Meanwhile, former Platinum executive Gilad Kalter testified against Rechnitz. Kalter said Rechnitz tried to get a New York police union to invest in the hedge fund. Although the police union didn’t, Seabrook’s prison guards’ union threw $20 million into Huberfeld’s business.
Platinum is now in bankruptcy court, and the Correction Officers’ Benevolent Association can’t reclaim any of that money.
At the time of Rechnitz’s and Seabrook’s alleged criminal activities, Platinum suffered from mass withdrawals. It was even identified as risky by the union’s own lawyers.
Trouble follows Platinum Partners
These haven’t been the hedge fund’s only problems. Earlier in the year, insurers asked a state judge to say they don’t have to cover Platinum or its managers. A separate fraud charge drove that request as much as the alleged kickback scheme did.
The two insurance companies said Platinum claimed it was unaware of circumstances that could lead to a claim. But the hedge fund already had received a grand jury subpoena when it made that claim, they charge.
So several people connected to Platinum face charges in a $1 billion fraud scheme, allegedly exaggerating the value of their investments in an oil driller.
