A federal judge has frozen some $118 million belonging to Platinum Partners, the hedge fund manager at the center of a federal fraud investigation, after a bankruptcy trustee sued the company, the Wall Street Journal reported today. Bankruptcy Judge Marvin Isgur issued a temporary restraining order on Wednesday barring transfers from certain bank accounts belonging to Platinum hedge funds and investment vehicles. Judge Isgur issued the order at the request of Trustee Richard Schmidt, who is overseeing the remnants of oil-platform operator Black Elk Energy Offshore Operations LLC. Schmidt sued Platinum for $200 million on Wednesday in U.S. Bankruptcy Court in Houston, alleging that insiders at Platinum’s flagship fund engaged in a scheme to “plunder” Black Elk by siphoning off the proceeds from the sale of its prime assets before putting the company into bankruptcy. Judge Isgur said that the lawsuit’s allegations reflect a pattern of “fraud and abuse” by Platinum. “If the funds are not frozen, the court finds that the funds are likely to leave the United States and this Court’s practical ability to control them,” Judge Isgur said. “This would result in a total loss to the Plaintiff and constitutes irreparable injury.” Read more. (Subscription required.)
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