Update: Platinum Partners’ Assets Frozen

According to a recent Wall Street Journal article, a federal judge has frozen the $118 million assets of Platinum Partners, the hedge fund manager which is the subject of a federal fraud investigation after a bankruptcy trustee sued the company. The judge ordered a temporary restraining order on Wednesday barring transfers from certain bank accounts belonging to Platinum hedge funds and investment vehicles. The trustee sued Platinum for $200 million on Wednesday, alleging that insiders at Platinum’s flagship fund engaged in a scheme to “plunder” Black Elk Energy Offshore Operations by siphoning the proceeds from the sale of its prime assets before the company went bankrupt. The judge said that this reflected a pattern of “fraud and abuse” by the company. The company’s scheme was engineered by its executives: Mark Nordlicht and David Levy. They took the sale proceeds with the help of a company called Beechwood Bermuda International Ltd., which was allegedly controlled by Platinum. Platinum used Beechwood to use bondholders to authorize the transaction with a false vote. Black Elk collapsed after criminal charges surfaced in connection with an off-coast explosion that killed three workers. Black Elk pleaded not guilty to the criminal charges and the litigation is pending. Platinum has pleaded not guilty to conspiracy and wire fraud in connection with an alleged bribe of a union official for investments.

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