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.

Platinum Partners – One Description

Unbelievable description of the Platinum fraud.

http://www.houstonchronicle.com/business/article/The-fall-of-Black-Elk-Energy-10855360.php

The fall of Black Elk Energy began in New York City nearly a decade ago, with a meeting, a handshake and a loan.

Looking back, those were halcyon days for John Hoffman, founder of the Houston oil and gas company – before an explosion tore through an offshore rig and killed three workers, before federal investigators accused the hedge fund that made the loan of bilking investors, and before one of his top executives turned on him.

Hoffman, forced out of Black Elk in 2014, is now at the helm of a new company, and barely keeping the doors open. Black Elk is bankrupt and facing criminal charges in a federal case awaiting trial. And Hoffman’s one-time backer, Platinum Partners, is under federal indictment, accused of pillaging Black Elk and the hedge fund’s investors.

Last month, federal investigators arrested six Platinum executives and the man who replaced Hoffman as CEO, alleging they overvalued Black Elk’s assets, concealed “severe cash flow problems,” extracted high management fees and illegally diverted to Platinum more than $95 million owed to creditors holding Black Elk’s bonds. Platinum attorneys did not return calls seeking comment.

“I didn’t think (Platinum) had the guts to take it all,” Hoffman said in an interview. “I thought they’d take a large share. Ends up they took it all.”

The rise and fall of Black Elk Energy highlights the risks of the oil and gas business, which demands piles of cash that can quickly vanish through bad luck, bad planning, bad management or all three. It also reveals a shadow banking system that lends at double-digit interest rates to firms desperate for capital and has few qualms about gutting companies when they don’t perform.

BLACK ELK TIMELINE

MONEY TRAIL

2003 Investment manager Mark Nordlicht starts the hedge fund Platinum Partners in New York.

2007 Engineer John Hoffman and a partner open Black Elk Energy in Houston.

2008 Hoffman and partner fly to New York looking for capital; meet Platinum executives.

2009 Black Elk buys 35 oil fields on 71,000 acres from the Houston company W&T Offshore for $30 million, the first major purchase of many to come.

2011 Black Elk ends year with 240 oil production platforms in the Gulf of Mexico on 300,000 acres, producing about 14,500 barrels of oil and gas per day.

2012 Workers welding on a company platform in the Gulf ignite fuel vapors, leading to a string of exploding tanks and killing three.

2013 Black Elk signs drilling contracts worth about $90 million, but Platinum reneges on promises to send capital and Black Elk can’t pay the contractors.

2014 Renaissance Offshore, a Houston production company, buys Black Elk oil fields for $170 million; Platinum engineers a bondholders vote, federal investigators say, that diverts $95 million in proceeds to Platinum rather than contractors and bondholders.

2015 Federal prosecutors file involuntary manslaughter and other charges stemming from the Gulf explosion against Black Elk and contractor Grand Isle Shipyards. Black Elk files for bankruptcy.

2016 The U.S. attorney of the Eastern District of New York announces the indictment of six Platinum executives and one Black Elk executive, alleging they overvalued Black Elk assets, concealed “severe cash flow problems,” extracted high management fees and illegally diverted to Platinum money owed to bondholders.

Hoffman now says he had no idea of the financial disaster he was walking into when he flew from Houston to New York in 2008 and made a deal with Platinum. He thought he had found a deep-pocketed partner to fuel his vision for Black Elk at a time when loans were hard to come by. Even after disaster struck an offshore rig in the Gulf of Mexico, Platinum seemed to have the money and confidence to right Black Elk and put it back on a path to success.

But one day in 2014, Hoffman got suspicious pretty quickly.

Knocking on doors

The following account is based on interviews, financial filings and court records in civil and criminal cases:

Hoffman started Black Elk in 2007, raising money from private investors and using the cash to buy shallow-water oil fields in the Gulf for bottom-barrel prices from companies that no longer wanted them. Black Elk reworked the old wells with updated technology and boosted production.

Not a year later, the U.S. economy crashed, and oil prices with it. In late 2008, Hoffman and co-founder James Hagemeier flew to New York City to nail down capital. Over the course of two months, they knocked on the doors of at least 50 investment firms.

“It was a tough time to look for funds,” Hoffman said.

