Securities & Exchange Commission v. Platinum Management (NY) LLC, et al.

Updates

On April 27, 2021, in accordance with the Court’s December 1, 2020 Order Establishing the Receiver’s Claims and Interests Reconciliation and Verification Procedures [Dkt. 554] (the “Verification Order”),the Receiver’s Claims and Noticing Agent mailed Investor Statements (each a “PPCO Investor Statement” and collectively the “PPCO Investor Statements”) to the limited partners of Platinum Partners Creditor Opportunities Master Fund L.P., and the Investors in Platinum Partners Credit Opportunities Fund LLC, Platinum Partners Credit Opportunities Fund (BL) LLC, and Platinum Partners Credit Opportunities Fund (TE) LLC.

The limited partners in Platinum Partners Liquid Opportunity Master Fund L.P., and its feeder funds, will not receive a PPCO Investor Statement, but will be sent a separate Investor Statement regarding their interests, and are not subject to the deadlines set forth in the PPCO Investor Statements.

Pursuant to the Verification Order, each PPCO Investor Statement assigns each Investor an individual receivership investor number unique to that Investor. The respective receivership investor number will be used by the Receiver to identify individual investors in public filings with the Court.

The amounts reflected in the PPCO Investor Statements are not necessarily equal to or indicative of any recoveries an Investor may receive from one or more Receivership Entities. The eventual distribution of funds will be subject to the Receivership’s total assets available for distribution after the Court approves a distribution plan and approved methodology for distribution to investors and creditors.

If an Investor disagrees with the information contained in the PPCO Investor Statement, the sole basis for an Investor Objection to the information reflected in a PPCO Investor Statement shall be that the books and records of the Receivership Entities are inaccurate. Only an Investor or their counsel may file an Investor Objection, and no other party may file an objection to the information reflected in the PPCO Investor Statement. Investor Objections should not be filed with the Court in the Receivership, instead they must be sent to the Receiver at the email address platinumreceiver@otterbourg.com. Unless otherwise indicated on an Investor Statement, Investor Objections to the PPCO Investor Statements must be submitted to the Receiver so that they are actually received by the Receiver by no later than June 11, 2021.

If an Investor, or their counsel, does not timely submit an Investor Objection, the Investor will be deemed to have agreed with the information listed, and the information set forth in the PPCO Investor Statement shall control and shall form the basis for calculating the allowed amount on account of the Investor’s Interest, and the Investor will be permanently precluded from objecting to or contesting the information in the PPCO Investor Statement.

If an Investor, or their counsel, timely submits an Investor Objection, a representative of the Receiver will contact the Investor or their counsel to attempt to resolve the Investor Objection in accordance with the Verification Order, which may include, with the Investor’s consent, submitting the dispute to mediation.

To be eligible to receive a distribution, if any, an Investor must complete and return a Form W-9 and wire instructions by email to platinumreceiver@otterbourg.com or by mail to Platinum Partners, 230 Park Avenue, Third Floor West, Suite 323, New York, NY 10169.

