By Anat Ghelber From Jewish Voice

In June of this year, hedge fund Platinum Partners was embroiled in a bribery investigation that has resulted in founder Murray Huberfeld been arrested. He was charged with paying $60,000 in bribes to the president of the New York City Correction Officers Benevolent Association, Norman Seabrook in order to ensure Mr. Seabrook investing COBA’s pension and dues money from its members into his fund. Platinum has announced that will close down its main fund as a result. COBA had invested about 20% of its annuity into the fund under Norman Seabrook’s leadership, even though Platinum had a risky reputation at the time.

The Federal Bureau of Investigation had raided the offices of Platinum Partners in June in order to more fully inspect their hard-to-value liquid assets. Platinum Partners has had to continually ensure its members and investors that their assets are solid and nobody’s money is at risk. They’ve pointed out, for example, that there was only one “down month” nine years ago for them. The new president of the Correction Officers Benevolent Association, Elias Husamudeen has had to send out a letter promising the members and employees that their money is “safe.”

Murray Huberfeld has a complicated past. He had made large donations in the millions of dollars to charity, including Orthodox Jewish causes, through the Huberfeld Family Foundation. These have included shuls that are part of the Chabad Lubavitch movement. He has also been a member of the Simon Wiesenthal Center. While, at the same time, he was convicted of a misdemeanor in 1992 for having someone else take his Series-7 broker-licensing exam for him. For that he paid a $5,000 fine and was sentenced to two years’ probation. In 1998, Mr. Huberfeld and his partner David Bodner, handed over almost $5 million in profits and interest in order to settle allegations in court that they sold 513,000 shares of secret stock. An additional $50,000 civil penalty had to be paid to the Securities and Exchange Commission.

Now, despite the earlier promises made by Platinum Partners to its investors, it appears that bankruptcy may be in the hedge fund’s future. On Tuesday, October 18th, Platinum Partners filed for Chapter 15, a section of the U.S. Code involved with international insolvency. At issue is the fund’s legal operations in the Cayman Islands

It turns out that Platinum Partners has “severe and substantial liquidity problems” according to two Cayman Island liquidators who are investigating the hedge funds assets in the Caymans. Also cited as issues are the frequent investigations by the U.S. Securities and Exchange Commission and Justice Department, as well as unpaid bills mounting into the hundreds of millions. What is currently at debate as well, is whether or not the Cayman Islands will be recognized by a U.S. judge as the main jurisdiction for the fund, considering how many assets it has there. If done so, then any lawsuits filed against Platinum Partners will be frozen and creditors seeking to grab any U.S. assets the company has will be stymied.

Platinum Partners has warned of “ongoing threats” to its future with the Cayman Island liquidators performing “emergency triage” to prevent utter collapse in general. They have referred to the Cayman Island as Platinum Partners “nerve center” while seeking the approval of the U.S. courts for the Islands as their jurisdiction.

IMAGE: In June, Platinum’s co-founder Murray Huberfeld was arrested for his role in the alleged bribery of Norman Seabrook, ex-president of New York City’s correction officer’s union, in exchange for an investment in the firm’s funds.

For more on this story go to: http://www.jewishvoiceny.com/index.php?option=com_content&view=article&id=16100:murray-huberfeld-co-founder-of-platinum-partners-files-for-bankruptcy-amid-nypd-probe&catid=112&Itemid=792&lang=en