Law360, New York (June 26, 2019, 9:31 PM EDT) — An attorney for Platinum Partners co-founder Mark Nordlicht on Wednesday sought to turn the tables on prosecutors in closing arguments, accusing the government of peddling more lies at trial than top executives at the defunct hedge fund are alleged to have told to investors.
The jury weighing the fate of Nordlicht, former Platinum co-chief investment officer David Levy and former Chief Financial Officer Joseph SanFilippo heard the first part of Nordlicht’s final pitch to escape fraud and conspiracy charges from his attorney Jose Baez, who argued that prosecutors have been eliciting misleading testimony and presented flawed and incomplete evidence from the start of trial.
“We agree this case is all about lies. It’s all about the lies of the government,” Baez told the jury. “They came in here and lied to you with a straight face.”
Prosecutors say Nordlicht, Levy and SanFilippo were part of a conspiracy stretching from 2014 to 2016 to defraud investors by lying about a liquidity crisis at Platinum’s signature fund, preferential redemption payments that were made to certain investors and high interest, interfund loans Platinum was arranging to keep the fund afloat.
Baez told jurors that Nordlicht had been forthright with his investors, and as the largest investor in Platinum’s flagship fund, Platinum Partners Value Arbitrage Fund, he stood side by side with the other investors.
“For you to believe he defrauded them, he would have had to defraud himself,” Baez said.
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.
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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Edward Cohen, 67, illegally sold medication – including viagra – through Jewish charities
An Orthodox man has been convicted of laundering proceeds from the illegal sale of medication totalling more than £10 million through Jewish charities.
Edward Cohen, 67, funnelled “huge sums of money” – from sales and charitable donations – through an international network of firms, bank accounts and currency exchanges.
Southwark Crown Court heard that the medication sold included Viagra, slimming pills and prescription medication.
Edward Cohen fled the country ahead of the start of the trial and was convicted in his absence.
Edward Cohen’s son David, a 38-year-old teacher, was cleared of money laundering charges and supplying false information to the Charity Commission.
But he was convicted of providing false information for the purposes of obtaining benefits.
David Cohen, of Ashbourne Avenue, in Temple Fortune, North London, was granted bail.
Both men will be sentenced on July 4.
The trial partly concerns the financial activity of charity Chabad UK – which is entirely separate from Chabad Lubavitch UK, and not part of the official Chabad movement.
Data obtained by police investigators show that in one financial year – 2012/13 – Chabad UK’s income jumped from £1.26 million to just under £8 million, almost £7 million of which came from merchant accounts linked to sales.
The following year, Chabad received £2.85 million from merchant accounts, out of a total income of £3.4 million.
It contrasted with the period from 2008 until 2012, when merchant account proceeds accounted for 2.5 per cent of an income of £6.05 million.
The jury heard that Chabad UK’s premises, on Oldhill Street in Stamford Hill, North London, were raided by police officers on September 1, 2014.
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Law360, New York (June 25, 2019, 9:24 PM EDT) — A federal jury in Brooklyn on Tuesday heard of how the former top executives of Platinum Partners schemed with a dozen other co-conspirators tied to the hedge fund manager to defraud existing and prospective investors by telling lie after lie about a liquidity crisis at Platinum’s flagship fund.
Jurors heard the first part of closing arguments from Assistant U.S. Attorney Alicyn L. Cooley, who argued as cash flow problems left Platinum Partners Value Arbitrage Fund unable to pay all redemptions to investors, Platinum insiders mounted a campaign of deception to retain investor money and to raise new cash for the fund.
Platinum co-founder Mark Nordlicht, former co-chief investment officer David Levy and chief financial officer Joseph SanFilippo — who have been standing trial on fraud and conspiracy charges since late April — each played a critical role in the scheme, Cooley said.
“They chose the path of deception and by doing that they committed fraud,” Cooley told the jury.
Prosecutors say Nordlicht, Levy and SanFilippo were part of a conspiracy that stretched from 2014 to 2016 to defraud investors by lying about PPVA’s liquidity crisis, its practice of making preferential redemption payments to certain key investors and insiders as well as high interest, interfund loans Platinum was arranging to keep PPVA afloat.
