Comment: “You should read up on the Platinum hedge fund fiasco in NY. A tight knit group of Orthodox got together to do a poor man’s Madoff and AIG, got caught paying off the black head of the Riker’s jail guard union with 30k in a designer bag to keep the Ponzi scheme going.”
Wall Street Journal Sept. 17, 2016:
Platinum’s fund investors have been largely concentrated in a tight-knit group of observant Jewish businesspeople. Exposure to Platinum reached a far wider realm as a result of Beechwood’s having directed insurance-client money into Platinum funds and related investments.
Wall Street Journal July 25, 2016:
Fraud Probe Ricochets Through Platinum Partners, a Hedge Fund With Ties to Jewish Community
For his son’s bar mitzvah in 2008, hedge-fund manager Murray Huberfeld chartered a JetBlue plane and invited hundreds to an oceanfront party in Palm Beach, Fla. An Orthodox pop star known as the “Jewish Elvis” entertained the guests, who Mr. Huberfeld says included investors in his fund.
Intimate ties and fundraising inside a close-knit world of observant Jewish businesspeople in New York, Florida and Israel are central to the $1.25 billion hedge-fund firm Mr. Huberfeld has helped lead, Platinum Partners. Now those ties are being tested as two sets of federal prosecutors as well as securities regulators delve into Platinum’s operations.
In early June, Mr. Huberfeld was arrested in connection with an alleged scheme to bribe a union leader to funnel $20 million to Platinum. Later in June, federal agents raided Platinum’s New York offices…
Among investors in Platinum is Sol Werdiger, a clothing magnate who is prominent in the New York Orthodox Jewish community to which the hedge-fund firm has looked for investors. “I know very, very little about the inner workings” of the firm, said Mr. Werdiger. He said he was concerned about the safety of his investment…
Mr. Huberfeld, the 55-year-old son of a kosher restaurateur in the working-class Brooklyn neighborhood of Canarsie, traded penny stocks privately for years. In 1992 he pleaded guilty to a misdemeanor after sending an imposter to take a brokerage-license exam on his behalf, drawing a $5,000 fine.
In 2003, he and others helped stake Mr. Nordlicht with $25 million to start Platinum. Two years later Mr. Huberfeld started his own hedge fund, initially called Centurion and owned mostly by Mr. Nordlicht, which specialized in making loans to companies that found it hard to borrow…
Seeking investors, the firm tapped a network of Jewish day schools and wealthy Jewish philanthropists with shared charitable interests. “We were raising a fund,” Mr. Huberfeld said. “These were the people we knew.”
Mr. Huberfeld sometimes took investors on a Gulfstream III jet and hobnobbed with them during a celebration of Talmudic study at MetLife Stadium and New York Knicks games. Most years at Sukkot, an annual fall holiday, he set up shop in the presidential suite at Jerusalem’s five-star David Citadel hotel and hosted a party.
The Sukkot parties weren’t strictly fund-raising events, Mr. Huberfeld said. “Were some of the people investors? Possibly one, two or three. But a handful at best,” he said.
“Murray was known in the Jewish community as someone to have means,” said a friend of his. “If you have a wallet, people perceive you to be a genius.”
The outreach dates to as early as 2005, when Mr. Huberfeld made his credit fund known to fellow philanthropists during a trip to the Vatican to meet the pope. The trip was organized by the Simon Weisenthal Center, a nonprofit focused on anti-Semitism, where Mr. Huberfeld was a board member and donor. At least one person on the trip invested.
“Several people met him through the center, but we had no idea” of the details of the investments, said Rabbi Marvin Hier, the Weisenthal Center’s founder, who led the trip. Mr. Huberfeld resigned from the center’s board last month.
Another investment source was Touro College, a Jewish-oriented New York college whose board of overseers Mr. Huberfeld joined in 2003. It invested endowment funds with Mr. Huberfeld’s fund in 2008 and received its investment back in 2011. Touro’s chief financial officer, Melvin Ness, said there was no correlation between Mr. Huberfeld’s listing on the Board of Overseers and Touro’s investment in the fund…
Platinum developed a reputation for investing where peers might not. It owned a company that, according to the Securities and Exchange Commission, deceived terminally ill patients and sold them contracts that would be lucrative for the company if the purchaser died quickly.
The Platinum-owned company was run by a friend of Mr. Nordlicht’s and made more than $1.5 million from the moves, according to an in-house SEC judge’s ruling in January 2015. The SEC determined that the company had obtained confidential health data to make its bets.
Why Did a Jewish Schools Charity Loan $2.3M to Failing Hedge Fund?
A Jewish education charity made a $2.3 million loan to a failing hedge fund this May, two months before the hedge fund’s collapse.
Torah Umesorah, also known as the National Society for Hebrew Day Schools, handed the money to a fund controlled by Platinum Partners at a time when the fund had access to just $63,000 cash…
Torah Umesorah is a Brooklyn-based not-for-profit that provides programing, training, and other services to hundreds of Orthodox yeshivas. Founded in 1944, it had an annual budget of $39 million in 2008, the last year for which it made its tax documents public.
Its relationship to Platinum is unclear. Platinum has managed money for some charities, though there’s no indication that Torah Umesorah itself was one of those investors.
Torah Umesorah’s May 27 loan to Platinum came more than a month after an April 14 Wall Street Journal report tying the hedge fund to a federal investigation involving Jona Rechnitz, an Orthodox businessman embroiled in a police corruption scandal, and Norman Seabrook, boss of the corrections officers union.
The Wall Street Journal story turned out to be prescient. Just weeks after Platinum accepted the charity’s loan, a close associate of the firm, Murray Huberfeld, was arrested and charged with bribing Seabrook to invest union pension funds with Platinum. Rechnitz reportedly cooperated with prosecutors in the case. Huberfeld has pleaded not guilty.
Huberfeld is a leading Orthodox philanthropist, a major donor to Chabad-Lubavitch synagogues and to yeshivas in Brooklyn’s Boro Park, and, until his arrest, a member of the board of the Simon Wiesenthal Center, a California-based group that opposes anti-Semitism. His foundation has sponsored a named program at the rabbinical school at Yeshiva University.
Huberfeld was convicted of fraud in 1993 for having someone else take a broker license exam in his name. An earlier company he founded, Broad Capital, specialized in selling penny stocks to Jewish charities.
