FBI agents raided Platinum Partners on Wednesday, weeks after a former manager at the embattled New York hedge fund was charged in a kickback scheme.
The investigation of the firm’s operations is being conducted in coordination with the Brooklyn US Attorney’s office. The probe is expected to look at Platinum’s valuation of its hard-to-value illiquid assets, a source said.
“We are in receipt of a search warrant from law enforcement and are fully cooperating.
We look forward to resolving this on a timely basis,” said Platinum spokesman Montieth Illingworth.
Platinum has come under scrutiny following the arrest of one of its executives, Murray Huberfeld, who has been accused of paying bribes to a union boss in exchange for a $20 million investment.
Prior to Wednesday’s raid, the FBI had only reached out to Platinum and its employees about the fund’s relationship with Norman Seabrook, the head of the New York City Correction Officers’ Benevolent Association, who was arrested along with Huberfeld.
Questions the FBI asked last year “were not specific to the fund,” a Platinum employee said. “They were related to the relationship between Huberfeld and Seabrook.”
Platinum, in which COBA invested $20 million in 2014, said last week that it would wind down its main fund after spooked investors demanded their money.
But the firm appeared to be having money woes before the kickback probe became public.
The company, run by Chief Executive Mark Nordlicht, was sued by New Mountain Partners for failing to repay a $30 million loan. A lawyer for Platinum on Monday managed to convince the judge it had the cash without providing the paperwork to back it up, sources said.
Last week, new COBA President Elias Husamudeen sent a notice to the 9,000 city correction workers assuring them their pension money was safe.
“Despite what is currently being alleged about how certain investments were made, our investments have all shown a solid return and are performing well,” he wrote.
Roughly 20 percent of COBA’s annuity was invested in the hedge fund. Husamudeen, who is running unopposed in the union’s election that concludes next week, was one of four trustees who signed off on the $20 million investment in Platinum.
COBA declined comment.