Associated Press
NEW YORK — The longtime head of the nation’s largest municipal jail guard union was paid tens of thousands of dollars in cash, delivered in a luxury handbag, in exchange for steering $20 million in union money in 2014 to a hedge fund, according to a criminal complaint.
Norman Seabrook, the brash and defiant president of the 9,000-member New York City Correction Officers’ Benevolent Association, and hedge fund founder Murray Huberfeld, were arrested by FBI agents on conspirathayscy and fraud charges Wednesday morning, officials said.
The arrests are the latest development in a series of overlapping public corruption investigations coordinated by U.S. Attorney Preet Bharara, with other targets including high-ranking New York Police Department officials and political fundraising activities of several people with ties to New York City’s mayor.
Huberfeld is accused of participating in a scheme to hand out hundreds of thousands of dollars in kickbacks to Seabrook in exchange for investments in his fund, Platinum Partners, L.P., according to the complaint. It says the scheme was facilitated by someone who has pleaded guilty and is cooperating with federal investigators.
The court papers don’t name the cooperator. But two people with direct knowledge of the case identified that person as Jona Rechnitz, a businessman who has contributed to Mayor Bill de Blasio’s campaigns, was friendly with top city police officials and has been captured on FBI wiretaps in a related gifts-for-favors probe.
The people were not authorized to discuss the ongoing case and spoke to The Associated Press on condition of anonymity. A lawyer for Rechnitz didn’t return a request for comment.
Union representatives did not immediately respond to comment requests. There was no immediate information on an attorney who could comment on Huberfeld’s behalf. An email to Platinum was not immediately returned.
The 17-page complaint appears to corroborate many of the claims raised by a union official in a state lawsuit last year, who said Seabrook made risky multimillion-dollar investments in a hedge fund without board approval.
Though he was promised more for his investments, Seabrook was ultimately paid $60,000 in cash handed to him by Rechnitz in an $820 Salvatore Ferragamo luxury handbag in December 2014, according to the complaint. To disguise the kickback, Huberfeld created a fake invoice for Rechnitz’s eight season tickets to the Knicks, paid for from Platinum funds that were funneled to Seabrook.
Seabrook has fiercely defended his union members amid repeated allegations of brutality and misconduct at the Rikers Island jail complex and elsewhere in the 10,000-inmate jail system.
In his more than 20 years in power, he has become a political powerbroker, contributing heavily to state and local elections and influencing almost every administrative decision affecting the city’s jails.
But according to the complaint, he was desperate to gain personally from his work investing union funds, complaining drunkenly in a hotel room during a trip to the Dominican Republic with Rechnitz that he “worked hard to invest COBA’s money and did not get anything personally from it,” adding that “it was time that ‘Norman Seabrook got paid.’”
Shortly after Rechnitz introduced Seabrook and Huberfeld in December 2013, union lawyers sent a letter to Huberfeld expressing interest in investing $10 million in union annuity funds in a Platinum fund, the complaint says. Noting that though no other unions had done so, the jail guards’ union “is not adverse to being a trendsetter,” it says.
In subsequent months, Seabrook then unilaterally invested two other $5 million payments, leaving “COBA with just over $3 million cash on hand for the union,” the complaint said.
De Blasio sought on Wednesday to distance himself from Seabrook.
“I am absolutely comfortable that we have done things properly,” the mayor told reporters. “What Norman Seabrook did with his pension fund has nothing to do with the way we run our government day to day.”
Copyright 2016 The Associated Press