Mark Nordlicht

Mark (Meir) Nordlicht (born 1968) is an accused criminal and a failed hedge funder manager, who was accused of running a "ponzi like scheme", according to his indictment.[1] While he was convicted of a bond-rigging scheme, Judge Brian Cogan ordered a new trial be set for Nordlicht.[2] He was the founder and former chief investment officer of Platinum Partners, a U.S. based hedge fund.[3][4]

Mark Nordlicht
Born
Meir Nordlicht

1968 (age 52–53)
NationalityUnited States
EducationB.A. Yeshiva University
OccupationHedge fund manager
Known forFounder of Platinum Partners

Early life and education

Nordlicht was born to a Jewish family[4] and raised on Long Island.[5] He graduated from Yeshiva University in 1990 with a B.A. in philosophy. With $11,000 saved from his bar mitzvah he started trading commodity options.[6][7]

Platinum Partners

Platinum Partners was formed in 2003 in New York City with Nordlicht as chief investment officer. It portrayed itself as having a knack for illiquid investments and had $1.7 billion in assets in its most recent filing. The investor mix consisted of institutional investors, family offices and ultra-high-net individuals.[8]

Arrest

On December 19, 2016, federal agents arrested Nordlicht and six others on charges related to a $1 billion fraud that alleged that Nordlicht's firm operated "like a Ponzi scheme," according to prosecutors.[9][10] The indictment charged Nordlicht and his co-defendants with eight counts of conspiracy to commit securities fraud, investment adviser fraud, securities fraud conspiracy, investment adviser fraud conspiracy, and wire fraud conspiracy for defrauding investors through overvaluation of assets, concealment of severe cash flow problems at Platinum, and the preferential payment of redemptions.[11] Nordlicht's Platinum Partners management companies "projected stability and confidence" to current and prospective investors, reporting positive average returns of 17% from 2003 to 2015, according to a parallel civil lawsuit filed by the Securities and Exchange Commission.[12][13] Included among the charges was manipulation of Black Elk Energy bonds.[14]

Nordlicht and the other five defendants all pleaded not guilty to the charges.[15] A trial date of April 15, 2019 has been set.[16]

Ties to New York City correctional officers' union

The investigation of Platinum and Nordlicht was an outgrowth of a criminal case against Norman Seabrook, the head of the New York City correctional officers' union, who was alleged to have invested $20 million of the union's pension money in Platinum as part of a scheme in which he got kickbacks. Murray Huberfeld, an executive of Platinum, reportedly gave Seabrook bribes including a Ferragamo bag stuffed with $60,000 in cash to secure a $20 million pension investment. Seabrook was also to be paid a portion of the profits from the union's investment, which Huberfeld estimated would be between $100,000 and $150,000 a year, according to the government.[17][18] After a hung jury in his first trial, Seabrook was found guilty of bribery and conspiracy at a second trial in August 2018, and as a result of the ongoing case that forced Platinum to close, the correction officers' union pension fund lost $19 million dollars of its investment.[19] Seabrook was sentenced to 58 months in prison on February 8, 2019.[20]

Leaks in the media

Lawyers for Nordlicht argued in court and in a letter dated April 7, 2017 that an FBI agent may have leaked information about the investigation to the press before it became public. The letter cited news articles in Bloomberg, the Wall Street Journal and the New York Post published in the summer of 2016 reporting that Platinum was under investigation.

Nordlicht's lawyers further argued that the leaks, and not the actions of Platinum's executives, may have been responsible for the damage to the value of Platinum's funds that caused harm to investors.[21]

The actions of Nordlicht have been defended as reflecting the difficulty of pricing futures in the energy sector, as well as the problem of leaks driving down price. In February 2017 the media outlet Newsmax reported:

