Arrests In $1B Hedge Fund Ponzi Scheme

The founder and chief of New York hedge fund Platinum Partners was arrested this week and charged with running a $1 billion fraud, operating the fund “like a Ponzi scheme,” in what will be one of the largest such cases since Bernie Madoff’s scam unraveled in 2008. Mark Nordlicht, along with the firm’s co-chief investment officer David Levy, has been charged with securities fraud and investment adviser fraud, the New York Times reports. The Securities and Exchange Commission has filed its’ own parallel civil case against the hedge fund. According to the charges, Platinum Partners took money from families and foundations within the Orthodox Jewish community in New York, and bankrolled high-stakes bets on payday lenders and oil companies, and even tried to game insurance payouts for the terminally ill. Ultimately the fund took in new money to pay back investors who wanted refunds, and “engaged in numerous improper measures in an attempt to meet redemption requests, including taking out high-interest rate loans, commingling monies among funds and raising money from new investors through fraudulent misrepresentations,” said Andrew J. Ceresney, director of the SEC’s enforcement division.