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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Tuesday, February 12, 2019

Hedge Fund Founder Sentenced To 30 Months In Connection With Bribery Of Former Correction Officers Union Leader

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today that MURRAY HUBERFELD was sentenced to 30 months in prison for his role in a scheme to submit false paperwork to Platinum Partners (“Platinum”), a hedge fund founded by HUBERFELD, in order to facilitate a bribe to Norman Seabrook, the former president of the nation’s largest municipal correction officers union.  HUBERFELD previously pled guilty to conspiring to commit wire fraud and thereby causing Platinum to fund a $60,000 bribe payment to Seabrook, which HUBERFELD intentionally concealed by falsely documenting the payment as one for courtside tickets to New York Knicks basketball games.  As a result of the bribe, Seabrook caused the investment of millions of dollars of union funds into Platinum. Today’s sentence was imposed by U.S. District Judge Alvin K. Hellerstein.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Not content with being a successful businessman, Murray Huberfeld sought to grow his fund through fraud and deception, playing a critical role in a pernicious kickback scheme.  His conduct was not only corrupt and criminal, but led to the loss of millions of dollars of union retirement benefits.  The sentence imposed today reflects the magnitude of his crimes and untold pain his conduct caused to others.”

According to the Superseding Information, Superseding Indictment, Indictment, and Complaint filed in this case, other public filings, statements made during the plea proceeding, and evidence and testimony presented at trial proceedings in the fall of 2017 and the summer of 2018:

HUBERFELD was a founder of Platinum, a hedge fund that he had founded and continued to control unofficially even after his formal affiliation with the fund had ceased.  In late 2013, HUBERFELD and Jona Rechnitz, an acquaintance and real estate businessman, sought to attract public and institutional investors to the fund.  In late 2013, Rechnitz told HUBERFELD that a contact of his – Norman Seabrook president of the Correction Officers’ Benevolent Association (“COBA” or the “Union”) – would likely invest COBA money in Platinum if HUBERFELD were willing to pay Seabrook money.  Over the next few months, Seabrook caused COBA to invest approximately $20 million of its funds into Platinum, including $15 million from a retirement benefits program funded by the City of New York that invests money for correction officers’ retirements.

In or around December 2014, arrangements were made to pay Seabrook for the millions of dollars the Union had invested over the course of that year.  Rechnitz paid Seabrook $60,000 in cash, delivered to Seabrook in a men’s luxury handbag.  HUBERFELD and Rechnitz arranged for Platinum’s management company to receive a fraudulent invoice for $60,000 – generated by Rechnitz – that, on its face, billed Platinum for seven pairs of courtside tickets to New York Knick games given to Platinum by Rechnitz, who owned Knicks season tickets.  In truth, and as HUBERFELD knew, the reason given to Platinum was false, and no Knicks tickets had changed hands.  The real purpose of the payment was to reimburse Rechnitz, who had paid Seabrook for his efforts in securing COBA’s investments.  Three days later, Platinum issued Rechnitz a $60,000 check.  Over the next few months, Rechnitz, HUBERFELD, and Jeremy Reichberg, another co-conspirator, continued to work together to lobby Seabrook for more money.  However, after a lawsuit filed by a former COBA board member referred to the Platinum investments, and the U.S. Attorney’s Office grand jury investigation resulted in subpoenas to Platinum and COBA in May 2015, no further investments were made.  Ultimately, Platinum collapsed, and COBA lost $19 million of its investment.

Seabrook was convicted of honest services fraud and conspiracy on August 18, 2018, after a 10-day trial in Manhattan federal court.  On February 8, 2019, Judge Hellerstein sentenced Seabrook to 58 months in prison and ordered him to pay restitution in the amount of $19 million.

On January 2, 2019, Reichberg was found guilty of honest services fraud, conspiracy, and obstruction of justice in connection with a separate scheme in which he and Rechnitz provided gifts and benefits to a number of high-level officers of the New York City Police Department (“NYPD”) in exchange for official police action for themselves and their associates.  He is due to be sentenced by U.S. District Judge Gregory H. Woods on April 4, 2019.

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In addition to the prison term, HUBERFELD, 58, of Lawrence, New York, was sentenced to three years of supervised release, and ordered to pay restitution in the amount of $19 million.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the NYPD Internal Affairs Division.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Martin S. Bell, Russell Capone, and Lara Pomerantz are in charge of the prosecution.

Topic(s): 
Public Corruption
Press Release Number: 
19-036
Updated February 12, 2019