The valuation of illiquid assets is frequently a topic of disagreement, controversy, and negotiation. The Platinum value arbitrage fund had energy-related assets whose value varied depending on the price of oil. At a certain point, the federal government itself starting driving down the value of Platinum's assets by leaking that the fund was under investigation. The idea underlying the Platinum value arbitrage fund — private equity illiquid assets in a structure with hedge fund liquidity — may have been too difficult to execute successfully even absent government interference. But having a bad investment idea, or a good idea poorly executed, doesn't usually warrant the criminal charges and 20 years in jail that the Platinum managers are facing. It's not supposed to be a crime to have a money-losing hedge fund, or even one that made money for a while and then lost some.[22]

Reporter Ira Stoll of New Boston Post said of the case:

The more one looks into this, the more it looks like the Platinum Partners prosecution is just the latest in a mounting and troubling pattern of examples in which New York-area federal prosecutors and FBI agents have jailed hedge fund managers or destroyed their businesses with publicized raids — only to have the charges eventually overturned by judges or never brought at all.[23]

Trial

Trial the case of USA v. Nordlicht, et. al. began on April 23, 2019 before U.S. District Judge Brian Cogan. The jury trial spanned nine weeks as defendants Mark Nordlicht and to other platinum executives invoked various defenses unveiling unruly subject matter purported by the prosecution, and can otherwise in rebuttals. The jury reached a mixed verdict on July 9, 2019.

The jury rejected the prosecution's keystone argument purporting the Platinum Partners fund operated "like a Ponzi scheme," finding all defendants not guilty on those five subject charges unanimously. The jury did find two defendants guilty on three counts relating to conspiracy and securities fraud in transactions relating to bondholders of oil exploration company Black Elk. Platinum's former CFO, Joseph SanFilippo, was exonerated and acquired of all charges in a unanimous not guilty verdict by the jury on every count.

Earlier in proceedings, the judge overseeing the case nixed the government's case as to the credibility of fraud claims, finding no clear anchor of fact or evidence limiting the government's scope in prosecution on the subject charges relating to fraudulent misrepresentation or falsely inflating asset values relating to the Platinum flagship fund.

After the announcement of the jury's findings in verdict, presiding Judge Brian Cogan granted the defense a request for a special motion to vacate the lesser guilty verdicts. The defense was granted by order to file motions challenging all remaining charges pertaining to the charges coinciding with the jury's guilty verdicts. In a final statement, Hon. Cogan affirmed "It's not over yet," insinuating a likely re-examintion of subject matter related to the Black Elk guilty charges.

Personal life and philanthropy

Nordlicht is married.[7] He lives in Westchester with his wife and children.[22]

Bankruptcy

Mark Nordlicht filed for bankruptcy, claiming he had only $137,000 to his name. It has been alleged that he illegally transferred his house at 245 Trenor Drive, New Rochelle, NY 10804 into a Cook Island trust controlled by his wife.[24] Additionally, his wife is the principal owner of OBH 2308 LLC,[25] which owns a 5300 sq ft apartment at the Ritz Carlton in Bal Harbor.[26]

