Top executives of New York-based hedge fund manager Platinum Partners were arrested on Monday and charged with running a US$1 billion fraud that federal prosecutors said became “like a Ponzi scheme” as its largest investments lost much of their value.
Led by Mark Nordlicht, Platinum was known for years for producing exceptionally high returns — about 17 percent annually in its largest fund — by taking an unusually aggressive approach to investing and fund management, as detailed by a Reuters special report in April.
Nordlicht, Platinum’s founding partner and chief investment officer, was arrested at his home in New Rochelle, New York.
Photo: Bloomberg
Federal prosecutors accused him and six others of participating in a pair of schemes to defraud investors.
“The charges ... highlight the brazenness and the breadth of the defendants’ lies and deceit,” US Attorney Robert Capers told reporters.
Capers added that the case was one of the largest and “most brazen” investment frauds ever and Platinum was ultimately exposed to have “no more value than a tarnished piece of cheap metal.”
The US Securities and Exchange Commission announced parallel charges on Monday against the same executives and two Platinum entities for similar civil fraud charges.
A 48-page criminal indictment said that since 2012, Nordlicht and four other defendants defrauded investors by overvaluing illiquid assets held by its flagship Platinum Partners Value Arbitrage funds, 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.
Founded in 2003, Platinum until this year had more than US$1.7 billion under management, with more than 600 investors, authorities said.
Some of those investors came from the same New York Jewish community as Nordlicht and other Platinum executives. They have included a charitable trust set up by day-trading pioneer Aaron Elbogen; the Century 21 Associates Foundation, led by department store executive Raymond Gindi and the SFF Foundation, a non-profit controlled by the Schron family, known for its real-estate investments.
Avi Schron declined to comment; Gindi and Elbogen did not immediately respond to requests for comment.
The indictment describes how angry investors sought to take their money out late last year and early this year as Platinum hinted to clients that some assets were in trouble.
It also cites e-mails between Nordlicht and another unnamed executive in which the men discussed fleeing to Israel as pressure on the firm mounted.
Prosecutors said Platinum’s co-chief investment officer David Levy, and former president of the firm’s signature fund Uri Landesman, also participated in the scheme, which prosecutors said allowed Platinum to extract more than US$100 million in fees based on inflated asset values.
NEW MARKET: The partnership opens up India to the Dutch company, which already has a strong hold in the semiconductor market of South Korea, Taiwan and China ASML Holding NV entered into a partnership agreement with Tata Electronics Pvt Ltd aimed at ramping up India’s goal to develop domestic chip-manufacturing capabilities. The Dutch company’s technology would help power Tata Electronics’ planned 300 millimeter (mm) semiconductor foundry in Gujarat, according to a joint statement from the two companies on Saturday. The signing of a memorandum of understanding coincides with a visit by Indian Prime Minister Narendra Modi to the Netherlands, which is looking to deepen bilateral relations with New Delhi. ASML, whose top customers include Taiwan Semiconductor Manufacturing Co (台積電) and Samsung Electronics Co, makes lithography machines that can print
ROUGH RECORDS: Bonds in Japan, as well is in New Zealand, Australia and the US, are seeing the effects of a nervy market as stock exchanges across Asia edge down A deepening slump in Japanese government bonds added fuel to the selloff in global debt markets as rising oil prices stoked inflation fears and pushed yields to multi-decade highs. Japan’s 30-year yield yesterday surged as much as 20 basis points to the highest level since the tenor’s debut in 1999, before paring some of the move. Shorter-maturity Japanese debt was also under pressure, underscored by weak demand at a sale of five-year notes that offered a record-high coupon of 2 percent. Concerns over inflation and government spending rippling through markets including the US, Australia and New Zealand are being amplified in Japan,
The US has cleared about 10 Chinese firms to buy Nvidia Corp’s second-most powerful artificial intelligence (AI) chip, the H200, but not a single delivery has been made so far, three people familiar with the matter said, leaving a major technology deal in limbo as chief executive officer Jensen Huang (黃仁勳) seeks a breakthrough in China this week. Huang, who was not initially listed in a White House delegation to Beijing, joined the trip after an invitation from US President Donald Trump, a source said. Trump picked him up in Alaska en route to a summit with Chinese President Xi Jinping
Wall Street is licking its chops over an unprecedented slate of massive initial public offerings (IPOs) set to arrive in the coming months, beginning with Elon Musk’s Space Exploration Technologies Corp (SpaceX) next month. That is expected to be followed by artificial intelligence (AI) rivals OpenAI and Anthropic PBC. The trio of mega listings, each eyeing valuations around US$1 trillion or more, constitutes a heady period of elevated risk and reward. SpaceX is targeting an IPO that would raise up to US$80 billion — about double the funds generated from all IPOs last year. OpenAI and Anthropic are eyeing IPOs raising US$60 billion. “We’re
RSS