A Federal appeals court denied longtime Correction Officers’ Benevolent Association President Norman Seabrook’s attempt to have his conviction on bribery charges overturned, setting the stage for the man who wielded immense power in the city jail system for 21 years to begin a 58-month term in Federal prison by early fall.
Mr. Seabrook, who was convicted in August 2018 of accepting a $60,000 payoff in return for investing $20 million in union monies in a hedge fund that later filed for bankruptcy, argued in his appeal that his right to a fair trial had been compromised when jurors were informed that COBA lost $19 million of that investment.
Evasion Proves Damning
But a 2nd Circuit U.S. Court of Appeals panel rejected his claim that he believed the large investment in Platinum Partners was a good one at the time in early 2014 that he convinced other board members to make an initial investment of $10 million with the hedge fund.
During both his initial trial in 2017 that ended with the jury unable to reach a unanimous verdict and the second one that produced a conviction, ranking union officials testified that Mr. Seabrook withheld from them concerns that had been expressed in writing by a union attorney and its outside investment adviser.
Elias Husamudeen, a close ally of Mr. Seabrook’s since they gained control of COBA in a 1995 officers election, testified that Mr. Seabrook didn’t inform him or other board members of a February 2014 letter from attorney Howard Wien outlining the risks and drawbacks of investing through hedge funds generally and Platinum Partners in particular.
While such funds were capable of producing huge profits, Mr. Wien stated, it was also possible that the entire investment could be lost. He also pointed out that at the time, no other municipal union had placed benefits-fund investments with a hedge fund.
‘Not Aware of Concerns’
Under questioning by Assistant U.S. Attorney Martin Bell, Mr. Husamudeen—who became COBA’s president after Mr. Seabrook was removed from office in August 2016 following his indictment—testified, “I wasn’t aware of any of those emails, letters, I wasn’t even aware of the attorney’s concerns.”
Corroboration was provided by the union’s then-treasurer, Mike Maiello, who during the second trial said he hadn’t known of Mr. Wien’s letter or one from investment consultant Thomas Reynolds that also outlined the potential risks.
Asked by a prosecutor whether knowing what was in the two letters might have led him to vote against the large investment, Mr. Maiello replied, “Yes. A handful of red flags on it.”
One of the three appeals-court judges, Rosemary Pooler, wrote in the decision, “The record contained evidence that Seabrook intended to subject the organization to a risky investment in order to enrich himself.”
Behind Bars by Fall?
Paperwork and processing steps, including a decision on where Mr. Seabrook will serve his sentence, make it likely that he will report to the designated facility by early October.
His co-defendant in the original trial, Platinum Partners founder Murray Huberfeld, fared better before the appeals judges: they set aside the 2 1/2-year prison term he had agreed to rather than face a second trial alongside Mr. Seabrook, and ruled that he was not legally obligated to pay COBA the full $19 million it had lost as restitution.
The judges concluded that COBA could not be considered a victim of Mr. Huberfeld’s criminal conduct because it did not begin until after the union made its investments in his struggling hedge fund.
Mr. Seabrook received the $60,000 bribe in late 2014, presented in a Ferragamo bag by Jona Rechnitz, whose father was friends with Mr. Huberfeld. The younger Rechnitz wound up as the middle man in the transaction after the union leader allegedly said to him while they were vacationing in the Dominican Republic in December 2013, “It’s time Norman Seabrook got paid.”
Mr. Rechnitz, who along with business partner Jeremy Reichberg also sought to curry favor with top NYPD officials and Mayor de Blasio through high spending and campaign contributions, was the prime witness in both Seabrook trials.
But his credibility was damaged enough by blistering cross-examination by defense attorneys in the first case, in particular Seabrook lawyer Paul Shechtman, that the jury could not reach a unanimous verdict. Mr. Huberfeld opted to enter a plea agreement rather than face a second trial. In his return engagement, Mr. Rechnitz was more reserved and less obnoxious, and jurors focused more on the testimony of union officials than the earlier jury had and found Mr. Seabrook guilty.
In January 2018, prior to working out his plea deal with the Manhattan U.S. Attorney’s Office, Mr. Huberfeld reached a separate agreement with COBA to reimburse it for $7 million of its investment losses.
COBA President Benny Boscio, who unseated Mr. Husamudeen earlier this summer, said in a statement Aug. 6, "To date, COBA has obtained repayment of $4.5 million as partial repayment of monies lost in this disreputable scheme...Going forward, we are committed to pursuing every available reasonable legal avenue to obtain further repayment."
Ruling Won't Affect Payout
One legal expert, not speaking for attribution, said that repayment should not be affected by the appeals-court ruling, which will lead to a new sentencing for Mr. Huberfeld.
He explained that the agreement with COBA was not part of the plea deal with prosecutors, even though it was aimed at producing more-favorable terms. “It was to gain leniency at sentencing and it was voluntary,” he said.
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