Jury declares founder of Platinum Partners guilty in fraud lawsuit

NEW YORK (Reuters) – Mark Nordlicht, founder of the Platinum Partners disappeared hedge fund company, has been convicted of defrauding bondholders of a Platinum-controlled oil exploration company, but released the charges. he defrauded investors in Platinum hedge funds.

The verdict was rendered by a jury in federal court in Brooklyn at the end of a nine-week trial. Platinum's former co-chief investment officer, David Levy, has been convicted on the same charges of conspiracy and securities fraud.

A third defendant, the former chief financial officer, Joseph SanFilippo, was acquitted of all charges against him.

After the jury left, the lawyers for Nordlicht and Levy sought the quashing of the guilty verdicts. US District Judge Brian Cogan ordered them to file documents in support of their motions and said he could hold a hearing to review them.

"It's not over yet," said the judge.

Prosecutors accused Nordlicht, Levy and SanFilippo of fraud in December 2016, claiming that these and other Platinum people had escaped investors to "millions and millions of dollars" in two different ploys.

The three men were accused of lying to investors about the health and liquidity of Platinum Partners Value Arbitrage's flagship fund. Prosecutors said Platinum was operating "like a ponzi scheme" using new funds to fund buybacks from previous investors, a practice called "Hail Mary Time" internally.

The jury, however, rejected the charges, declaring the three men not guilty.

In the second case, according to prosecutors, Nordlicht and Levy would have swindled bondholders in Black Elk, a Platinum-owned oil exploration company, by diverting money from the sale of assets to Platinum, in anticipation of the bankruptcy of Black Elk in 2015. The jury found them guilty of two counts of conspiracy and a chief of securities fraud related to this ploy.

SanFilippo has not been charged with participation in the Black Elk program.

A Nordlicht lawyer was not immediately available to comment.

"Although disappointed by any finding of wrongdoing, we are extremely pleased that the jury categorically rejected the central theory of the government that Platinum defrauded its investors and acquitted David of the main charges against him. "said Moe Fodeman, Levy's lawyer, in an email. "We are looking forward to David's complete exoneration."

Kevin O'Brien, one of SanFilippo's lawyers, said in an email: "Joe is delighted with the verdict of acquittal of the jury, which confirms what we have always maintained, that this case should never have been brought. "

Platinum's assets are being liquidated under the control of court-appointed receivers.