[Photo:  Platinum's Mark Nordlicht & "Majesty of Justice" Sculpture in Great Hall of Department of Justice]

Mark Nordlicht, founding partner and chief investment officer of NY-based hedge fund Platinum Partners, was arrested at his New Rochelle, NY, home on charges that he and 6 others had participated in a $1 billion fraud. Others arrested included David Levy, Platinum's co-CIO, and Uri Landesman, former president of the firm's signature fund..

ACCORDING TO THE INDICTMENT.    Since 2012, Nordlicht, Levy and Landesman schemed to defraud Platinum investors by overvaluing illiquid assets held by its flagship fund. This caused a "severe liquidity crisis" that Platinum at first tried to remedy through high-interest loans between its funds before selectively paying some investors ahead of others.

Nordlicht, Levy and Jeffrey Shulse, former CEO of Platinum's majority-owned Black Elk Energy Offshore Operations, also defrauded the Texas energy company's bondholders.

Founded in 2003, Platinum Partners until this year had more than $1.7 billion under management. The flagship fund reported returning profits of more than 8% in 2015 and 7% from January to April 2016. But this year, a series of investigations tied to Platinum came to a head, leading to a Cayman Islands court placing its 2 main funds into liquidation in August.

OTHER PLAYERS.:    In June, Murray Huberfeld, a Platinum associate who prosecutors say was a founder, was charged in Manhattan federal court with orchestrating a bribe to the head of the NYC prison guards' union, Norman Seabrook, to secure a $20 million investment.

Others indicted include Joseph Sanfilippo, former CFO of flagship fund Platinum Partners Value Arbitrage Fund;  Joseph Mann, former Platinum marketing employee; and, Daniel Small, a Platinum managing director.