Early on Wednesday morning, Norman Seabrook, the president of the Correction Officers’ Benevolent Association, was arrested at his Bronx home on federal corruption charges. According to the New York Daily News, Seabrook, who has blocked reforms at Rikers Island, was under investigation for allegedly receiving kickbacks from a hedge fund that work with the union.
Murray Huberfeld, a hedge-fund financier, was also arrested Wednesday morning. Huberfeld is the founder of Centurion Credit Management, which was acquired by a top-performing hedge fund, Platinum Partners, in 2011. Seabrook, the New York Times reports, invested about $10 million of the union’s pension fund in Platinum Partners through Huberfeld—allegedly in exchange for a cut of the profits.
William Valentin, a correction officer who was forced off the executive board when he mounted a challenge for the union presidency, alleged that Mr. Seabrook had made the $10 million investment in the hedge fund without consulting the board.
Mr. Seabrook acknowledged the investment in an affidavit for a lawsuit, but declined to identify the fund and gave contradictory statements about how much the union earned from it. At one point, he said the return was $475,000 in three months; but the union’s audited financial statements listed a $47,529 return.
COBA’s financial records were subpoenaed in May, the Daily News reported. “It’s not the first union in America to get a subpoena and I’m sure it won’t be the last,” Seabrook said at the time. “We will gladly provide all the requested documents and I’m confident that the government will see that there has been no wrongdoing.”
Preet Bharara, the United States attorney for the Southern District of New York, is expected to announce the charges against Seabrook and Huberfeld on Wednesday afternoon. According to the Times, each face one count of honest services wire fraud and one count of conspiracy to commit honest services wire fraud.
This is the first major criminal case to emerge from the federal investigation into Mayor Bill de Blasio’s campaign fundraising, the Times reports. At a 2014 fundraiser, the mayor called Seabrook as a “friend” and a “great leader.”
Update – 1:05 pm
The Times identified a co-conspirator in the case as Jona Rechnitz, a real estate executive who pleaded guilty fraud conspiracy charges and is “providing information to the government in the hopes of obtaining leniency when he is sentenced,” according to the complaint.
Rechnitz—who contributed the individual maximum of $4,950 to the mayor’s 2013 campaign and raised $41,650 as an intermediary—also happens to be a key fixture in the unfolding federal investigation into the mayor’s fundraising practices.
Responding to the news of Seabrook’s arrest, de Blasio downplayed their relationship. “These are allegations, but I’ll say if proven true it’s disgusting and it’s very, very sad. It means he stole money from his own workers,” he told reporters this morning. “It has been a very fraught relationship over the years. Sometimes we’ve been able to work together, sometimes there was real disagreement. I haven’t spoken to him in several months.
“But the reform on Rikers Island will continue aggressively,” the mayor added. “We are adamant about changing the culture on Rikers Island.”