A spokesman for the union declined to comment. The Justice Department and Seabrook did not respond to requests for comment.

Nordlicht has tried to polish Platinum's image. In 2010, he hired ING Investment Management veteran Uri Landesman, who as president of the firm courts big investors and serves as its public face. Platinum declined to make Landesman available for an interview.

Platinum also has added to its legal and compliance staff, increased information provided to clients, and created a "headline test" for prospective investments to avoid bad publicity, according to the person familiar with the firm.

That hasn't stopped Platinum from pursuing investments like CashCall, which lends to people at annualized interest rates that can be in the triple digits. The company has faced legal actions in recent years from multiple states and the federal government for its aggressive marketing practices and charging interest rates above state limits. It has been compelled to pay refunds to customers in some cases, according to regulators.

Platinum subsidiary Bayberry CF Management has set up six or more funds since 2009 that have lent at least $193 million to CashCall, according to marketing documents reviewed by Reuters. One CashCall fund expected to pay investors as much as 17.5 percent annually over three years, even after Bayberry took a 2 percent fee and 20 percent of the gains, according to a May 2013 marketing document.

A spokesman for CashCall declined to comment.

Nordlicht and his team often take positions in messy situations that can be difficult or costly to exit quickly. The perceived liquidity risk has been heightened by Platinum's policy of allowing investors to take money out of its two main funds every three months. That's far more frequently than most hedge funds that focus on private debt, which can lock up capital for several years.

"The mismatch in assets and liabilities could leave serious problems for those left holding the bag should the fund shrink in size," said Seides, the veteran hedge fund allocator.

Platinum has told investors in recent years that it can manage mass redemptions thanks to large chunks of more liquid investments, at least in its main fund. It also believes that its loyal investor base of wealthy individuals and employees won't flee at the first sign of trouble, according to another person with knowledge of the firm.

That logic didn't hold up last year, as oil prices plummeted and volatility wracked markets. In response, Platinum extended the redemption notice from three to six months for the Value Arbitrage fund. Then, in December, it put about half the capital of the fund - much of it from the energy sector - in a so-called side pocket, meaning investors can't take out their money on the normal schedule. When they can isn't clear.

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