NASDAQ Reporting – A Platinum Fraud, Black Elk and Going Back to 2016… $1 Billion and Counting
NEW YORK, Feb 26 (Reuters) – Former Platinum Partners chief Mark Nordlicht and other executives of the now-defunct hedge fund group are due to go to trial on Tuesday on charges they defrauded investors out of $1 billion.
Opening statements are expected to begin in the morning before U.S. District Judge Brian Cogan in federal court in Brooklyn.
Prosecutors charged the defendants in December 2016 with orchestrating two fraudulent schemes involving Platinum, which struggled to attract large institutional clients despite years of golden returns from niche and unsavory investments.
In one scheme, Platinum was accused of overvaluing its often-illiquid assets to collect higher fees, and falsely reporting annualized returns topping 17 percent.
Authorities said Platinum operated “like a Ponzi scheme” by using new money to fund redemptions by earlier investors, which were referred to internally as “Hail Mary time.”
The second alleged scheme centered on Black Elk, a Platinum-controlled oil exploration company. Prosecutors said the defendants defrauded Black Elk’s bondholders out of $50 million by diverting the proceeds of asset sales to Platinum ahead of Black Elk’s 2015 bankruptcy.
Reuters described Platinum’s use of related parties in its Black Elk bond vote in an April 2016 Special Report:
To read the article in its entirety click here.