Cooley further argued that the executives and their co-conspirators falsely told investors that PPVA was a diversified fund, when in reality its biggest investments were in failing oil and gas companies.
“By 2014, this diversified, liquid hedge fund did not exist,” Cooley said.
Despite painting a rosy picture of PPVA to existing and prospective investors, Cooley said the conspirators knew full well of the problems inside the fund. She cited a June 2014 email between Nordlicht and PPVA president and Platinum partner Uri Landesman — who was also charged but died before trial — in which Nordlicht cited the liquidity crisis at PPVA and said it was becoming impossible to manage the outflows of cash from the fund.
Money launderer, 67, who tried to buy a knighthood is convicted in his absence of £10million Jewish charities scam after going on the run
A fugitive who once tried to buy a knighthood has been convicted of laundering more than £10million, made from the illegal sale of sex pills, through a Jewish charities scam.
Edward Cohen, 67, set up a ‘bewildering’ network of companies, some of them promoting Orthodox Judaism and ‘helping the Jewish poor’.
He diverted vast sums of cash, alongside legitimate charitable donations, via foreign exchange firms before sending it overseas, Southwark Crown Court heard.
Cohen, who fled the country before his trial began, also used some of the proceeds to try and purchase a gong from the Queen, supposedly in recognition of his work with the sham charities.
Cohen’s teacher son David, 38, was also involved in the charities but was cleared of money laundering charges and supplying false information to the Charity Commission.
But he was convicted of failing to notify a change in circumstances when obtaining benefits and bailed ahead of sentence on July 4.
David told jurors his signature had been forged on charity documents and insisted he had no idea what his crooked father was up to.
He said: ‘If I had known that my father was involved in any sort of dirty money I would have run a mile. I would not have not asked for his help, no way Jose.
‘I am sure I am not the only child who does not know how their father makes money.’
Cohen denied but was convicted in his absence of a series of offences including supplying false information to the Charity Commission and money laundering offences after a two month trial.
A warrant has been issued for his arrest and he will be sentenced in his absence on July 4.
Edward Cohen, 67, set up a ‘bewildering’ network of companies that he used to launder money through. He diverted vast sums of cash, alongside legitimate charitable donations, via foreign exchange firms before sending it overseas, Southwark Crown Court heard
Earlier James Dawes, QC, prosecuting, said Cohen set up a ‘bewildering variety of companies and they either put themselves or their family members as directors’.
‘The companies were simply vehicles. Either the Revenue was told these companies were dormant or they made no returns.’
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Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)
Nearly 20 limited liability companies for individual multifamily buildings that are linked to a federal fraud complaint are now bankrupt.
The filings late last month in a U.S. bankruptcy court in White Plains also relate to over a dozen foreclosure cases initiated by an affiliate of Maverick Real Estate Partners, which in court filings is seeking information on the identity of the owner behind the low-rise, residential properties, all of which are scattered throughout Brooklyn.
In April 2017, Israeli investors Jacob and Binyomin Schonberg, Binyomin Halpern and Raphael Barouch Elkaim alleged in a complaint filed in federal court in Brooklyn that Yechezkel Strulovich and Yechiel Oberlander defrauded them out of more than $20 millionin a scheme carried out “in the style of Bernie Madoff.”
Eleven properties that are now in Chapter 11 proceedings — located predominantly in the neighborhoods surrounding Williamsburg and Crown Heights — were also named as defendants in the fraud case against Strulovich and Oberlander. That case, which a judge dismissed in part and sent to arbitration in 2017, included more than 40 defendants, mostly LLCs that have not filed for bankruptcy.
The LLCs that are bankrupt and own the underlying Brooklyn properties all list David Goldwasser of GC Realty Advisors as their authorized signatory, according to court filings. GC Realty is described as a commercial real estate advisory firm, per its LinkedIn page, which notes that it is based in Boca Raton, Florida, and has offices in New York. The state’s Division of Corporations shows that GC Realty has an address in East Midwood, Brooklyn.
Goldwasser is also listed as a principal at FIA Capital Partners, which is also based out of Florida and New York, according to his apparent LinkedIn profile.
