Lawrence resident arrested in a kickback scheme

Lawrence resident Murray Huberfeld was arrested on Wednesday, along with Norman Seabrook, the president of the Correction Officers’ Benevolent Association (COBA), and charged with committing honest services fraud as Huberfeld is alleged to have paid a $60,000 bribe to Seabrook, and the promise of future bribes, in exchange for Seabrook investing $20 million of COBA money in the hedge fund Huberfeld manages.

Huberfeld, 55, and Seabrook 56, were arrested by Federal Bureau of Investigation (FBI) agents; Seabrook at his Bronx home and Huberfeld in his Manhattan office. “As alleged, Norman Seabrook and Murray Huberfeld engaged in a straight forward and explicit scheme,” Preet Bharara, the U.S. Attorney for the Southern District of New York, said in a prepared release. “For a Ferragamo bag stuffed with $60,000 in cash, Seabrook allegedly sold himself and his duty to safeguard the retirement funds of his fellow corrections officers.”

According to the allegations filed on Monday in Manhattan federal court, near the end of 2013, on a trip to the Dominican Republic, Seabrook told an individual who is identified as a cooperating witness that he worked hard to invest COBA’s money and was not getting rewarded, and it was time that “Norman Seabrook got paid.” The cooperating witness said that Platinum Partners, a firm he was familiar with and conducted business with was seeking to attract public and institutional investors and told Huberfeld that Seabrook would likely invest COBA money in the hedge fund if Huberfeld paid Seabrook money.

Allegedly, Huberfeld agreed and created a formula in which Seabrook would receive a kickback of a portion of the profits from COBA’s investment that Huberfeld estimated could range from $100,000 to $150,000 annually.

Seabrook began investing COBA money with Platinum, and even had Platinum pitch COBA’s Annuity Fund board and advisers conduct due diligence, even though the fix was in. “When an official; takes advantage of his or her position as steward of a organizations financial resources in order to line their own pockets, it is a dereliction of duty for someone trusted to protect financial contributions of the hard working men and women who belong o the organization,” Diego Rodriguez, FBI assistant director-in-charge, said in the release. “When a hedge fund manager provides bribe payments to organizations to gain their business, he or she pits the financial security of the fund’s investors at risk.”

Based on the federal complaint, Seabrook demanded the first of his kickback payment from the cooperating witness toward the end of 2014. Huberfeld said the fund had not performed as well as thought and he could only pay Seabrook $60,000. The cooperating witness agreed to lay out the money, and Huberfeld agreed to reimburse the witness and used the cost of the witness’s Knicks tickets in that amount.

Huberfeld, who is a generous contributor to Orthodox Jewish causes, and Seabrook were charged with one count of conspiracy to commit honest service fraud and one count of honest services wire fraud. If convicted, both could serve a maximum of 40 years in prison.