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

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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.

 

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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

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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Chai – Black Elk, Regents Amongst the Most Optionable of Connections

The 18 Cases to Follow – A Thread that Ties Black Elk, Platinum and Optionable, Inc. – oh… and Where’s Bodner?

 

Schmidt v. Nordlicht et al

Filed: December 9, 2016 as 4:2016cv03614
Plaintiff: Richard Schmidt
Defendant: Mark Nordlicht, David Levy, Daniel Small and others
Cause Of Action: Notice of Removal
Manchester Management Company, LLC et al v. Echo Therapeutics, Inc. et al

Filed: November 29, 2016 as 1:2016cv09217
Plaintiff: Manchester Management Company, LLC , Manchester Alpha, L.P. , Jeb Partners, L.P. and others
Defendant: Echo Therapeutics, Inc. , Michael Goldberg , Shepard Goldberg and others
Cause Of Action: m(a) Securities Exchange Act
Romain et al v. Seabrook et al

Filed: October 31, 2016 as 1:2016cv08470
Plaintiff: Elizabeth Ann Romain , Herman Jiminian , Jeanette Feliciano and others
Defendant: Norman Seabrook, Elias Husamudeen , Joseph Bracco and others
Cause Of Action: Racketeering (RICO) Act
Matthews et al. v. Black Elk Energy Offshore Operations, LLC et al. We have downloadable decisions or orders for this case

Filed: March 9, 2016 as 4:2016cv00611
Plaintiff: Thomas G. Andrus , WHITE MARLIN ENERGY SERVICES, INC. , Guy E Matthews and others
Defendant: Black Elk Energy Offshore Operations, L.L.C. , John G. Hoffman, IRON ISLAND TECHNOLOGIES INC. and others
Cause Of Action: R&R re motions to remand (non-core)
Matthews et al. v. Black Elk Energy Offshore Operations, LLC et al.

Filed: November 30, 2015 as 1:2015cv09362
Plaintiff: Thomas G. Andrus , White Marlin Energy Services, Inc. , Guy E. Matthews and others
Defendant: Black Elk Energy Offshore Operations, LLC , John G. Hoffman, Iron Island Technologies Inc. and others
Cause Of Action: R&R re motions to remand (non-core)
Bank of Montreal v. Optionable, Inc.

Filed: March 18, 2014 as 14-860
Plaintiff-Counter-Defendant – Appellee: Bank of Montreal
Defendant: Optionable, Inc., MF Global Inc., Edward J. O’Connor and others
Defendant – Appellant: Kevin P. Cassidy
Kalter et al v. Fireman’s Fund Insurance Company

Filed: August 22, 2013 as 1:2013cv23029
Plaintiff: Mark Nordlicht , Dahlia Kalter
Defendant: Fireman’s Fund Insurance Company
Cause Of Action: Diversity-Notice of Removal
Shutts & Bowen LLP v. Regent Capital Partners, LLC et al

Filed: March 20, 2012 as 1:2012cv21116
Plaintiff: Shutts & Bowen LLP
Defendant: Regent Capital Partners, LLC, Laura Huberfeld, Murray Huberfeld and others
Cause Of Action: Diversity-Breach of Contract
Stettin v. Regents Capital Partners, LLC et al We have downloadable decisions or orders for this case

Filed: December 8, 2011 as 0:2011cv62612
Defendant: Murray Huberfeld, Naomi Bodner, David Bodner and others
Plaintiff: Herbert Stettin
Cause Of Action: Motion for Withdrawal of Reference
Stettin v. Regents Capital Partners, LLC et al

Filed: December 8, 2011 as 0:2011bk00061
Defendant: Regents Capital Partners, LLC, Laura Huberfeld, Murray Huberfeld and others
Plaintiff: Herbert Stettin
Cause Of Action: Motion for Withdrawal of Reference
Discala v. Nordlicht et al

Filed: November 10, 2011 as 9:2011cv81253
Defendant: Platinum Partners, Ari L. Glass, David Bodner and others
Plaintiff: Abraxas J. Discala
Cause Of Action: Diversity-Libel, Assault, Slander
Bank of Montreal v. Optionable, Inc. et al

Filed: August 28, 2009 as 1:2009cv07557
Plaintiff: Bank of Montreal, Bank of Montreal, Bank of Montreal
Defendant: Optionable, Inc., MF Global Inc., Kevin P. Cassidy and others
Cause Of Action: Diversity-Fraud
CMEG Nymex Inc. v. Optionable, Inc. et al

Filed: April 10, 2009 as 1:2009cv03677
Plaintiff: CMEG Nymex Inc.
Defendant: Optionable, Inc., Kevin Cassidy, Pierpoint Capital, Inc. and others
Cause Of Action: Securities Exchange Act
Bock v. Optionable Inc. et al

Filed: June 22, 2007 as 1:2007cv05948
Plaintiff: Stanley T. Bock, Stanley T. Bock, Stanley T. Bock
Defendant: Optionable Inc., Kevin Cassidy, Mark Nordlicht and others
Cause Of Action: Securities Exchange Act
Glaubach v. Optionable Inc. et al

