Norman Seabrook, president of New York City’s correction officers’ union, was arrested at his home early Wednesday morning as part of a continuing federal municipal corruption probe, according to a criminal complaint and a person familiar with the matter.
Seabrook, 56, was taken into custody by federal agents at his Morris Park home in the Bronx about 6 a.m. Mr. Seabrook faces honest-services wire fraud and conspiracy charges for allegedly taking bribes and kickbacks in connection with the investment of $20 million of union money into a hedge fund, according to the complaint
He was under investigation for allegedly receiving kickbacks from an investment firm that does business with the 9,000-member union — the largest municipal jail union in the country.
Murray Huberfeld, who had previously run the credit fund at the hedge-fund firm, Platinum Partners, was also arrested at his home Wednesday morning. Mr. Huberfeld faces the same counts as Mr. Seabrook, according to court papers. They will appear Wednesday in federal court in Lower Manhattan.
The investigation predates the ongoing corruption probes in the New York City Police Department and the city government.
However, one of the Brooklyn businessmen at the central of the investigation, Jona Rechnitz, is believed to have referred Seabrook to Huberfeld.
According to the criminal complaint, Seabrook received “hundreds of thousands of dollars” in bribes in exchange for his investment of Correction Officer Benevolent Association money into Huberfeld’s Platinum Partners, a Manhattan hedge fund.
In 2014, the complaint says, Seabrook directed a total of $20 million of COBA money to Platinum. After both COBA and Platinum were subpoenaed in 2015, no further money was invested. U.S. Attorney Preet Bharara subpoenaed COBA’s financial records in May 2015, according to multiple sources.
The investigation revealed that in December, 2013, Seabrook complained to a third party “about not getting any personal financial benefit for investing COBA money,” according to court papers.
That third party — who is now cooperating with the federal investigation — introduced Seabrook to Huberfeld.
“Seabrook made it clear that if COBA were to invest in Platinum, Seabrook would need to be paid a bribe,” court papers state.
Huberfeld paid Seabrook $60,000 in cash for receiving the union’s money, officials claim.
Attorneys for Seabrook and Huberfeld couldn’t be reached for comment Wednesday morning. A spokesman for Mr. Seabrook declined to comment. Platinum founder Mark Nordlicht didn’t respond to requests for comment.
Mr. Seabrook had been one focus of a wide-ranging probe by the Federal Bureau of Investigation and the U.S. attorney’s office in Manhattan into alleged corruption at the New York Police Department, an investigation that has also focused on Mayor Bill de Blasio’s fundraising activities.
Mr. de Blasio, a Democrat, has repeatedly denied any wrongdoing, saying he and his aides have always abided by campaign-finance laws. The mayor said what Mr. Seabrook did with his pension fund has “absolutely nothing” to do with his administration. If the allegations against Mr. Seabrook are proven, Mr. de Blasio said, “It’s disgusting and it’s very, very sad.”
If the charges are true, the mayor said, “that means he took money that was meant for his workers’ retirements and put it in his own pockets.”
Through an intermediary, Mr. Huberfeld allegedly bribed Mr. Seabrook—at Mr. Seabrook’s request—to have the Correction Officers’ Benevolent Association invest in Platinum, according to the complaint, reports the Wall Street Journal.
That intermediary was Jona Rechnitz, a businessman and a donor to Mr. de Blasio who is a focus of the federal probe, The Wall Street Journal has reported. A lawyer for Mr. Rechnitz couldn’t be reached for comment Wednesday morning.
Mr. de Blasio said Wednesday he regretted his involvement with Mr. Rechnitz. This year, the mayor returned a $4,950 contribution from Mr. Rechnitz, and another $4,950 donation from his wife.
“Look, I wish I never met the guy,” Mr. de Blasio said. “If we had any inkling that this was the kind of human being he was, we never would have gone near him.”
The complaint alleges Mr. Rechnitz arranged for international air travel, cash payments and other gifts for Mr. Seabrook. In exchange for Mr. Rechnitz’s role in facilitating the union’s investment and the alleged bribes to Mr. Seabrook, Platinum repaid Mr. Rechnitz by writing checks to his company and through donations to various causes Mr. Rechnitz supported, the complaint alleges.
Mr. Seabrook met Mr. Rechnitz through an NYPD officer, unnamed in the complaint, in late 2013. The complaint details a number of trips Mr. Seabrook and the NYPD officer, accompanied by Mr. Rechnitz and others, took in 2013 and 2014 to Las Vegas, Israel and the Dominican Republic and other places. Mr. Rechnitz paid the cost of the airfare for those trips, according to the complaint.
According to an account provided to investigators by Mr. Rechnitz, on a December 2013 trip to the Dominican Republic, Mr. Seabrook approached Mr. Rechnitz in his hotel room and complained that while he “worked hard to invest” the union’s money he didn’t get anything personally from it, the complaint alleges. Mr. Seabrook told Mr. Rechnitz it was time that “Norman Seabrook got paid,” according to the complaint.
Mr. Rechnitz then made the connection to Mr. Huberfeld, who said Platinum would pay Mr. Seabrook 10% of its performance fees earned from the union’s investment, the complaint alleges. Mr. Seabrook was expected to get more than $100,000 a year from the alleged kickback, according to the complaint.
In 2014, Mr. Seabrook directed a total of $20 million of union money—$15 million from the union’s annuity fund, plus $5 million from the union’s general fund—to Platinum, according to the complaint.
In December 2014, Mr. Seabrook allegedly received a $60,000 cash bribe from Mr. Huberfeld—delivered by Mr. Rechnitz in an $820 Salvatore Ferragamo bag—in exchange for directing union funds to Platinum, according to the complaint.
After Platinum and the union received federal grand-jury subpoenas in May 2015 seeking information about the union investment, no further union funds were invested in Platinum, according to the complaint.
Platinum had come to depend on union funds, and starting in late 2014 Platinum executives began writing each other asking about pressing Mr. Seabrook for more money, according to emails excerpted in the complaint.