Finally, a middleman suggested the two meet the executives of the New York hedge fund Platinum Partners.

Platinum was founded in 2003 by Mark Nordlicht, who started as a young trader in the pits of the New York Cotton Exchange and opened two other investment firms before Platinum. He and Platinum gained a reputation for investing in risky companies and returning double-digit profits for investors.

Platinum offered Black Elk two loans together worth about $50 million – at 20 percent interest. But Platinum’s business model didn’t just loan money to desperate companies. The loans came with “kickers,” or clauses that gave Platinum growing ownership stakes in the firms over the lives of the loans.

“We were new and so small,” Hoffman recalled. “We didn’t draw much interest from the bigger players. Platinum seemed like a good fit.”

In 2009, Black Elk began a buying spree with Platinum’s cash, later supplemented by $150 million raised in a bond sale. By 2011, it owned leases on 300,000 acres in the Gulf of Mexico that produced about 14,500 barrels of oil and gas per day, according to securities filings.

“All I know was when we had an acquisition, Mark Nordlicht said, ‘Don’t worry about it,’ ” Hoffman said. “And he always had the money.”

By 2012, Black Elk, with a market value that Platinum estimated at nearly $300 million, was the largest asset in Platinum’s most successful fund, then valued at $700 million. Then it all unraveled.

In November 2012, workers welding on a Black Elk platform ignited fuel vapors, leading to a string of exploding tanks. The explosion killed three workers, injured at least two others and spilled hundreds of gallons of oil into the Gulf.

The fall out was immediate for Black Elk’s finances. Oil production fell. Legal fees mounted. (In 2015, federal prosecutors filed involuntary manslaughter and other criminal charges against Black Elk and contractor Grand Isle Shipyards, which both pleaded not guilty. Hoffman was not charged individually.)

BUSINESS

It’s official. Whataburger has been dubbed the winner of taste over In-N-Out and Shake Shack, according to BuzzFeed .  Buzzfeed dubs Whataburger better than In-N-Out, Shake Shack Houston Salsa Congress workshop participant Harrison Bohanan follows instructor Franklin Liranzo’s dance moves to warm up before a class Saturday in Houston. Houston Salsa Congress attracts veterans seeking stress relief A group of economists who believe in the thesis of “cash only, no strings” founded GiveDirectly, just give cash, unconditionally, to poor adults in Africa. Kenya is one of the main countries it operates in. In eliminating poverty, cold hard cash goes a lot further than Cattle are inspected for ticks near Laredo. Experts are trying to pinpoint how the ticks ended up 110 miles north of the border. Spread of fever tick spooks Texas cattle industry Indian airline SpiceJet buying 100 Boeing 737 MAX jets Consumers look over toys for sale before Christmas in Harare, Zimbabwe. A cash crunch is so severe that banks are capping customer withdrawals at $150 a week. Cash is king in Mugabe’s Zimbabwe
Black Elk’s lenders reduced lines of credit and demanded more collateral. Black Elk started selling assets to raise cash.

Still, in December 2012, Hoffman flew to New York to present Black Elk’s growth strategy to Nordlicht and another Platinum executive, David Levy. Platinum promised as much as $120 million in capital for the company’s 2013 drilling campaign, Hoffman said, and Black Elk signed drilling contracts worth about $90 million with energy services companies.

Four months later, Platinum reneged on its pledge, leaving Black Elk unable to pay the contractors.

“It was just such a deep hole,” Hoffman said. “We couldn’t dig out of it.”

‘This is code red’

By the start of 2014, Black Elk had a new chief financial officer, Jeffrey Shulse, a lawyer and accountant whom Hoffman had hired a few years earlier to run a well-plugging company created by Black Elk. Platinum pushed Hoffman hard to make Shulse the CFO of Black Elk, Hoffman said.

Shulse wanted Hoffman out of the company. He wouldn’t comment for this story but said in a court deposition that Black Elk was ineptly managed, spending money it didn’t have on luxuries like boats, helicopters and cigar rooms at the office. Hoffman began secretly tracking and reading Shulse’s every email, Shulse said in the deposition; Shulse hired investigators to see if Hoffman had bugged his office.

Black Elk was by then effectively insolvent, federal investigators said.