Key Documents

• The Receiver’s Twentieth Status Report to the Court
• The Receiver’s Nineteenth Status Report to the Court
• Notice of the Proposed BAM Claim Confirmation Order
• Motion for an Order (i) Permanently Enjoining Any Prosecution of Claim No. 145, (ii) Confirming the Receiver’s Disallowance of Claim No. 145, and (iii) Confirming the Receiver’s Authority to Consent to the Release of the Indemnity Escrow Amount
• The Receiver’s Eighteenth Status Report to the Court
• The Receiver’s Seventeenth Status Report to the Court
• The Receiver’s Sixteenth Status Report to the Court
• Notice of Receivers Claims Analysis Report
• The Receiver’s Fifteenth Status Report to the Court
• The Receiver’s Fourteenth Status Report to the Court
• The Receiver’s Thirteenth Status Report to the Court
• The Receiver’s Twelfth Status Report to the Court
• The Receiver’s Eleventh Status Report to the Court
• The Receiver’s Tenth Status Report to the Court
• The Receiver’s Ninth Status Report to the Court
• The Receiver’s Eighth Status Report to the Court
• The Receiver’s Seventh Status Report to the Court
• The Receiver’s Sixth Status Report to the Court
• Order Granting the Receiver’s Motion for Entry of an Order (A) Approving Settlement Agreements with (1) CNO Financial Group, Inc. and Related Parties, and (2) Senior Health Insurance Company of Pennsylvania and Fuzion Analytics, Inc., and (B) Approving Use of Funds
• Notice of Proposed Sale of LC Energy and Establishment of LC Energy Claims Bar Date In Connection Therewith
• Order Authorizing the Receiver to Sell the Receivership’s Rights in LC Energy and Establishing LC Energy Claims Bar Date
• Complaint dated December 19, 2018
• The Receiver’s Fifth Status Report to the Court
• The Receiver's Fourth Status Report to the Court
• The Receiver’s Third Status Report to the Court
• The Receiver’s Corrected Second Status Report to the Court
• The Receiver’s Second Status Report to the Court
• Order Approving Expansion of Receivership

  On December 29, 2017, the Court entered an Order [Dkt. No. 297] approving the Receiver’s request to expand the receivership estate to include the following additional entities: (i) Platinum Partners Liquid Opportunity Master Fund L.P., (ii) Platinum Partners Credit Opportunities Fund International Ltd, and (iii) Platinum Partners Credit Opportunities Fund International (A) Ltd. These entities are now under the control of the Receiver and the supervision of the Court in accordance with the provisions of the Second Amended Order Appointing Receiver.

• The Receiver’s First Status Report to the Court
• Order Reassigning Case.

  Case reassigned to Judge Brian M. Cogan for all further proceedings. Chief Judge Dora Lizette Irizarry is no longer assigned to the case.

• Second Amended Order Appointing Receiver
• Order Adopting Protocols for Parties in Interest to Be Heard on Receiver Motions
• The Receiver’s Initial Status Report to the Court
• Order Approving Retention of Goldin Associates LLC
• Order Approving Retention of Otterbourg P.C.
• Facsimile Letter from Melanie L. Cyganowski to Judge Irizarry Regarding the Proposed Order Appointing Receiver
• Declaration of Neal Jacobson Pursuant to Local Rule 6.1(d) in Support of Application for an Order to Show Cause
• Declaration of Melanie L. Cyganowski dated June 26, 2017
• Securities and Exchange Commission’s Memorandum in Support of Its Application for an Order to Show Cause for Entry of a Second Amended Order Appointing Receiver and Appointment of a Substitute Receiver
• Securities and Exchange Commission’s Application for an Order to Show Cause for Entry of a Second Amended Order Appointing Receiver and Appointment of a Substitute Receiver
• The Receiver’s First Quarterly Status Report for the Period December 19, 2016 through March 31, 2017
• Order Appointing Receiver Schwartz
• Exhibits to the Complaint December 19, 2016
• Complaint dated December 19, 2016

Protocols for Parties in Interest to Be Heard on Receiver Motions

• Order Adopting Protocols for Parties in Interest to Be Heard on Receiver Motions

Beechwood Litigation

To access the Beechwood Litigation Case Docket, please click below:

• 18-06658 In re Platinum-Beechwood Litigation
• 18-10936 Trott et al v. Platinum Management (NY) et al
• 18-12018 Cyganowski, et al v. Beechwood Re LTD. et al

