Federal prosecutors have charged seven money managers from the hedge fund Platinum Partners with defrauding investors of $1 billion. The fund made risky loans but told clients their money was safe.
Platinum Partners specialized in buying the debt of struggling oil companies. When the price of oil plummeted in 2013, the value of those loans were nearly worthless. But rather than inform clients, Platinum took out loans, paid off old investors with new investor money, and lied about the value of their holdings. U.S. Attorney for New York's Eastern District, Robert Capers, called Platinum a sinking ship.
“Nevertheless, between 2012 and 2016, Platinum collected more than a $100 million in fees.”
Platinum filed for bankruptcy protection in the Cayman Islands where the company is flagged. Officials say most of the money is gone, and can't promise victims will be made whole.