Filed: May 24, 2007 as 1:2007cv04085
Plaintiff: Jonathan Glaubach, Jonathan Glaubach, Jonathan Glaubach and others
Defendant: Optionable Inc., Kevin Cassidy, Mark Nordlicht and others
Cause Of Action: Securities Exchange Act
Peters et al v. Optionable, Inc. et al

Filed: May 17, 2007 as 1:2007cv03877
Plaintiff: Edward Peters, Edward Peters
Defendant: Optionable, Inc., Mark Nordlicht, Kevin P. Cassidy and others
Cause Of Action: Securities Exchange Act
Manowitz v. Optionable Inc. et al

Filed: May 17, 2007 as 7:2007cv03884
Plaintiff: Gerald Manowitz, Gerald Manowitz
Defendant: Optionable Inc., Kevin Cassidy, Edward J. O’Conner and others
Cause Of Action: Securities Exchange Act
Fleiss v. Optionable Inc. et al

Filed: May 11, 2007 as 1:2007cv03753
Plaintiff: Alexander Fleiss, Alexander Fleiss
Defendant: Optionable Inc., Mark Nordlicht, Kevin Cassidy and others
Cause Of Action: Securities Fraud

Platinum and Black Elk – an Explosive Combination

http://www.reuters.com/article/us-platinumpartners-lawsuit-idUSKBN1481BI

U.S. charges Platinum Partners executives with $1 billion fraud

 

Top executives of New York-based hedge fund manager Platinum Partners were arrested on Monday and charged with running an approximately $1 billion fraud that federal prosecutors said became “like a Ponzi scheme” as its largest investments lost much of their value.

Mark Nordlicht, Platinum’s founding partner and chief investment officer, was arrested at his New Rochelle, New York, as federal prosecutors in Brooklyn accused him and six others of participating in a pair of schemes to defraud investors.

“The charges relating to these two schemes highlight the brazenness and the breadth of the defendants’ lies and deceit,” Brooklyn U.S. Attorney Robert Capers told reporters.

Led by Nordlicht, Platinum, the subject of a Reuters Special Report in April, was known for years for producing exceptionally high returns by taking an usually aggressive approach to investing and fund management. (reut.rs/2h36duU) (reut.rs/1TRovwx)

But a 48-page indictment said since 2012, Nordlicht and four other defendants defrauded investors by overvaluing illiquid assets held by its flagship Platinum Partners Value Arbitrage Fund LP, mostly troubled energy-related investments.

This caused a “severe liquidity crisis” that Platinum at first tried to remedy through high-interest loans between its funds before selectively paying some investors ahead of others, the indictment said.

“So to some extent, there is a Ponzi-esque aspect to this scheme,” Capers said.

Prosecutors said David Levy, Platinum’s co-chief investment officer, and Uri Landesman, the former president of the firm’s signature fund, also participated in the scheme, which prosecutors said allowed Platinum to extract more than $100 million in fees.

Nordlicht, Levy and Jeffrey Shulse, former chief executive officer of Platinum’s majority-owned Black Elk Energy Offshore Operations LLC [BLCELB.UL], also schemed to defraud bondholders of Black Elk, a now-defunct Texas energy company, out of $50 million, prosecutors said.

The indictment said the scheme involved using a group of reinsurance companies called Beechwood, partially controlled by Platinum’s principals, to rig a bond vote and pay the hedge fund manager ahead of creditors.

A Platinum spokesman declined to comment. Nordlicht’s lawyer did not immediately respond to requests for comment. Michael Sommer, Levy’s lawyer, said he looked forward to clearing his client.

Lawyers for the other defendants did not immediately respond to requests for comment.

Founded in 2003, Platinum until this year had more than $1.7 billion under management, with more than 600 investors, authorities said. Its Value Arbitrage fund reported average returns of more than 17 percent from its inception, according to prosecutors.

This year, a series of investigations tied to Platinum came to a head. The firm hired an independent monitor in July to unwind its funds, and a Cayman Islands court in August placed its main offshore funds into liquidation.

Those moves came after the June arrest of Murray Huberfeld, a longtime Platinum associate, on charges in Manhattan federal court that he orchestrated a bribe to the head of the New York City prison guards’ union, Norman Seabrook, to secure a $20 million investment with the firm.

Seabrook pleaded not guilty, as did Huberfeld who was also arrested.

Two weeks later, the FBI and U.S. Postal Inspection Service raided Platinum’s Manhattan offices in a separate fraud investigation that culminated in Monday’s indictment.

Others indicted on Monday include Joseph Sanfilippo, Value Arbitrage’s former chief financial officer; Joseph Mann, a former Platinum marketing employee; and Daniel Small, a Platinum managing director.

The U.S. Securities and Exchange Commission said on Monday that it was seeking a court-appointed receiver for funds managed by Platinum Credit Management, the firm’s second-largest vehicle after Value Arbitrage.

The case is U.S. v. Nordlicht et al, U.S. District Court, Eastern District of New York, No. 16-cr-640.