Platinum, however, owned a $98 million stake in Black Elk, about 76 percent of the company, according to Hoffman’s files. And Platinum had a plan to get as much money back from the sinking oil company. It ordered Shulse to find a buyer willing to pay $170 million for Black Elk’s seven most valuable oil fields.

Shulse, meanwhile, was secretly trying to get Hoffman’s job. In March 2014, Shulse sent an email to Levy asking to take over as Black Elk CEO – and, according to the indictment, get paid $1 million from sales of the Black Elk’s assets.

“I want to be aligned with Platinum and friends of Platinum,” Shulse wrote in an email seized by investigators. “What’s good for them is good for me.”

Shulse found a buyer, the Houston production company Renaissance Offshore, for the Black Elk holdings. But Platinum still had a problem. The terms of Black Elk’s bonds required the company to pay off bondholders before it did anything else with the money.

Platinum was having its own problems. No longer generating double-digit returns, investors were pulling out money, and Platinum was barely able to pay redemption requests to investors, according to the indictment. Failure to cash in on Black Elk assets would “be the end of the fund,” Nordlicht wrote in an email. “This is code red,” he later said.

By May 2014, Platinum executives decided they had to persuade bondholders to let Black Elk use the sale proceeds for other purposes than paying off the bonds. And that change required a vote of the bondholders.

Hoffman didn’t like the move. But he didn’t oppose it, either. What bondholder “with half a brain,” Hoffman thought, would agree to give up his rights?

Platinum, again, had it figured out. It began buying Black Elk bonds – so that it could vote to pay itself, according to the indictment.

Platinum executives leaked information about Black Elk’s finances, driving down the value of the bonds, which they then bought at healthy discounts, federal prosecutors alleged. By April 2014, Platinum owned $99 million of the original $150 million in bonds, but concealed its ownership, investigators said, by selling all but $18 million to four investment funds that Platinum controlled.

With Platinum and its entities holding most of the bonds, the proposal to spend the cash from the oil field sales as the company saw fit was easily approved.

Ripping TVs off walls

On Aug. 18, 2014, Platinum sent an email to Shulse directing him to wire $70 million to Platinum. Two days later, Black Elk sent another $25 million from the Renaissance sales to Platinum.

The next Monday, Hoffman showed up at Black Elk. The doors were locked and office vacated, he said, and he had to call the building superintendent to get in. What was left of the company had moved in with Shulse’s well service company, which was by then also controlled by Platinum.

Not a week later, Shulse, now CEO, held something of a yard sale in the old office. Afterwards, former Black Elk employees said they went back inside the building. Computers, refrigerators and office furniture were all gone. Trash littered the floor. TVs yanked out of the walls, mounts and all, left fist-sized holes in the drywall.

“What a disgraceful way to go out,” Hoffman said.

By then, Black Elk had laid off about 100 workers, most of its staff.

On Sept. 11, 2014, Platinum authorized Shulse to pay himself a $275,000 bonus. Platinum executives, meanwhile, were paying themselves as well, according to the indictment. From 2012 to 2015, even as Black Elk crashed and Platinum scraped for cash, executives consistently told investors the fund was returning double-digit profits, justifying charges of as much as 20 percent in management and incentive fees, or $111 million in total over the four years, federal authorities alleged.

Many of Black Elk’s contractors were never paid. In August 2015, some filed a petition to liquidate Black Elk through Chapter 7 bankruptcy and use the proceeds to pay creditors. By the following June, Platinum didn’t have enough cash to pay investors trying to pull their money out the Platinum fund.

On Dec. 19, the U.S. Attorney of the Eastern District of New York announced the indictment of seven on fraud and conspiracy charges: Platinum executives Uri Landesman, Joseph Sanfilippo, Joseph Mann, Daniel Small, Levy and Nordlicht as well as Shulse. They all pleaded not guilty.

U.S. Attorney Robert L. Capers, whose office investigated the case, estimated that investors in Platinum’s fund lost $1 billion.

Shulse’s attorney, F. Andino Reynal, said Shulse was told what to do by Platinum.

“He didn’t commit a crime here,” Reynal said. “I’m very confident that once the jury has heard all the facts, they’ll determine he’s not guilty.”

Hoffman’s hands still shake when talking about Platinum. His cheeks still redden. The scandal has hamstrung his new company, P3 Petroleum, which can’t raise money to grow. The company pumps about 50 barrels a day and employs seven workers.

