Mark Nordlicht

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Mark Nordlicht
Born
Meir Nordlicht

1968 (age 55–56)
NationalityAmerican
EducationB.A. Yeshiva University
OccupationHedge fund manager
Known forFounder of Platinum Partners

Mark (Meir) Nordlicht (born 1968) is the founder and former chief investment officer of (now defunct) Platinum Partners, a U.S. based hedge fund, which came to be known for its unusual investment strategies becoming the subject of a series of controversial criminal and legal actions.[1][2] According to an indictment, Nordlicht, in addition to the fund's co-CIO and CFO, were accused of running a "ponzi like scheme".[3] A jury acquitted all defendants on the core charges relating to the Ponzi scheme operation, but found two of the lead executives guilty on the lesser charges relating to a bond-rigging scheme. In an unusual move, Judge Brian Cogan, presiding in the case of United States vs. Nordlicht, et al., reversed the jurors' guilty verdicts and acquitted the firm's co-CIO of the lesser charges in a full acquittal, but ordered a new trial to be set for Nordlicht. An appellate court later upheld the convictions.[4][5]

Early life and education[edit]

Nordlicht was born to a Jewish family[2] and raised on Long Island.[6] 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.[7][8]

Platinum Partners[edit]

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.[9]

Arrest[edit]

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.[10][11] 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.[12] 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.[13][14] Included among the charges was manipulation of Black Elk Energy bonds.[15]

Others charged in the SEC's complaint in addition to Nordlicht, Platinum Management (NY) LLC, and Platinum Credit Management LP: [16]

  • David Levy, owner and co-chief investment officer along with Nordlicht.
  • Daniel Small, former managing director and portfolio manager of certain Platinum funds.
  • Uri Landesman, former managing general partner of certain Platinum funds.
  • Joseph Mann, who worked in Platinum Management’s investor relations department.
  • Joseph SanFilippo, CFO of a Platinum hedge fund.
  • Jeffrey Shulse, CFO of Black Elk Energy, the oil company used in the illicit $100 million scheme.

Nordlicht and other defendants pleaded not guilty to the charges.[17] A trial date of April 15, 2019 has been set.[18]

Ties to New York City correctional officers' union[edit]

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.[19][20] 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 of its investment.[21] Seabrook was sentenced to 58 months in prison on February 8, 2019.[22]

Leaks in the media[edit]

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.[23]

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.[24]

It was later disclosed via a Freedom of Information Act request that Judge Cogan who heard the Platinum Partners case rejected the notion that a media leak actually occurred.[25]

A subsequent court document revealed that Mark Nordlicht believed that Platinum Partners' liquidity crunch was caused by their mismanagement. The document quotes Nordlicht as writing in an e-mail "This ‘liquidity’ crunch [at PPVA] was caused by our mismanagement – yours, David [Levy] and I – of the black elk position. " [26]

Trial[edit]

Trial the case of United States 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. 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-examination of subject matter related to the Black Elk guilty charges.

On November 5, 2021, the 2nd U.S. Circuit Court of Appeals came to a 3–0 decision to vacate Judge Brian Cogan's decision thereby reinstating Mark Nordlicht's securities fraud and two conspiracy convictions.[27][28][29]

On October 3, 2022, the Supreme Court upheld the decision of the 2nd U.S. Circuit Court of Appeals by denying to review a petition filed by Mark Nordlicht and David Levy.[30][31]

Philanthropy[edit]

Mark Nordlicht is a founder of the Westchester Torah Academy (WTA) donating substantial funds to the yeshiva.[32] In June 2021, Mark Nordlicht gave a commencement speech to the first eighth grade class to graduate from WTA.[33]

Personal life[edit]

Mark Nordlicht is married to Dahlia Kalter-Nordlicht[8][34] and lives in New Rochelle.[35][36][37]

Bankruptcy[edit]

Mark Nordlicht filed for bankruptcy, claiming he had only $137,000 to his name. It has been alleged that he illegally transferred his house in New Rochelle, New York into a Cook Island trust controlled by his wife.[38] Additionally, his wife is the principal owner of OBH 2308 LLC,[39] which owns a 5300 sq ft apartment at the Ritz Carlton in Bal Harbor.[40]

References[edit]

