Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Securities and Exchange Commission v. Platinum Management (NY) LLC

United States District Court, E.D. New York

July 7, 2017

SECURITIES AND EXCHANGE COMMISSION, Plaintiff,
v.
PLATINUM MANAGEMENT (NY) LLC; PLATINUM CREDIT MANAGEMENT, L.P.; MARK NORDLICHT; DAVID LEVY; DANIEL SMALL; URI LANDESMAN; JOSEPH MANN; JOSEPH SANFILIPPO; and JEFFREY SCHULSE, Defendants.

          MEMORANDUM & ORDER

          DORA L. IRIZARRY Chief United States District Judge.

         In this civil action, commenced on December 19, 2016, the Securities and Exchange Commission (“SEC”) alleges that defendants Platinum Management (NY) LLC (“PMNY”) and Platinum Credit Management, L.P. (“PCM”), as well as individual defendants Mark Nordlicht, David Levy, Daniel Small, Uri Landesman, Joseph Mann, Joseph SanFilippo, and Jeffrey Schulse (the “Individual Defendants”) (collectively, the “Civil Defendants”), participated in multiple fraudulent schemes in violation of various securities laws. See SEC Compl., Dkt. Entry. No. 1 at ¶¶ 2-4, 38-43, 50-75.

         Just prior to the filing of this action, on December 14, 2016, an indictment was filed in this district charging each of the defendants with various counts of conspiracy to commit securities fraud and wire fraud, securities fraud, and investment advisor fraud.

         On January 23, 2017, the United States, through the United States Attorney for the Eastern District of New York (the “Government”), moved to intervene and stay discovery pending the outcome of the associated criminal proceeding. See generally, Gov't's Mem. of Law in Supp. of Appl. to Intervene and to Stay Civil Proceedings, Dkt. Entry No. 42 (“Gov't Mem.”). For the reasons stated herein, the Government's motion is granted.

         BACKGROUND

         On December 14, 2016, the Government filed an indictment charging all seven of the Individual Defendants with conspiracy to commit securities and wire fraud, securities fraud, and investment advisor fraud. (See Dkt. Entry No. 1, No. 16-cr-640) Specifically, the indictment charges defendants Nordlicht, Levy, Landesman, SanFilippo, and Mann together, with one count of conspiracy to commit securities fraud and investment advisor fraud, one count of conspiracy to commit wire fraud, two counts of securities fraud, and one count of investment adviser fraud. Id. at ¶¶ 88-90, 91-92, 93-94, 95-96, 97-98. Defendants Nordlicht, Levy, Small, and Schulse also were charged together with one count of conspiracy to commit securities fraud, one count of conspiracy to commit wire fraud, and one count of securities fraud. Id. at ¶¶ 99-101, 102-03, 104-05. Five days later, the SEC filed a civil complaint (“Complaint”) in this action alleging violations of the securities laws by the Civil Defendants.

         The civil and criminal actions address essentially the same two allegedly fraudulent schemes. First, the indictment and civil complaint allege that, between November 2012 and December 2016, the Civil Defendants concealed a growing liquidity crisis at Platinum Partners' flagship hedge fund, Platinum Partners Value Arbitrage Fund L.P. (“PPVA”), overvalued the performance of PPVA's assets, liquidity, and investments, and concealed the purpose of various transactions in violation of PPVA's governing documents. See SEC Compl. at ¶¶ 2-4, 38-43, 50-75; Indictment ¶ 42. The indictment and complaint also allege that select investors were paid requested redemptions of their investments in PPVA ahead of and/or in lieu of other investors, contrary to PPVA's governing documents. SEC Compl. at ¶¶ 9, 127-37; Indictment at ¶ 42.

         Second, the indictment and complaint allege that, between November 2011 and December 2016, certain of the Individual Defendants defrauded third-party holders of Black Elk bonds and deprived these bondholders of the proceeds of a Black Elk asset sale through misrepresentations regarding PMNY's ownership and control over the bonds. SEC Compl. at ¶¶ 5, 77-102; Indictment at ¶ 73.

         After the SEC action was filed and the criminal indictment was unsealed, on January 23, 2017, the Government moved to intervene in the SEC's civil action and sought a stay of the civil proceedings pending the resolution of the parallel criminal action and an ongoing grand jury investigation. See generally, Gov't Mem. Defendants Small, Levy, SanFilippo, and Schulse opposed the motion, arguing that certain discovery should proceed in this action. See Defs. Small's, Levy's, SanFilippo's, and Schulse's Partial Opp. to App. of the U.S. to Intervene and to Stay Civil Proceedings, (“Small Opp. Br.”) Dkt. Entry No. 79; Letter from Jeffrey Schulse, (“Schulse Opp. Letter”) Dkt. Entry No. 80. Defendants Nordlicht, PMNY, and PCM joined. See Ltr. from Government, Dkt. Entry No. 81, at 1; Gov't Reply Mem. of Law in Supp. of Application to Intervene and to Stay Civil Proceedings, Dkt. Entry No. 84, at 1 fn 2. Defendants Landesman and Mann did not oppose the motion. See Gov't Mem. at 1; Ltr. from Joseph Mann, Dkt. Entry No. 78. The Government replied to Small, Levy, SanFilippo, Schulse, Nordlicht, PMNY, and PCM on February 13, 2017. Id.

         DISCUSSION

         I. Intervention

         The Government moved to intervene in this action, arguing that it may do so as a matter of right or alternatively on a permissive basis. (See Gov't Mem. at 4-8.) This request is unopposed by the Civil Defendants. (See Small Opp. Br. at 2.).

         Under Rule 24 of the Federal Rules of Civil Procedure, a party may intervene in a civil action either as a matter of right or on a permissive basis. Rule 24 provides that intervention as of right is appropriate when, upon a timely motion, a party seeking to intervene:

claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movant's ability to protect its interest, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.