On March 29, 2019, Melanie L. Cyganowski, the Court appointed receiver for certain funds commonly referred to as Platinum Partners (the “PPCO Funds”), through her counsel Otterbourg P.C., filed an amended complaint in the United States District Court for the Southern District of New York against, among others, (i) certain so-called Beechwood entities, (ii) Senior Health Insurance Company of Pennsylvania, (iii) Fuzion Analytics, Inc., (iv) CNO Financial Group, Inc., (v) Bankers Conseco Life Insurance Company, (vi) Washington National Insurance Company and (vii) 40|86 Advisors, Inc. Click here to read the amended redacted complaint in the action captioned “Melanie L. Cyganowski, as Equity Receiver for Platinum Partners Credit Opportunities Master Fund LP, et al. v. Beechwood RE Ltd., et al.” now pending as Case 1:18-cv-12018 in the United States District Court for the Southern District of New York. As is fairly standard in similar cases, the Receiver exercised her right under the applicable rules and orders of the court to amend the originally filed complaint.

The Receiver’s amended complaint seeks redress for the innocent investors and creditors of her estate damaged by the defendants’ unlawful and tortious acts. The Receiver alleges that through their creation of Beechwood, a purported independent reinsurance entity, the Platinum insiders expanded a pre-existing fraud that personally enriched them through the generation of millions of dollars in management fees, incentive fees, false profits and other remuneration over the years.

Certain of the defendants named in the Receiver’s amended complaint are alleged to have substantially assisted, and participated with, Beechwood and the Platinum insiders to commit fraud and breach their fiduciary duties to the PPCO Funds. Specifically, these defendants – acting through Beechwood – structured and implemented a series of transactions that ultimately saddled the PPCO Funds with approximately $69.1 million of debt owing to Beechwood, as agent for the insurers, secured by liens on substantially all of the PPCO Funds’ assets, including those of nearly all of their portfolio companies, in consideration for assets that were worth a fraction of that amount.

For these reasons, the Receiver asserts causes of action for, among other things, (i) violations of the Racketeer Influenced and Corrupt Organizations Act and/ or federal securities fraud; (ii) aiding and abetting common law fraud; (iii) aiding and abetting breach of fiduciary duty; (iv) actual and constructive fraudulent conveyances; and (v) unjust enrichment. In addition to monetary damages, the Receiver seeks to avoid the first-priority liens asserted against PPCO Funds’ assets by certain defendants which may otherwise adversely impact potential distributions to investors and creditors.

The Receiver will update her website, http://www.platinumreceivership.com/index, with developments in the case and will address investor/ creditor inquiries regarding the suit at her next Town Hall meeting, the date and time of which have not yet been scheduled but which will be announced on the Receiver’s website. Any questions or concerns in the interim should be submitted via email to platinumreceiver@otterbourg.com.

Bar Date

The Court has established the following dates by which claims by non-investor creditors against the Receivership Entities must be filed:

(i) 5:00 p.m. (prevailing Eastern Time) on March 29, 2019 as the deadline for Claimants other than Governmental Units to submit Proofs of Claim against the Receivership Entities; and

(ii) 5:00 p.m. (prevailing Eastern Time) on April 12, 2019 as the deadline for Governmental Units to submit Proofs of Claim against the Receivership Entities.

The Bar Date Order can be viewed here.

The Proof of Claim Form, which includes instructions for filing a claim, can be downloaded here.

The Notice of the Bar Date can be viewed here.

DEADLINE for filing a claim against LC ENERGY only: March 4, 2019 at 5:00pm (ET). For additional information on how to file a claim, see Notice of Proposed Sale of LC Energy and Establishment of LC Energy Claims Bar Date In Connection Therewith and Order Authorizing the Receiver to Sell the Receivership’s Rights in LC Energy and Establishing LC Energy Claims Bar Date in Key Documents section for more information.

