Jonathan Stempel, Jody Godoy

NEW YORK (Reuters), – The fraud convictions of two top former executives from the now-defunct Platinum Partners hedge-fund were reaffirmed by the U.S.Appeals Court on Friday. They claim that a trial judge erred when he acquitted one defendant and granted the second a new trial.

In a 102 page decision, 2nd U.S. Circuit Court of Appeals in Manhattan ruled sufficient evidence supports the July 2019 jury verdicts of Mark Nordlicht, Platinum founder, and David Levy as co-chief investment officer.

Appeal court sent the case back to U.S. Judge Brian Cogan, Brooklyn, for sentencing. Platinum, which was once worth $1.7 billion in assets, had its headquarters in Manhattan.

Nordlicht and Levy attorneys did not immediately reply to our requests for comment. Brooklyn U.S. Attorney Breon peace declined comment.

They were both convicted on securities fraud charges and conspiracy charges. The defendants were accused of cheating bondholders at Platinum’s Black Elk Energy Offshore Operations LLC to minimize Platinum’s losses in the event that Black Elk was bankrupt.

The scheme consisted of defrauding nearly $100m from Black Elk oil field sales for 2014, according to the prosecutor. After manipulating bondholder votes to guarantee that Platinum was paid first, it also meant that bondholders were not compensated.

Black Elk creditors have filed an involuntary bankruptcy complaint against this company in August 2015.

Cogan in September 2019 ordered Nordlicht to be tried once again. Cogan said that it would not be an “injustice” to keep his conviction. Nordlicht was convicted after he went to “great lengths”, to ensure that he followed the rules for a Platinum affiliate.

Cogan ordered Levy to be acquitted, stating that prosecutors hadn’t proved he was guilty of criminal intent.

Circuit Judge Robert Sack ruled Friday that there was no evidence to support Nordlicht being convicted. However, he stated in a 3-0 decision that “the evidence did not preponderate strongly” and rational jurors might have concluded Levy committed criminal intent.

Jury verdicts are rarely overturned by trial judges.

Platinum founder Murray Huberfeld, who was also convicted in Manhattan for involvement in a scheme to bribe Norman Seabrook (the former chief of New York City Correction Officers’ Union) was sentenced in June. He will spend seven months behind bars.

U.S. v. Levy et al., 2nd U.S. Circuit Court of Appeals No. 19-3207