NEW YORK (Reuters) - A trustee for defunct oil and gas producer Black Elk Energy Offshore Operations LLC has sued executives and subsidiaries of reinsurer Beechwood with allegations they helped orchestrate fraud with hedge fund manager Platinum Partners.
Platinum’s top executives, including founder Mark Nordlicht and co-chief investment officer David Levy, were arrested and charged with fraud in December by U.S. authorities. Some of the allegations were that Platinum coordinated with Beechwood to illegally rescue an investment in Black Elk.
Black Elk’s complaint filed in federal bankruptcy court in Houston on Thursday used similar facts and said that Platinum and Beechwood “engaged in a criminal enterprise to fraudulently transfer nearly $100 million of the proceeds from the sale of Black Elk’s prime oil and gas assets to Platinum for its benefit.”
The civil lawsuit, which identifies Beechwood executives Mark Feuer and Scott Taylor as defendants, seeks triple damages and other costs that could total nearly $300 million.
Feuer and Taylor did not respond to requests for comment. Messages left for Beechwood were not immediately returned.
Beechwood, a reinsurer and asset manager which controlled $2.4 billion in 2015, was recently sold to a mystery buyer for an undisclosed price.
Reuters reported in April 2016 that Levy briefly left New York-based Platinum to work at Beechwood and that his time there coincided with Beechwood’s purchase of Black Elk bonds and a vote on those securities that appeared to help Platinum cash in. Levy returned to Platinum soon after.
The government’s case against Platinum, which at one time purportedly managed around $1.4 billion, is open. Its executives have pleaded not guilty and its hedge funds are being liquidated.
Houston-based Black Elk entered into bankruptcy in 2015 and is now essentially dissolved. A litigation trust remains in an effort to recoup funds and repay creditors and contractors following what trust attorney Craig Smyser has called an “outrageous plundering” of the company.
Beechwood’s executives have also been sued by subsidiaries of Indiana insurer CNO Financial Group (CNO.N), which last year cut business ties over the firm’s exposure to Platinum.
Reporting by Lawrence Delevingne; Editing by Lauren Tara LaCapra and Grant McCool