Corrections Union Head Accused of Corruption

MANHATTAN (CN) — New York federal prosecutors trained their anti-corruption crosshairs Wednesday on a powerful union president, saying he gave a hedge fund pal access to $20 million in benefits for retired corrections officers.

"We allege this was not a coincidence, it was corruption," U.S. Attorney Preet Bharara said this afternoon.

Bharara held the press conference after unsealing a complaint against Norman Seabrook, whose Correction Officers' Benevolent Association, is described as the largest municipal jail union in the nation.

Prosecutors say Seabrook, 56, took a $60,000 cash kickback in exchange for directing $20 million in COBA money to Platinum Partners, a hedge fund managed by 55-year-old Murray Huberfeld.

Using a flowchart to explain the conspiracy, Bharara noted that the arrangement raised suspicions since Platinum had never before invested in a retirement fund.

The $20 million investment also represented 40 percent of COBA's assets.

Bharara referred to Huberfeld and Seabrook's arrangement as a "straightforward and explicit bribe" and "quid pro quo."

The 17-page complaint says Seabrook confided to a cooperating witness that he worked hard to invest COBA's funds in Platinum, and emphasized that it was time that "Norman Seabrook got paid."

Seabrook, a corrections officer himself since 1985, has been the union's president for 21 years. He hails from the Bronx, and Huberfeld from Manhattan.

Though the government has not named the cooperating witness, it says this individual, a man, already pleaded guilty and is hoping for leniency at sentencing.

Noting that the witness "has done business with Huberfeld," the complaint says he was the one who handed off the "initial" $60,000 cash kickback from Platinum to Seabrook in an $800 Salvatore Ferragamo bag on Dec. 11, 2014.

To cover up with the cash withdrawal from the hedge fund, Huberfeld and the cooperating witness prepared a bogus receipt for several games worth of the company's season tickets to the New York Knicks.

Bharara elicited laughter at the press conference by noting that, at the time of the "sham arrangement," the Knicks' record was 4 wins, 20 losses.

Bharara called the COBA funds "the nest eggs of thousands of hardworking public servants." COBA represents more than 9,000 correction officers in New York City, including at officers at Rikers Island, whose culture of violence Bharara has long condemned.

COBA members are required to pay $45 each two-week pay period for a total cost of more than $1,000 per in contributions.

The COBA annuity fund is funded primarily by the City of New York, approximately $845 per correction officer with less than five years of employment, and $1,411 per correction officer with more than five years of employment.

The Annuity Fund is managed by Seabrook and three other COBA officials.

The FBI's Diego Rodriguez mentioned that, in addition to the Ferragamo bag full of cash, Seabrook also received nonmonetary kickback including trips to the Dominican Republic, Las Vegas and Israel.

Bharara noted that during his arrest this morning in the Bronx, officers found 10 pairs Salvatore Ferragamo shoes.

The prosecutors noted twice during the press conference on the perverseness of public corruption. "It's too bad we seem to find it everywhere we look," he said.

Seabrook and Huberfeld face presentment this afternoon before U.S. Magistrate Judge Kevin Fox.

They each face one count of honest-services fraud and conspiracy to commit honest-services wire fraud.

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