“We’ve been going at it for more than two years now,” Hoffman said. “We don’t have a lot to show for it.”

THE PLATINUM QUESTION – WAS ANYBODY LISTENING?

PLATINUM PARTNERS AND THEIR OUTRAGEOUS RETURNS

LostMessiah 4 January 2016

LostMessiah was and has been the brainchild of several people who began this venture last February with a few stories already in our heads, Platinum being front and center.

From the very beginning we made clear that something was very wrong with Platinum, beginning with the extraordinary, though irrational returns. We then raised the question of David Bodner and a piece of property (191 Viola Road) that transferred names rather nefariously in Rockland County, New York.

We questioned the Africa-Israel connection and most notably those who financed Platinum in its early years: David Bodner and Murray Huberfeld and their band of merry… Philanthropists? No.

We posted diagrams.

Huberfeld Ponzi1.3

We showed you the connections between Seabrook and Platinum, COBA and Platinum. We even spoke of Black Elk, a story still in its making. We believe that most of the Platinum investor money (which is likely currently in the family trusts of Bodner and Huberfeld and in the yeshivas begun by Nordlicht and his family) belongs to Black Elk investors who were taken for a ride during a tender offer which was specifically intended to drain the company of its assets.

That story is still one to be told but unfortunately 12 pages later, we have found a web of lies and a spider with far more than eight legs and we have not even scratched the surface.

The investor money has not been spent, in our view. It has been funneled. The trick is going to be getting it out from under the various trust laws protecting it. The key to Huberfeld’s participation in all of this beyond his family trusts is his property which has more recently been transferred to his wife in a quit-claim deed. 

There were people questioning – just too few listening.

 

See also:

https://lostmessiahdotcom.wordpress.com/2016/04/13/the-seabrook-connection-investments-gone/

https://lostmessiahdotcom.wordpress.com/2016/04/15/the-long-short-nope-the-dead-undead/

https://lostmessiahdotcom.wordpress.com/2016/04/14/theres-not-enough-time-in-the-day-to-discuss-nordlicht-huberfeld-bodner/

READ FURTHER:

No One Questioned This Hedge Fund’s Madoff-Like Returns

  • Red flags abounded while hedge fund claimed 17% annual gains
  • Platinum was embroiled in rogue trades, Florida Ponzi scheme

In the years before Mark Nordlicht was arrested for what’s alleged to be one of the biggest investment frauds since Bernie Madoff’s, U.S. authorities had plenty of reasons to suspect something might have been fishy about his hedge fund, Platinum Partners.

As far back as 2007, Bank of Montreal accused Nordlicht of helping a rogue trader, costing it more than $500 million. Three years later, when the Securities and Exchange Commission was investigating what it called a “scheme to profit from the imminent deaths of terminally ill patients,” the agency discovered that Platinum had funded the deals. And in 2011, a Florida lawyer who confessed to running a $1.2 billion Ponzi scheme testified that Nordlicht, his biggest funder, lied to help him lure new investors.

And then there were the remarkable profits: 17 percent annually on average from 2003 through 2015, with no down years. The returns were almost as smooth as the fake gains that Madoff claimed year after year, as measured by a popular metric called the Sharpe ratio. Continue reading

Coincidences Too Hard to Ignore. Hudson Group… Monster Digital, A Platinum Opportunity?

A Monster Inc. Pump and Dump? Perhaps Much Ado About Nothing… We Don’t Think So…. The Hudson Group Connection? Platinum???

By:  LostMessiah, 29/12/16

Yesterday, in a fluke series of events, one of us noticed that the shares of several companies were behaving irrationally. Among them were the shares of Monster Digital Inc..  At about 1:00pm (EST) Monster Digital, Inc.’s (MSDI) share price had nearly doubled from the morning. Its trading volume was nearly quadrupled. At one point during the day it had gone up 114%. As the day continued, the shares peaked and then began sliding.  

