NEW YORK (AP) – The longtime head of the nation’s largest municipal jail guard union was paid tens of thousands of dollars in cash, delivered in a Ferragamo handbag, in exchange for steering $20 million in union money 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 Murray Huberfeld, the hedge fund’s founder, were arrested by FBI agents on conspiracy and fraud charges Wednesday.
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 people with ties to New York’s mayor.
Seabrook “made decisions about how to invest the nest egg for thousands of hardworking civil servants based not on what was good for them but on what was good for Norman Seabrook,” Bharara said.
A scheme by Huberfeld to hand out hundreds of thousands of dollars in kickbacks to Seabrook in exchange for the investments in his fund, Platinum Partners, L.P., was facilitated by someone who has pleaded guilty and is cooperating with federal investigators, the complaint says.
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 Democratic 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 weren’t authorized to discuss the ongoing case and spoke to The Associated Press on the condition of anonymity. A lawyer for Rechnitz didn’t return a request for comment Wednesday.
Union representatives didn’t immediately respond to comment requests. There was no immediate information on an attorney who could comment on Huberfeld’s behalf, and an email to Platinum was not immediately returned.
The complaint appears to corroborate many of the claims raised by a union official in a state lawsuit last year. The official said Seabrook made risky multimillion-dollar investments in a hedge fund without board approval.
Though Seabrook was promised more for his investments, he ultimately was paid $60,000 by Rechnitz, the complaint says.
The middleman stashed the cash in an $820 bag he bought at “one of Seabrook’s favorite stores, Salvatore Ferragamo on Fifth Avenue,” before handing it to the union boss at a meeting in Manhattan in December 2014, it says. Investigators searching Seabrook’s home recovered the luxury bag and 10 pairs of Ferragamo shoes, prosecutors said.
Huberfeld reimbursed Rechnitz for the kickback by having him create a fake invoice for eight games from his season tickets to the New York Knicks, the complaint says, at a time the team was in the midst of the worst season of franchise history. Platinum then paid the bill by check, it adds.
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 “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. In subsequent months, Seabrook unilaterally invested two other $5 million payments, leaving “COBA with just over $3 million cash on hand for the union,” it says.
De Blasio, who sought to distance himself from Seabrook on Wednesday, said if the allegations against Seabrook are true they are “disgusting” and “very, very sad.”
“What Norman Seabrook did with his pension fund has nothing to do with the way we run our government day to day,” he said.
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AP reporters Kiley Armstrong and Ezra Kaplan contributed to this report.
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This story has been corrected to show the allegations are contained in a criminal complaint, not an indictment.