While most people had never heard of Platinum Partners, the hedge fund provided terrific returns, often in the double digits. That’s on par with some of the biggest hedge funds and investment groups in this industry, so the results were shockingly good. Some might even say they were unbelievably good.
According to federal prosecutors, that’s exactly what they were. They recently arrested those in charge of the hedge fund, claiming it was little more than a Ponzi scheme. Totals are being reported in the area of $1 billion, meaning few cases have been this big since the Bernard L. Madoff scheme came apart back in 2008.
Federal agents took action across the country. While most of their work happened in New York, in both New Rochelle and Manhattan, they also made arrests as far away as Texas. Those who have been arrested are facing charges for investment adviser fraud and securities fraud.
The company’s strategy, the authorities claim, was to make high-stakes investments. These focused on oil companies, payday lenders and those who were terminally ill. They often got investors from the biggest families in New York’s Orthodox Jewish community. When older investors decided they wanted to take money out of the fund, they’d simply get new investors and use that money to pay off the older ones.
In a case this big, those who have been accused of fraud need to know just how far the ramifications can stretch. They could be looking at charges that will impact the rest of their lives. Because of this, it’s critical for them to know their legal options as the case progresses. Everyone has a right to a fair trial.
Source: The New York Times, “Platinum Hedge Fund Executives Charged With $1 Billion Fraud,” Alexandra Stevenson, Dec. 19, 2016