New York, NY(Law Firm Newswire) July 26, 2016 – The head of a New York City correction officers’ union has been arrested by the FBI and accused of fraud and conspiracy.
Federal authorities allege that Norman Seabrook, president of the New York City Correction Officers’ Benevolent Association, was paid tens of thousands of dollars by a hedge fund manager, in exchange for investing millions of dollars of the union’s money with the fund. “Fraud and conspiracy are very serious charges,” said Peter Brill, a New York City criminal defense attorney with Brill Legal Group, who is not involved with the case. “An aggressive defense is often necessary to protect the defendant’s rights.”
Murray Huberfeld, the founder of Platinum Partners, L.P., was also arrested. Authorities claim that payment from the hedge fund to Seabrook, in exchange for the investments, was facilitated by a person who has entered a guilty plea and is cooperating with investigators. The complaint does not identify the cooperator, but news sources identified him as Jona Rechnitz, a businessman who was accused in an earlier federal corruption probe.
In a state lawsuit last year, a union official claimed that Seabrook had invested millions of dollars in a hedge fund without the approval of the board. According to the complaint, Seabrook was paid $60,000 in cash, delivered in a luxury bag from Salvatore Ferragamo on Fifth Avenue. Authorities claim that he was promised as much as $150,000 in exchange for investing $20 million in the high-risk fund. Prior to that investment, the union had kept a conventional investment portfolio with traditional stock and bond funds. Union lawyers pointed out that the investment was risky at the time, but they did not block it.
Seabrook and Huberfeld are each charged with fraud and conspiracy to commit fraud. Huberfeld was released on $1 million bond and Seabrook on $250,000 bond, and both were ordered to stay in the New York City region.
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