More Jews Arrested For Securities Fraud; Platinum Partners Mark Nordlicht, David Levy, Uri Landesman

Top executives of hedge fund Platinum Partners were arrested Monday morning and charged with defrauding investors in one of the biggest such cases since Bernard L. Madoff’s Ponzi scheme.

As recently as this fall, Platinum told investors it oversaw more than $1 billion scattered in eclectic investments like loans to bankrupt companies and thinly-traded pharmaceutical stocks. It boasted one of the steadiest performance track records in the hedge-fund industry, with no down years for its funds.

The indictment unsealed Monday in federal court in Brooklyn charges Platinum founder and Chief Investment Officer Mark Nordlicht,

co-chief investment officer David Levy, and former president Uri Landesman with counts of securities fraud, investment adviser fraud and conspiracy.

Authorities said they and others falsely reported the value of Platinum’s assets, allowing the firm to collect a hefty cut of all investment gains and project a veneer of financial stability. In actuality, the firm’s investments were worth far less, and Platinum’s executives knowingly faked the performance figures, authorities said.

A spokesman for Platinum declined to comment, and lawyers for those charged couldn’t immediately be reached for comment. The firm had earlier said it was cooperating with all investigations, following reports that it was being probed by the Securities and Exchange Commission and Justice Department.

Platinum’s investors were focused in the observant Jewish community, people familiar with the matter said.

The fund told them and others earlier this year it planned to liquidate its hedge funds, but couldn’t immediately pay back their money because of a paucity of easy-to-sell assets. Later, its flagship fund filed for bankruptcy protection, and Cayman Island liquidators working to unwind the troubled fund said they were trying to stave off collapse.

Separately, Platinum co-founder Murray H. Huberfeld was arrested this year by federal authorities in Manhattan in connection with an alleged scheme to bribe a union leader to funnel $20 million to Platinum, charges he denies.

Mr. Huberfeld wasn’t named in Monday’s indictment, but a person familiar with the matter said he was the anonymous “Co-Conspirator 1” in the document. His nephew, Mr. Levy, is one of the Platinum executives arrested Monday.

In December 2015, Messrs. Huberfeld and Nordlicht discussed fleeing the U.S. for Israel, according to the indictment.

“Don’t forget books,” Mr. Huberfeld wrote to his partner in an email, the indictment says. “Assume we are not coming back to ny…Take passport.”

The two didn’t move permanently in the end, people familiar with the matter said. They remained in the U.S. and continued to tell investors they were sanguine about Platinum’s financial health.