Court Appointed Receiver for Platinum Partners Credit Opportunities Funds Files Suit in SDNY Seeking Redress of Massive Fraud

Business Wire

NEW YORK--(BUSINESS WIRE)-- On December 19, 2018, Melanie L. Cyganowski, as the Court appointed receiver for certain funds commonly referred to as the Platinum Partners Credit Opportunities Funds (the “Platinum Credit Funds”), through her counsel Otterbourg P.C., filed suit in the United States District Court for the Southern District of New York, against a group of defendants, including certain so-called Beechwood entities, Senior Health Insurance Company of Pennsylvania, Fuzion Analytics, Inc., Bankers Conseco Life Insurance Company, Washington National Insurance Company and CNO Financial Group, Inc. The case is captioned “Melanie L. Cyganowski, as Equity Receiver for Platinum Partners Credit Opportunities Master Fund LP, et al. v. Beechwood RE Ltd., et al.” is now pending as Case 1:18-cv-12018 in the United States District Court for the Southern District of New York.

The Receiver’s complaint seeks redress for the massive fraudulent scheme perpetrated to the detriment of the Platinum Credit Funds and its innocent investors by certain of the now indicted and/or convicted insiders of Platinum. Specifically, the Receiver alleges that through the creation of what was a thinly disguised independent reinsurance entity, Beechwood, the Platinum insiders, fueled with money knowingly or recklessly contributed by Senior Health Insurance Company of Pennsylvania, Fuzion Analytics, Inc., Bankers Conseco Life Insurance Company, Washington National Insurance Company and CNO Financial Group, Inc., were able to prolong and expand a massive fraud that personally enriched the insiders through the generation of tens 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 complaint are alleged to be willing participants in the fraud, turning a blind eye from multiple red flags of fraud that left the Platinum Credit Funds in receivership gravely damaged in the form of limited liquidity, loss of their most valued assets for less than reasonably equivalent value and liens against substantially all of their assets for which less than adequate consideration was provided.

The Receiver asserts thirteen causes of action, including common law fraud, aiding and abetting of common law fraud, aiding and abetting of breach of fiduciary duty, fraudulent conveyances, federal securities fraud, and violations of the Racketeer Influenced and Corrupt Organizations Act, which collectively seek to remedy the harm inflicted on the Platinum Credit Funds in receivership for the ultimate benefit of their innocent investors and creditors. In addition to monetary damages, the Receiver seeks to avoid the first-priority liens asserted against Platinum Credit Funds’ assets by certain defendants which may otherwise adversely impact potential distributions to investors and creditors of funds.

The Platinum Partners funds’ receivership case is pending in the United States District Court for the Eastern District of New York as Case No. 16-CV-6848.

All inquiries regarding the Receiver’s litigation should be directed to [email protected].

The Otterbourg attorneys assisting the Receiver in the litigation include Adam Silverstein, William Moran, Erik Weinick and Andrew Halpern. Also assisting the Receiver in the litigation are her retained financial advisors from Goldin Associates LLC, led by Marc Kirschner, Will Edwards, Karthik Bhavaraju and Alois Chakabva.