  1. ^ 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
  2. ^ a b Taipei Times: "Platinum Partners executives charged with US$1bn fraud" December 21, 2016
  3. ^ "'If a Charge Can't Stick on These Guys, No Charges Can Stick on Anyone.'". Institutional Investor. 18 February 2020. Retrieved 2020-07-14.
  4. ^ 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.
  5. ^ "Platinum Partners' Securities Fraud Convictions Upheld". Institutional Investor. 8 November 2021. Retrieved 2021-12-08.
  6. ^ 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
  7. ^ 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.
  8. ^ a b 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.
  9. ^ Platinum Partners
  10. ^ "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.
  11. ^ 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.
  12. ^ "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.
  13. ^ "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.
  14. ^ "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.
  15. ^ "Platinum Partners execs charged in $1B mini-Madoff fraud". USA Today. December 19, 2016. Retrieved January 8, 2017.
  16. ^ "SEC.gov | SEC Charges Platinum Funds and Founder With Defrauding Investors". www.sec.gov. Retrieved 2022-08-05.
  17. ^ Pierson, Brendan. "Platinum Partners founder's lawyers drop appeal on witness contact ..." U.S. Retrieved 2018-03-31.
  18. ^ Pierson, Brendan (February 26, 2019). "Platinum Partners executives' $1 bln fraud trial postponed". CNBC. Reuters. Retrieved February 26, 2019.
  19. ^ Vardi, Nathan (June 8, 2016). "Hedge Fund Manager Arrested For Paying Kickbacks To New York Union Chief". Forbes. Retrieved May 12, 2017.
  20. ^ 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.
  21. ^ 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.
  22. ^ 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.
  23. ^ "U.S. judge orders hearing on claims of leaks in Platinum Partners probe". Reuters. 2017-04-11. Retrieved 2017-04-27.
  24. ^ Stoll, Ira (February 21, 2017). "Platinum Partners Case Is Latest Prosecutorial Overreach | NewBostonPost". Retrieved 2017-07-02.
  25. ^ "Judge Not Impressed By Platinum Founder's Media Leak FOIA - Law360". www.law360.com. Retrieved 2023-07-12.
  26. ^ Cogan, Brian (July 6, 2023). "MEMORANDUM DECISION AND ORDER 16-cr-00640 (BMC)" (PDF). GovInfo.
  27. ^ "U.S. appeals court restores Platinum Partners executives' fraud convictions". Reuters. 2021-11-05. Retrieved 2021-11-08.
  28. ^ "United States v. Levy, No. 19-3207 (2d Cir. 2021)". Justia Law. Retrieved 2021-11-08.
  29. ^ Ramey, Corinne (2021-11-05). "Appeals Court Reinstates Convictions of Platinum Partners Executives". Wall Street Journal. ISSN 0099-9660. Retrieved 2021-11-08.
  30. ^ "Docket for 21-1319". www.supremecourt.gov. Retrieved 2022-12-12.
  31. ^ "Platinum Executives Rejected by High Court on Fraud Convictions". news.bloomberglaw.com. Retrieved 2022-12-12.
  32. ^ Staff Report (23 December 2016). "Day School Innovator Charged In Fraud Scheme". jewishweek.timesofisrael.com. Retrieved 2021-11-08.
  33. ^ WTA's First 8th Grade Graduating Class - The Class of 2021!, retrieved 2021-11-08
  34. ^ "Alleged Ponzi mogul 'hid assets' in Cook Islands". Cook Islands News. 2020-10-21. Retrieved 2023-08-02.
  35. ^ Cox, Robert (2016-12-19). "Two New Rochelle Men Among Seven Indicted In A $1 Billion "Ponzi-esque" Investment Fraud". Talk of the Sound. Retrieved 2021-11-08.
  36. ^ "New Rochelle Man Charged In $1 Billion Investor Fraud". New Rochelle Daily Voice. 2016-12-19. Retrieved 2021-11-08.
  37. ^ "Platinum Partners' Founder and CIO Mark Nordlicht and Co-CIO David Levy Convicted of Defrauding Bondholders in a Multi-Million Dollar Scheme". www.justice.gov. 2019-07-09. Retrieved 2021-11-08.
  38. ^ "Rothstein Trustee Goes After Hedge Fund Heads For $40M - Law360". www.law360.com. Retrieved 2020-07-14.
  39. ^ "OBH 2308, LLC / Steinberg Paul B". florida.intercreditreport.com. Retrieved 2020-07-14.
  40. ^ Cox, 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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