For more than a decade, Platinum Partners reported some of the biggest gains in the hedge-fund industry, even as many of its investments seemed to go horribly wrong. Now, federal prosecutors say the $1.7 billion fund's industry-beating returns were based on lies.

On Monday, cofounder Mark Nordlicht and six associates were charged with fraud, accused of inflating the book value of unprofitable oil projects to make the fund's performance look better in what the government called a $1 billion fraud and a "Ponzi-esque" scheme.

"In the end, Platinum held no more value than a tarnished piece of cheap metal," U.S. Attorney Robert Capers said at a news conference in Brooklyn, N.Y. "Nordlicht and his cohorts engaged in one of the largest and most brazen investment frauds perpetrated on the investing public, earning Platinum more than $100 million in fees during the charged conspiracy."

Nordlicht, 48, a former commodities trader, founded New York-based Platinum in 2003, with seed money from Murray Huberfeld, a penny-stock trader from Brooklyn whose family owned kosher restaurants. The fund reported 17 percent average gains through 2015 with no down years, even as it allegedly invested in two Ponzi schemes and several other ventures that ended in sanctions for the other people involved. Nordlicht pleaded not guilty Monday.

In June, Huberfeld was arrested in a separate case alleging that he had bribed the head of New York City's corrections officers' union to put its retirees' savings into Platinum. The charges in that case depicted Platinum as desperately trying to get money from new investors to pay off old ones.

Federal investigators raided Platinum's offices two weeks later, looking more broadly at whether the fund was a fraud.

The charges brought Monday relate to two oil ventures Platinum claimed were its most valuable holdings, Golden Gate Oil LLC and Black Elk Energy. Platinum claimed they were worth $292 million as of the end of 2014, about 37 percent of its main fund's assets, according to prosecutors.

In reality, Golden Gate was a flop that never produced much oil, people familiar with the matter said in August. Black Elk is now in bankruptcy and facing criminal charges in connection with an explosion that killed three workers.

Montieth Illingworth, a spokesman for Platinum, declined to comment.

Prosecutors charged David Levy, 41, co-chief investment officer, and Uri Landesman, 55, former president of Platinum's signature fund, with securities fraud, conspiracy, and other crimes, according to the eight-count indictment. Also charged were Joseph SanFilippo, chief financial officer; Joseph Mann, marketing employee; Daniel Small, managing director, and Jeffrey Shulse, Black Elk's chief financial officer.

The Securities and Exchange Commission filed a civil case Monday with similar allegations.

Cayman Islands liquidators for Platinum's flagship fund filed a Chapter 15 bankruptcy petition Oct. 18 and asked a judge to prevent anyone from disposing of the fund's assets without their permission.