(Bloomberg) -- A former Platinum Partners fund manager convicted over a scheme to rig a bond vote at an oil and gas company was spared prison by a judge who remains skeptical about the government’s case.

US District Judge Brian Cogan on Wednesday sentenced Daniel Small to probation over the objections of prosecutors, who said the ex-manager defrauded the company of $70 million and should serve six months to a year behind bars.

Cogan called Small “a rather noble character who made a criminal mistake” by cutting corners, but who didn’t commit “a serious crime to rob other people.”

‘Criminal Mistake’

“I want to be clear, the jury has found a criminal mistake and I’m not arguing with that,” the judge said during the sentencing hearing in Brooklyn, New York. “I accept that thoroughly. But it still pales in comparison on how he’s lived his life.”

Small along with Mark Nordlicht, Platinum’s co-founder, and David Levy, who was the fund’s co-chief investment officer, all found an unusual ally in Cogan after juries in trials held in 2019 and last year found each of the three men guilty. 

Cogan initially voided the verdicts against Nordlicht and Levy, but an appeals court reinstated them. Earlier this year, the judge set aside their convictions for wire fraud, leaving them guilty only of securities fraud. The US is appealing that ruling.

No Victims

As for Small, the judge in July rejected his request to overturn a jury’s finding in 2022 that he engaged in a conspiracy with Nordlicht to commit securities fraud. But in a blow to the prosecution, Cogan ruled there were no victims and no financial losses in Small’s scheme — findings that would qualify him for a lesser sentence.

Read More: Hedge Fund Fraudsters Find Unlikely Ally in a Skeptical Judge

Throughout the time he’s presided over the Platinum cases, the judge has made various comments indicating that the alleged fraud would have been better handled as a civil lawsuit, and casting doubt that the evidence presented by prosecutors supported the charges that Levy and Nordlicht intended to break the law.

“While Mr. Small will continue to seek his complete vindication, and he was acquitted of the central charge in this matter, Mr. Small is deeply grateful for today’s ruling,” said his lawyer, Seth Levine, who called the judge’s sentencing decision “careful and thoughtful.”

The case stems from the sale of Houston-based Black Elk Energy Offshore LLC’s mst valuable assets in 2014 as the oil and gas company was heading toward bankruptcy. Black Elk was one of Platinum’s largest investments.

Prosecutors argued Small and his co-defendants defrauded Black Elk’s third-party bondholders by rigging a solicitation vote and ultimately diverting the $70 million in proceeds from the sale of the oil company’s assets to Platinum, even though Black Elk bondholders had priority.

$70 Million

Lawyers in the office of Brooklyn US Attorney Breon Peace argued that Small deserved a minimum of six months in prison for his role in the scheme.

“As a result of this fraud, Small and his co-conspirators looted Black Elk of approximately $70 million in proceeds, and gave that money to the preferred equity holders, who were not lawfully entitled to it,” prosecutors David Pitluck and Lauren Elbert said in a filing.

Levine had argued in court that Small should be spared prison, saying he’s already been punished enough by being prosecuted.

“There’s not a single person in Wall Street who could say ‘There for the grace of God go I,’” Levine said. “There really is no need for more punishment.”

The judge agreed, saying “I don’t suspect Mr. Small is even going to jaywalk after this.”

The case is US v. Nordlicht, 16-cr-640, US District Court, Eastern District of New York (Brooklyn). 

(Update with comment by Small’s lawyer in ninth paragraph.)

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