Webinar Videos

December 11, 2019 WEBINAR VIDEO – Investor & Creditor Forum

August 14, 2019 WEBINAR VIDEO – Investor & Creditor Forum

March 12, 2019 WEBINAR VIDEO – Investor & Creditor Forum

December 4, 2018 WEBINAR VIDEO – Investor & Creditor Forum

AUGUST 15, 2018 WEBINAR VIDEO – Investor & Creditor Forum

JUNE 6, 2018 WEBINAR VIDEO – Investor & Creditor Forum

DECEMBER 20, 2017 WEBINAR VIDEO – Investor & Creditor Forum

MARCH 1, 2018 WEBINAR VIDEO – Investor & Creditor Forum

DECEMBER 20, 2017 WEBINAR VIDEO – Investor & Creditor Forum

Previous Communications from Receiver

July 11, 2019

We are aware that many of you have been closely following the criminal trial of Mark Nordlicht, David Levy and Joseph SanFilippo, and have questions as to how the verdicts in that case may impact the Receivership. The Receivership was established with Mark Nordlicht’s consent in the civil enforcement case brought by the Securities and Exchange Commission titled SEC v. Platinum Management (NY) LLC, et al., case No. 16-cv-06848 (E.D.N.Y.) (BMC). Unlike the criminal trial, it is a civil action which will, at a certain point, be resolved before Judge Cogan. Our role is to administer the Receivership. We are not involved in either the prosecution of the criminal case by the Department of Justice or the advancement of the civil litigation by the SEC. The Receiver will continue her work as governed by the Court Orders, and will continue to provide updates on her progress.

December 11, 2017

VIA WEB POSTING

I am pleased to announce that I will hold a virtual forum for Platinum Partners Investors and Creditors on December 20, 2017 from 12:00 P.M. to 1:00 P.M. Eastern. During the forum, I plan to provide an update on the Receivership, including the steps I have taken since my appointment, and our plans moving forward. There will also be time for questions.

Instructions for registering and participating in the forum by computer or telephone are provided below. If you would like to submit questions in advance, or have any questions regarding the forum, please direct them to platinumreceiver@otterbourg.com. Those participating by computer will be able to submit questions during the event using the computer service, but those participating by phone will be on mute and will need to send questions through the platinumreceiver@otterbourg.com email address. Finally, please note that we will utilize a court reporter, as well as video, to record the session.

Thank you and I look forward to speaking with you soon.

Sincerely,

Melanie L. Cyganowski
Receiver

You are invited to a Platinum Receivership webinar.
When: Dec 20, 2017 12:00 PM (Eastern Time - US and Canada)

Topic: Investor & Creditor Forum

November 20, 2017

VIA WEB POSTING

Dear Investors:

I am writing to you as the Receiver of Platinum Credit Management, L.P.; Platinum Partners Credit Opportunities Master Fund LP; Platinum Partners Credit Opportunities Fund (TE) LLC; Platinum Partners Credit Opportunities Fund LLC; Platinum Partners Credit Opportunity Fund (BL) LLC; Platinum Liquid Opportunity Management (NY) LLC; and Platinum Partners Liquid Opportunity Fund (USA) L.P. (collectively, the “Receivership Entities” or “Platinum”). As you know, as Receiver, I am charged with, among other things, (i) taking control of and managing Platinum’s property and records (the “Receivership Assets”), (ii) taking actions as necessary and appropriate to preserve Receivership property, and (iii) taking actions as necessary and appropriate for the orderly liquidation of the Receivership Assets. The purpose of this letter is to provide an update on certain key developments since my last letter to you, dated August 17, 2017.

Recently, the Court entered several significant orders, all of which can be viewed on the receivership website (www.platinumreceivership.com):

• On November 11, 2017, the Court entered two separate orders approving the retention of professionals Houlihan Lokey Capital, Inc. and Conway MacKenzie, as more fully described below.


• On October 11, 2017, the Court entered an Order Adopting Protocols For Parties In Interest To Be Heard On Receiver Motions. This order outlines the simple procedural steps that you may take to be heard on any motions filed by me.


• On October 16, 2017, the Court entered the Second Amended Order Appointing Receiver, which revises the previously entered orders setting forth the rights and responsibilities of the Receiver.