A message left with FIA was not returned by the time of this story. The firm specializes in acquiring distressed properties and portfolios, according to its website.
Questions over control
The series of bankruptcies filed in White Plains starting on May 20 show that all of the properties, which number at least 18, are also affiliated with 73 Empire Development LLC. The latter owns the ground lease on a roughly 30,000-square-foot development site — it’s currently a vacant one-story retail building — at 73 Empire Boulevard in Crown Heights.
Empire Development, which is one of the defendants in the fraud case against Strulovich and Oberlander, also filed for bankruptcy in February. The debtor’s plan, according to court records in White Plains, is to build a 58,000-square-foot, two-story retail property at 73 Empire Boulevard.
But the connection between Goldwasser’s GC Realty, Empire Development and the 18 other bankrupt properties is not yet clear. Maverick, the debt fund led by David Aviram that buys distressed mortgages, wants some clarity on the matter.
A recent filing from the debtors claims that one of Maverick’s affiliates, Brooklyn Lender LLC, took on 13 notes and mortgages — totaling $36 million — on 26 properties that originated with Signature Bank. As a result of the Chapter 11 filings, Maverick wants a judge to allow a full examination into who controls the various debtors, pointing to Goldwasser’s name in court documents.
“To Brooklyn Lender’s knowledge, Goldwasser was not previously involved with the Debtors, and understanding his new role and responsibilities with respect to these Bankruptcy Cases and the Debtors’ management is of paramount importance,” Maverick said in a recent filing.
Maverick noted that when the Signature Bank loans were made, Strulovich maintained that he was the 100 percent sole member of the debtor entities. In the fraud case, however, he admitted this was not the case. In October 2017, Maverick’s Brooklyn Lender filed 14 foreclosure cases against the now bankrupt properties, alleging that the loans were in default, in part due to misrepresentations by their owners.
The petition made by Maverick in bankruptcy court now asserts that a further examination is needed to determine who actually owns the Brooklyn properties, citing a guilty plea by Goldwasser to defrauding two banks in the early 2000s. Goldwasser was sentenced to 27 months in federal prison — Federal Bureau of Prisons records show he was released in September 2005 — and ordered to pay $2.8 million in restitution. A judge also ordered that Goldwasser “is not to be employed in any position requiring fiduciary responsibilities.”
All of the debtors in the bankruptcy cases, except Empire Development, have opposed the motion by Brooklyn Lender, claiming that its parent Maverick has an “unspoken agenda” and that they are working on a plan that includes paying back Maverick. Lists of unsecured creditors in the various bankruptcy cases show that Brooklyn Lender is owed between $2.7 million and nearly $5 million, while the New York-based law firm Abrams Fensterman is owed a little more than $150,000.
Mark Frankel, an attorney with New York’s Backenroth Frankel & Krinsky representing the debtors in bankruptcy proceedings, declined to comment, as did Maverick’s Aviram, which is being represented in bankruptcy court by Stroock & Stroock & Lavan. Strulovich and Oberlander could not be reached and their lawyers did not return requests for comment.
Unresolved fraud claims
In the fraud case against Strulovich and Oberlander, the defendants said that the money they received from the plaintiffs would be invested in Brooklyn properties that they would buy, develop and rent out, with returns on those investments coming in six to seven months. The plaintiffs also would receive 45 percent of the profits from the multifamily purchases.
But plaintiffs claimed that Strulovich, Oberlander and other defendants inflated the value of that real estate and used their money to acquire and develop properties for their own personal benefit, pay off personal debts and support their “lavish lifestyles,” according to the civil complaint filed two years ago. The Brooklyn sites purchased with their funds were “left to languish, undeveloped and dilapidated,” alleged the plaintiffs.
“The entire process was nothing more than an elaborate fraud to personally enrich the individual defendants,” said their lawsuit.
Court filings in that litigation claim that Oberlander allegedly approached the plaintiffs in early 2012 about investing in a project with him and Strulovich at 908 Bergen Street in Crown Heights. Oberlander sent prospectuses for 19 properties between 2012 and 2014 that were meant to entice the plaintiffs into make more investments, they asserted in the dispute.
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