Top executives of New York-based hedge fund manager Platinum Partners were arrested on Monday and charged with running an approximately $1 billion fraud that federal prosecutors said became "like a Ponzi scheme" as its largest investments lost much of their value.

Platinum, led by Mark Nordlicht, for years was known for producing exceptionally high and consistent returns by taking an usually aggressive approach to investing and fund management, as outlined by a Reuters Special Report in April.



"As alleged, Nordlicht and his cohorts engaged in one of the largest and most brazen investment frauds perpetrated on the investing public," Brooklyn-based U.S. Attorney Robert Capers said in a statement. The charges detailed schemes that included exaggerating the value of their investments, paying some clients ahead of others and rigging a bond vote in their favor.



Nordlicht, Platinum's 48-year-old founding partner and chief investment officer, was arrested at his New Rochelle, New York, home on charges listed in an indictment filed in federal court in Brooklyn.



Others arrested included David Levy, 31, Platinum's co-chief investment officer, and Uri Landesman, 55, the former president of the firm's signature fund, said Federal Bureau of Investigation spokeswoman Adrienne Senatore.



Platinum is already liquidating its hedge funds, two of which have received bankruptcy protection. The firm and some of its executives also face lawsuits accusing them of stealing money or intellectual property from companies they invested in.