• Also on October 16, 2017, the Court entered an Order reassigning the Receivership case from Chief Judge Dora Lizette Irizarry to Judge Brian M. Cogan.

As mentioned, one of my most important responsibilities is to oversee the monetization of Platinum’s investment portfolio. The assets of the Receivership Entities are diverse, but generally fall into three main asset categories: (i) life settlement investments (e.g., investments in life insurance policies), (ii) litigation finance investments, and (iii) “other” assets, which are primarily concentrated in the metals and mining and energy sectors, in companies that are mostly in the developmental stages.

My team and I have made significant progress in liquidating these assets. Through the latest reporting period ending September 30, 2017, I have sold investment portfolio positions that have brought over $11 million into the Receivership Estate. The approximately $11 million is comprised of the following: (i) Katrina Barge Litigation Joint Venture, LLC (litigation finance investment) - $5.6 million, (ii) Milberg LLP (litigation finance investment) - $2.2 million, (iii) Martin Kenney & Co. (litigation finance investment) - $1.8 million, (iv) Blumont (stock sale) - $1.2 million, (v) Grey K (environmental-related investment) - $136,000.00, and (vi) Bang Holdings Corp. (social media investment) - $50,000.00. None of these assets has been liquidated in a “fire sale” fashion. Indeed, to the contrary, one of these investments was monetized at par value.

There are several other investments on the verge of disposition. I have retained Houlihan Lokey Capital, Inc. (“Houlihan Lokey”) to market and sell specific assets including the life settlements portfolio, the litigation finance portfolio, and certain other natural resource investments (including the Brazilian gold tailings mine). I am hopeful that the life settlements portfolio and certain of the litigation finance investments, as to which marketing has begun, is expected to be sold in the first quarter 2018. In addition, I have retained Conway MacKenzie to perform due diligence on and potentially market and sell assets in Platinum’s portfolio that Houlihan Lokey has not been tasked with monetizing. There will be no duplication in the work as between Houlihan Lokey and Conway MacKenzie.

I also negotiated a payoff at a considerable reduction of Platinum’s secured debt. The secured loan provided by Heartland Bank to Platinum Partners Credit Opportunities Master Fund LP was to come due at the end of August, at which time, if not paid in full, interest at the default rate would continue to accrue. For these reasons, I negotiated a settlement with Heartland Bank for the payoff of the loan at a reduced amount, achieving savings of over $1,000,000 in principal and $200,000 in interest.

I will report on our continuing efforts to monetize Receivership Assets by filing periodic reports with the Court. These reports will also be posted to this website. I anticipate filing my First Status Report to the Court no later than November 30, 2017.

As previously reported, Deloitte Tax LLP has been engaged to prepare tax returns, including K-1s, for the Receivership Entities. This has proven to be a complex engagement which has taken longer than anticipated. Some of the K-1s will begin to be issued shortly. Others will follow in the next several weeks.

As a reminder, you can send general email inquiries to platinumreceiver@otterbourg.com. Although we monitor and review all emails, it is not practical for us to respond personally to all messages. We will try to update the Frequently Asked Questions (“FAQ”) section on this website as needed to reflect your inquiries and our responses.

Thank you in advance for your cooperation and understanding.

Sincerely,

Melanie L. Cyganowski
Receiver

MELANIE L. CYGANOWSKI, RECEIVER c/o Otterbourg P.C. 230 Park Avenue, 30th Floor New York, NY 10169 E-mail: platinumreceiver@otterbourg.com Website: www.PlatinumReceivership.com

August 17, 2017

VIA WEB POSTING

Dear Investors:

I am writing to you as the newly-appointed receiver of Platinum Credit Management, L.P.; Platinum Partners Credit Opportunities Master Fund LP; Platinum Partners Credit Opportunities Fund (TE) LLC; Platinum Partners Credit Opportunities Fund LLC; Platinum Partners Credit Opportunity Fund (BL) LLC; Platinum Liquid Opportunity Management (NY) LLC; and Platinum Partners Liquid Opportunity Fund (USA) L.P. (collectively, the “Receivership Entities” or “Platinum”) (collectively, “Platinum”). As Receiver, I am charged with, among other things, (i) taking control of and managing Platinum’s property and records (the “Receivership Assets”), (ii) taking actions as necessary and appropriate to preserve Receivership property, and (iii) taking actions as necessary and appropriate for the orderly liquidation of the Receivership Assets. The purpose of this letter is to advise you of the initial progress since my appointment and to explain how I intend to respond to your inquiries.

On June 23, 2017, the prior receiver, Bart M. Schwartz, resigned. As a result, by Order dated July 6, 2017, the Court appointed me as Receiver for the Receivership Entities. On July 21, 2017, the Court approved the retention of Otterbourg, P.C. as my legal counsel and Goldin Associates LLC as my financial advisor (collectively, the “Receivership Team”). Unless specifically modified, all previous court orders remain in place. A Second Amended Order Appointing Receiver, which sets forth the rights and responsibilities of the Receiver is expected to be entered in the near term. All documents, including a copy of the original Complaint for Injunctive and Other Relief against Platinum and its principals, Mark Nordlicht, David Levy, Daniel Small, Uri Landesman, Joseph Mann, Joseph Sanfilippo, and Jeffrey Shulse, filed by the Securities & Exchange Commission (“SEC”), Temporary Restraining Order, and Order Appointing Receiver can be viewed on this website.

Upon my appointment, the Receivership Team took immediate steps to secure and take control over Platinum’s accounts and books and records and implement cash management procedures. I also implemented procedures for the review and approval of all expenditures. The Receivership Team has prepared a 13-Week Cash Receipts and Disbursements Forecast, performed weekly actual vs. forecasted variance analyses, and is conducting daily and weekly reconciliations of Platinum’s cash and brokerage accounts.

The opening investment portfolio consisted of 90 investments in 69 entities. The assets of the Receivership Entities are diverse, but generally fall into three main asset categories: (i) life settlement investments (e.g., investments in life insurance policies), (ii) litigation finance investments, and (iii) “other” assets, which are primarily concentrated in the metals and mining and energy sectors, in companies that are mostly in the developmental stages. The nature of the Receivership Entities’ investments in the “other” assets varies. The Receivership Team is undertaking a thorough financial and legal analysis of the Receivership Entities’ position(s) in each investment, the rights of the Receivership Entity in the capital structure and pursuant to the operative documents, assessing the maintenance costs of the asset, and options available to the Receiver with respect to the monetization of the investment.

During the short time that I have been in control of the Receivership Assets, certain investments totaling approximately $8.6 million have been liquidated or are on the verge of liquidation. None of these assets has been liquidated in “fire sale” fashion. Indeed, one of them was monetized at par value. I believe that the life settlement and certain of the litigation finance investments are liquid and that there may be additional funds realized from their liquidation in the next several months.

As a general matter, however, I have not found support for the values reflected on Platinum’s books or for certain early indications of value in the Receivership. I look forward to working with Houlihan Lokey Financial Advisors, Inc., which I have retained to provide valuation services, and developing supportable valuation assessments.

I will report on our efforts by filing periodic reports with the Court. The reports will also be posted to this website set forth above. The most recent report: My Initial Status Report to the Court, which was filed on August 10, 2017, provides a more detailed review of the actions taken since my appointment and can be found on this website.

You can send general email inquiries to platinumreceiver@otterbourg.com. Although my staff and I will review all emails we receive, it is not practical for us to respond personally to all messages, not least because it would consume a significant amount of time. Accordingly, we will update the Frequently Asked Questions (“FAQ”) section on this website as needed to reflect your inquiries and our responses.

Thank you in advance for your cooperation and understanding.

Sincerely,

Melanie L. Cyganowski
Receiver