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.
With this year’s Semicon Taiwan trade show set to kick off on Wednesday, market attention has turned to the mass production of advanced packaging technologies and capacity expansion in Taiwan and the US. With traditional scaling reaching physical limits, heterogeneous integration and packaging technologies have emerged as key solutions. Surging demand for artificial intelligence (AI), high-performance computing (HPC) and high-bandwidth memory (HBM) chips has put technologies such as chip-on-wafer-on-substrate (CoWoS), integrated fan-out (InFO), system on integrated chips (SoIC), 3D IC and fan-out panel-level packaging (FOPLP) at the center of semiconductor innovation, making them a major focus at this year’s trade show, according
DEBUT: The trade show is to feature 17 national pavilions, a new high for the event, including from Canada, Costa Rica, Lithuania, Sweden and Vietnam for the first time The Semicon Taiwan trade show, which opens on Wednesday, is expected to see a new high in the number of exhibitors and visitors from around the world, said its organizer, SEMI, which has described the annual event as the “Olympics of the semiconductor industry.” SEMI, which represents companies in the electronics manufacturing and design supply chain, and touts the annual exhibition as the most influential semiconductor trade show in the world, said more than 1,200 enterprises from 56 countries are to showcase their innovations across more than 4,100 booths, and that the event could attract 100,000 visitors. This year’s event features 17
EXPORT GROWTH: The AI boom has shortened chip cycles to just one year, putting pressure on chipmakers to accelerate development and expand packaging capacity Developing a localized supply chain for advanced packaging equipment is critical for keeping pace with customers’ increasingly shrinking time-to-market cycles for new artificial intelligence (AI) chips, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) said yesterday. Spurred on by the AI revolution, customers are accelerating product upgrades to nearly every year, compared with the two to three-year development cadence in the past, TSMC vice president of advanced packaging technology and service Jun He (何軍) said at a 3D IC Global Summit organized by SEMI in Taipei. These shortened cycles put heavy pressure on chipmakers, as the entire process — from chip design to mass
SEMICONDUCTOR SERVICES: A company executive said that Taiwanese firms must think about how to participate in global supply chains and lift their competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday said it expects to launch its first multifunctional service center in Pingtung County in the middle of 2027, in a bid to foster a resilient high-tech facility construction ecosystem. TSMC broached the idea of creating a center two or three years ago when it started building new manufacturing capacity in the US and Japan, the company said. The center, dubbed an “ecosystem park,” would assist local manufacturing facility construction partners to upgrade their capabilities and secure more deals from other global chipmakers such as Intel Corp, Micron Technology Inc and Infineon Technologies AG, TSMC said. It
RSS