations/ . The company has been developing its products for several years now but still has no commercially viable product. It probably doesn’t help that they spend more on SG&A than they do on R&D and that they compete with companies with significantly greater resources. ECTE does talk about getting approval from the Chinese FDA (we have our doubts) and the company does put out press releases on things that we believe are of limited real value. Promises of Chinese FDA approval was a ruse to add seeming legitimacy to its choice of strategic partner, also a Platinum related entity, in China. Meetings were held in China, thereby removing the US entrepreneurs and board members from earshot. To reiterate, the supposed FDA Approval in China was a ruse intended to make the entire scheme appear legitimate, reasonable and even value enhancing.

To avoid delisting from the Nasdaq, by the July 5, 2016 ECTE will need stockholders’ equity above $2.5 million (last quarter it was negative $4.7 million) and to provide projections that it can maintain that amount through June 30, 2017 (remember the company loses money and lost $2.6 million last quarter). ECTE could, theoretically meet the Nasdaq requirements by doing one of 2 things, neither of which would be good for current shareholders: 1) Raise equity through a recently filed (but not yet effective) $25 million shelf, although it is unclear if ECTE has enough time to pursue this option and who would buy the stock or 2) Have Platinum convert some/all of its preferred stock into common stock, although given Platinum’s other problems I’m not sure how focused they are on ECTE at the moment.

In addition to being ECTE’s largest shareholder, Platinum has the right to nominate one director to ECTE’s Board. Platinum’s designee is ECTE’s Chairman, Michael M. Goldberg. Goldberg’s previous biographies indicate he used to work for Platinum. However his employment by Platinum is not mentioned in the bio listed in ECTE’s SEC filings and we wonder why. (Note: Mr. Goldberg is also Board Director for ticker NAVB, another Platinum related company whose stock has cratered recently.) Each and every member of the Platinum team from start to finish is a Platinum person, friend, family member, financial colleague and co-conspirator. This is part of the same Platinum pattern. Platinum Controls all aspects of the entity it takes over. It is carefully planned, reflecting savvy, a clear understanding both of the markets and of investor behavior and a willingness to destroy the most vulnerable, those who began the venture and did not know enough to prevent Platinum from stepping in.

Besides Michael Goldberg, Echo Therapeutics has 2 other non-employee directors, one of whom is Mr. Goldberg’s first cousin. Couldn’t ECTE find a qualified director who was not related to an existing Board member? To be clear, we don’t know either of the Goldbergs nor are we suggesting they have done anything wrong. However, their ties to Platinum (and each other) are red flags for us. They should be huge red flags, warning signs a cause for running in the opposite direction.

Not surprisingly, ECTE has failed to attract much interest from institutional investors. If ECTE is such an interesting investment, why have so many sophisticated investors avoided it? Our opinion is that Platinum owns shares when the company is functioning with moderate returns, dumps those shares into the market, tanking the stock, which serves to make a company appear less financially viable. They then enter as the “legitimate institutional investor” at a lower market price, take over a majority of shares and proceed to acquire control in seemingly legal contracts and transactions then divest the company of its most valuable assets under the guise of  trying to rebuild a company. In reality the entire path from start to finish is a well orchestrated ballet, with a chorus of additional dancers waiting at the sideline to step in and steal the show.

Based on the latest proxy as of April 2016 we estimate Platinum’s investment to consist of 783k common shares, 5.6 mm shares (theorectically convertible from preferred stock) and 2.8 million warrants. Clearly exiting its position will be challenging considering the company needs to sell shares too to raise cash and the trading volume is limited. No surprises. It was orchestrated in similar fashion in EVERY other deal that Platinum has entered (see Objectionable, Black Elk and others).

Echo Therapeutics is an overvalued stock where we believe both insiders and the company will need to sell large numbers of shares and we don’t see how either can occur at these prices. Echo Therapeutics can be saved if the Receiver in Bankruptcy sees the company through the looking glass of Platinum’s involvement and facilitates its recovery by denying Platinum and its partners any involvement.