(Changes sourcing to judge’s order, adds new jury to be chosen)
By Brendan Pierson
NEW YORK, Feb 26 (Reuters) - The trial of former Platinum Partners chief Mark Nordlicht and other executives of the now-defunct hedge fund group accused of defrauding investors out of $1 billion, which was set to begin on Tuesday, has been postponed until April 15.
The postponement was due to “a medical issue relating to an individual involved in this case,” according to a written order issued on Tuesday by U.S. District Judge Brian Cogan.
Prosecutors, defense lawyers and a magistrate judge will begin on April 15 by choosing a new jury, the order said.
Nordlicht is expected to stand trial alongside David Levy, who was Platinum’s co-chief investment officer; Joseph SanFilippo, who was chief financial officer of Platinum’s flagship Value Arbitrage fund; and Daniel Small, who was a Platinum managing director. All have pleaded not guilty.
Prosecutors charged the defendants in December 2016 with orchestrating two fraudulent schemes involving Platinum, which struggled to attract large institutional clients despite years of golden returns from niche and unsavory investments.
In one scheme, Platinum was accused of overvaluing its often-illiquid assets to collect higher fees, and falsely reporting annualized returns topping 17 percent.
Authorities said Platinum operated “like a Ponzi scheme” by using new money to fund redemptions by earlier investors, which were referred to internally as “Hail Mary time.”
The second alleged scheme centered on Black Elk, a Platinum-controlled oil exploration company. Prosecutors said the defendants defrauded Black Elk’s bondholders out of $50 million by diverting the proceeds of asset sales to Platinum ahead of Black Elk’s 2015 bankruptcy.
Platinum was also implicated in corruption charges brought by Manhattan federal prosecutors against the former head of New York City’s prison guard union, Norman Seabrook, and Platinum co-founder Murray Huberfeld. Seabrook was found guilty last August of taking a bribe to invest $20 million of union funds in Platinum.
Huberfeld pleaded guilty to one count of conspiracy last May for his role in the scheme. (Reporting by Brendan Pierson in New York; Editing by Tom Brown)