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Orthodox Donor Murray Huberfeld Arrested in Norman Seabrook Kickback Scheme

Federal agents arrested a major Orthodox philanthropist on fraud charges Wednesday morning in connection with a sprawling corruption investigation now shaking political circles and the Orthodox community in New York City.

Murray Huberfeld, a financier and philanthropist with a long history of run-ins with regulators, was charged with honest services wire fraud for an alleged kickback he paid to Norman Seabrook, the powerful president of the union representing New York City corrections officers, who was also arrested.

At a press conference Wednesday afternoon, U.S. Attorney Preet Bharara, whose office is charging Huberfeld and Seabrook, called their alleged scheme a “very simple and straightforward quid pro quo.”

Seabrook is accused of sending $20 million from his union’s pension fund to a hedge fund controlled by Huberfeld. Huberfeld, in return, is accused of paying Seabrook $60,000 in cash, with the promise of more.

According to the complaint filed by the U.S. Attorney’s office, Seabrook received the payoff in a fancy bag from Ferragamo, a luxury goods store Seabrook particularly liked. FBI agents found 10 boxes of Salvatore Ferragamo shoes at Seabrook’s home during a Wednesday morning search.

Huberfeld’s hedge fund also gave an $18,000 donation to a “private school” with ties to an unnamed cooperating witness to thank the cooperating witness for connecting Seabrook and the fund, according to the complaint.

According to The New York Times, that cooperating witness is Jona Rechnitz, one of the two Orthodox businessmen at the center of a sprawling investigation into corrupt favors allegedly accepted by high-ranking members of the New York City Police Department.

The Times reported that Rechnitz has pleaded guilty to fraud charges and is cooperating with investigators. The arrests of Huberfeld and Seabrook come amid months of uncertainty and strained relations between city officials and Orthodox leaders stemming from the NYPD investigation, in which a number of top police officials have already been disciplined and reassigned.

Huberfeld is a major donor to Chabad-Lubavitch synagogues and to yeshivas in Brooklyn’s Boro Park, and is a member of the board of the Simon Wiesenthal Center, a California-based group that opposes anti-Semitism.

A resident of Lawrence, New York, Huberfeld founded Centurion Credit Management in 2005. He was convicted of fraud in 1993 for having someone else take a broker license exam in his name. In 1998, he and his partner settled a civil complaint brought by the Securities and Exchange Commission by giving up $4.6 million in profits and paying a $50,000 penalty.

An earlier Huberfeld venture, Broad Capital, specialized in selling penny stocks to Jewish charities.

Through his private foundation, the Huberfeld Family Foundation, Huberfeld gives millions in grants a year to Jewish charities. In 2014 alone, the foundation gave out $3.1 million, much of it to synagogues linked to the Chabad-Lubavitch Hasidic group, and to ultra-Orthodox institutions in Boro Park. The foundation has also sponsored a named program at the Modern Orthodox rabbinical school at Yeshiva University.

At the Wednesday press conference, Bharara laid out an uncomplicated scheme by which Seabrook invested union money in Platinum Partners, a hedge fund, and received cash in return.

According to the complaint, Seabrook was on a trip to the Dominican Republic paid for by the cooperating witness reported to be Rechnitz when he complained, while drinking, that he never personally benefited from the investments he made on behalf of the union. The cooperating witness was friendly with Huberfeld, knew Huberfeld was looking for institutional investors for his hedge fund, and made the connection.

At the time, Seabrook’s union had never before invested in a hedge fund. Bharara said that Platinum’s funds were struggling at the time that the investments were made, and that other investors were pulling their money out of Platinum.

“Just as high net worth investors were getting out of the fund, Seabrook was getting in with union retirement money,” Bharara said.

While Huberfeld is not officially in control of Platinum Partners, the complaint alleges that he in fact ran the firm, but that his role was publicly obscured because of his prior troubles with regulators.

Seabrook invested $20 million of his union’s funds with Platinum in early 2014. He allegedly received his $60,000 Ferragamo bag in December 2014. After the cash handoff, Seabrook and the cooperating witness alleged to be Rechnitz attended a Torah dedication ceremony together. Huberfeld allegedly covered up the payoff by creating a paper trail to make it look like Platinum had bought $60,000 in Knicks tickets.

“For a Ferragamo bag filled with cash, Seabrook allegedly sold himself and his duty to safeguard the retirement funds of his fellow corrections officers,” Bharara said.

Contact Josh Nathan-Kazis at [email protected] or on Twitter, @joshnathankazis

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