https://www.justice.gov/usao-sdny/pr/norman-seabrook-president-correction-officers-benevolent-association-arrested-demanding
Department of Justice
U.S. Attorney’s Office
Southern District of New York
FOR IMMEDIATE RELEASE
Wednesday, June 8, 2016
Norman Seabrook, President Of Correction Officers’ Benevolent Association, Arrested For Demanding And Accepting Bribes In Exchange For Investing Union Money In New York-Based Hedge Fund
Murray Huberfeld, Founder of Manhattan-based Hedge Fund, Also Charged For Paying Off Seabrook to Invest in the Fund
Preet Bharara, the United States Attorney for the Southern District of New York, and Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today that NORMAN SEABROOK and MURRAY HUBERFELD were arrested this morning and charged in Manhattan federal court with committing honest services wire fraud, in connection with HUBERFELD’s payment of a $60,000 bribe to SEABROOK, the President of the Correction Officers’ Benevolent Association (“COBA”), and the promise of future bribe payments, in exchange for SEABROOK’s investment of $20 million of COBA money in HUBERFELD’s hedge fund. SEABROOK was arrested this morning by FBI agents in the Bronx, and HUBERFELD was arrested this morning by FBI agents in Manhattan. They will be presented before U.S. Magistrate Judge Kevin N. Fox in Manhattan this afternoon.
(snip)
Toward the end of 2013, on a trip to the Dominican Republic with, among others, an individual who is now a cooperating witness for the Government (“CW-1”), SEABROOK told CW-1 that he worked hard to invest COBA’s money and was not getting anything out of it, and it was time that “Norman Seabrook got paid.” CW-1 was friendly with and had done business with MURRAY HUBERFELD, a founder and part owner of Platinum Partners (“Platinum”), a Manhattan-based hedge fund that principally ran two funds. CW-1 was aware that Platinum was looking to attract public and institutional investors – as opposed to its more typical investor set of high net-worth individuals – and told HUBERFELD that SEABROOK would likely invest COBA money in Platinum if HUBERFELD were willing to pay SEABROOK money. HUBERFELD agreed to the proposition, and HUBERFELD worked out a formula in which SEABROOK would be paid a kickback of a portion of the profits from COBA’s investment that HUBERFELD estimated could be between $100,000 and $150,000 per year.
SEABROOK then began investing COBA’s money, at first going through the motions of having Platinum make a pitch to COBA’s Annuity Fund board and having advisers conduct diligence. Those advisers included attorneys who expressed concern that public pensions like COBA do not typically invest in higher-risk vehicles like hedge funds. In March 2014, COBA’s Annuity Fund made a $10 million investment in one of Platinum’s funds. In June 2014 – this time without running the investment by the COBA Board or seeking any approval – SEABROOK invested $5 million, or 40 percent, of COBA’s own assets in the same fund. In August 2014, the Annuity Fund invested another $5 million in Platinum. By that point, COBA was the largest investor in that Platinum fund for all of 2014, and amounted to more than half of all incoming investments for the fund. At the same time, the fund was experiencing significant redemptions by other investors.
Toward the end of 2014, SEABROOK wanted the first of his kickback payments, and demanded it from CW-1. HUBERFELD told CW-1 that the fund had not performed as well as expected, and that he could pay SEABROOK only $60,000. CW-1 agreed to lay out the cash, and HUBERFELD agreed to reimburse CW-1 on Platinum’s behalf. HUBERFELD suggested that to paper over the reimbursement, CW-1 invoice Platinum for a number of CW-1’s tickets to the Knicks, in the amount of $60,000, and Platinum would then cut a check to CW-1.
(snip)
= new reply since forum marked as read