References
  1. "'If a Charge Can't Stick on These Guys, No Charges Can Stick on Anyone.'". Institutional Investor. Retrieved 2020-07-14.
  2. Henning, Peter J. (2019-11-11). "What a Judge's Rare Reversal Means in the Platinum Partners Fraud Case". The New York Times. ISSN 0362-4331. Retrieved 2020-07-14.
  3. Wall Street Journal: "Fraud Probe Ricochets Through Platinum Partners, a Hedge Fund With Ties to Jewish Community - Platinum Partners has reported strong returns for years but now is liquidating" By Rob Copeland July 25, 2016
  4. Taipei Times: "Platinum Partners executives charged with US$1bn fraud" December 21, 2016
  5. The Times of London: "Take spousal test to avoid a trip down denial that may end up in the clink" by Alexandra Frean December 21, 2016
  6. Rubinstein, David; Levine, Doron (December 19, 2016). "Yeshiva University Commentator: "$1 Billion Fraud Indictment for Firm with which YU Reportedly Considered Investing". Retrieved May 21, 2017.
  7. Cox, Robert (December 19, 2016). "New Rochelle Talk: Two New Rochelle Men Among Seven Indicted In A $1 Billion "Ponzi-esque" Investment Fraud". Retrieved May 21, 2017.
  8. Platinum Partners
  9. "Platinum Partners' Founder And Chief Investment Officer Among Five Indicted In A $1 Billion Investment Fraud". justice.gov. United States Department of Justice – U.S. Attorney's Office – Eastern District of New York. December 19, 2016. Retrieved 21 May 2017.
  10. Stevenson, Alexandra (2016-12-19). "Platinum Hedge Fund Executives Charged With $1 Billion Fraud". The New York Times. ISSN 0362-4331. Retrieved 2017-01-08.
  11. "United States of America v. Mark Nordlicht, David Levy, Uri Landesman, Joseph Sanfilippo, Joseph Mann, Daniel Small, and Jeffrey Shulse, Defendants" (PDF). platinumpartnersreceiver.com. Platinum Partners Receivership. December 16, 2016. Retrieved May 21, 2017.
  12. "Securities and Exchange Commission, Plaintiff, v. Platinum Management (NY) LLC; Platinum Credit Management, L.P.; Mark Nordlicht; David Levy; Daniel Small; Uri Landesman; Joseph Mann; Joseph Sanfilippo; and Jeffrey Shulse, Defendants" (PDF). sec.gov. United States Securities and Exchange Commission. December 19, 2016. Retrieved May 21, 2017.
  13. "SEC Charges Platinum Funds and Founder with Defrauding Investors – Litigation Release No. 23704 – Securities and Exchange Commission v. Platinum Management (NY) LLC et al., Civil Action No. 16-cv-06848 (E.D.N.Y.)". sec.gov. United States Securities and Exchange Commission. December 20, 2016. Retrieved May 21, 2017.
  14. "Platinum Partners execs charged in $1B mini-Madoff fraud". USA Today. December 19, 2016. Retrieved January 8, 2017.
  15. Pierson, Brendan. "Platinum Partners founder's lawyers drop appeal on witness contact ..." U.S. Retrieved 2018-03-31.
  16. Pierson, Brendan (February 26, 2019). "Platinum Partners executives' $1 bln fraud trial postponed". CNBC. Reuters. Retrieved February 26, 2019.
  17. Vardi, Nathan (June 8, 2016). "Hedge Fund Manager Arrested For Paying Kickbacks To New York Union Chief". Forbes. Retrieved May 12, 2017.
  18. Ross, Barbara (January 6, 2017). "Ex-correction union boss Norman Seabrook's corruption trial postponed by possible new evidence Tweet email". New York Daily News. Retrieved 21 May 2017.
  19. Greenberg, Zoe (August 15, 2018). "Norman Seabrook Guilty of Bribery in Trial That Cast Shadow Over De Blasio". New York Times. Retrieved 16 August 2018.
  20. Weiser, Benjamin; Greenberg, Zoe (2019-02-08). "Norman Seabrook Was Once a Union PowerBroker in New York. Now He Is Going to Prison". The New York Times. ISSN 0362-4331. Retrieved 2019-02-09.
  21. "U.S. judge orders hearing on claims of leaks in Platinum Partners probe". Reuters. 2017-04-11. Retrieved 2017-04-27.
  22. Stoll, Ira (February 1, 2017). "Feds Business Ignorance Shows With Hedge Fund Indictments". newsmax.com. Newsmax Media. Retrieved May 21, 2017.
  23. Stoll, Ira (February 21, 2017). "Platinum Partners Case Is Latest Prosecutorial Overreach | NewBostonPost". Retrieved 2017-07-02.
  24. "Rothstein Trustee Goes After Hedge Fund Heads For $40M - Law360". www.law360.com. Retrieved 2020-07-14.
  25. "OBH 2308, LLC / Steinberg Paul B". florida.intercreditreport.com. Retrieved 2020-07-14.
  26. Cox, Author Robert (2016-12-19). "Two New Rochelle Men Among Seven Indicted In A $1 Billion "Ponzi-esque" Investment Fraud". Talk of the Sound. Retrieved 2020-07-14.
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