There was no news, nothing of any interest that should have logically pushed the shares up as high as they were trading or as low as they landed.  http://www.marketwatch.com/investing/stock/msdi  

Tweets were going crazy (see below) as were Bloomberg posts, most of which were both perplexed and ecstatic, depending upon what positions were held by the particular “tweeter”. One trader thanked the market for his significant short on the shares of MSDI.  Another came right out and said that the company was the perfect target for a “pump and dump”.  http://stocktwits.com/symbol/MSDI

Today, the shares are not only down from their open yesterday morning but they have sunk further as of today’s opening. Again there was no news yesterday and no new news today that should have caused this much activity in this particular company.

We decided to dig because this company fits with impeccable clarity the pattern of companies serially targeted by Platinum Partners: an obscure company, tech or oil/energy driven, with a following of tech geeks or oil bigwigs, small, IPO over-valued, followers unsophisticated, etc. etc.  We decided to go digging for a Platinum Partners connection.

And we found one.

Of recent notice, on December 5, 2016 Monster Digital, Inc. exhibited new products at the Hudson Group show in Las Vegas. An article in Marketwired on the 9th mentioned the show.  The link to the article is listed as follows: http://www.nasdaq.com/press-release/monster-digital-inc-exhibits-new-products-at-hudson-group-show-20161209-00411

As it would happen, the current Chief Marketing Officer of Platinum Partners is also the former Chief Marketing Officer of Hudson Group. The two week span of time between the Hudson Show (wherein Monster exhibited) and yesterday’s market activity is simply too hard to ignore.

We may be wrong.  Who knows? This may just be coincidental. We don’t think so.  Looks like a duck. Smells like a duck… You know the rest…

In fact, we think that we found the tiniest of threads to link MSDI with Platinum. We have little doubt that there is something far more nefarious lurking.  There were other stocks that behaved oddly yesterday and some today. Many of them fit the pattern. We are simply too understaffed to follow all of the breadcrumbs. We are banking on the possibility that by posting this, someone will follow leads where we cannot. Forgive the banking pun…

We hope that people who read this will send along information, watch the newswires and market industry news and tweets. We hope the federal authorities are paying attention.   

TWEETS TO FOLLOW:

Continue reading

A Platinum Array of Victims – Arrests are Not Enough

File photo of rescue crews surrounding Black Elk oil platform in the Gulf of Mexico
Rescue crew surrounds an oil platform operated by Houston-based Black Elk Energy which exploded off the coast of Louisiana in the Gulf of Mexico, in this November 16, 2012 file photo. REUTERS/Sean Gardner/Files

 

Platinum Partners arrests are scant consolation for alleged victims

By Lawrence Delevingne | NEW YORK

When six executives of Platinum Partners, including founder Mark Nordlicht, were arrested on Monday on federal charges of running a more than $1 billion hedge fund fraud, people who had long alleged they were harmed by the New York-based firm felt some vindication.

But the possibility that each defendant might face prison terms has done little to soothe their continued anger over losses that may never be recouped.

One such person is Houston-based energy entrepreneur John Hoffman. In the charges, the U.S. Department of Justice and the U.S. Securities and Exchange Commission alleged what Hoffman had long believed – that Platinum, with the help of a seventh man also arrested, Jeffrey Shulse, had illegally profited from the failure of Hoffman’s company, Black Elk Energy Offshore Operations LLC. 

Hoffman said in a telephone interview on Wednesday that he did not expect to recover anything and that his involvement with Platinum had cost him the company he founded and at least $500,000 in legal fees. He also described stress-related health problems and difficulty fundraising for a new energy venture.

Hoffman expressed anger that thousands of Gulf Coast-area families were stiffed: mostly the small businesses that were never paid for work on Black Elk’s oil and gas drilling platforms before it went bankrupt amid lower oil prices and Platinum’s alleged corporate cash grab.

All six Platinum executives pleaded not guilty and an attorney for Shulse told Reuters he plans to do the same. A spokesman for Platinum declined to comment for this article, and the firm has not offered any public comment. A person familiar with Platinum’s thinking told Reuters in April that the firm always acted within the limits of the law despite its aggressive investment approach.

Launched in 2003, Platinum was known as a high-performing hedge fund manager that backed struggling companies and employed esoteric investment strategies such as litigation finance and high-interest consumer loans. (Reuters Special Report: reut.rs/1TRovwx)

The government charges on Monday included allegations of over-valuing assets and misleading clients on the health of the firm. The government demanded that the hedge fund return money that was allegedly illegally taken from clients and Black Elk bondholders, and pay related penalties.

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