A hedge fund founder from Lawrence who was part of a scheme to bribe the leader of New York City’s correction officers union to invest $20 million in his firm was sentenced to 30 months in prison Tuesday, officials said. His attorney vowed to appeal the term.
Murray Huberfeld, 57, who founded Platinum Partners hedge fund, was sentenced by U.S. District Judge Alvin K. Hellerstein in connection with the transfer of $60,000 that prosecutors said was used to bribe Norman Seabrook, the former president of the Correction Officers Benevolent Association, to invest tens of millions in Platinum.
In all, the union lost $19 million of its $20 million investment with Platinum. As much as $15 million was from a retirement benefits program funded by the City of New York that invests money for correction officers’ retirements.
Huberfeld pleaded guilty in May to wire fraud conspiracy. Specifically, he pleaded to conspiring with Jona Rechnitz, a real estate businessman and star government witness in several federal corruption trials, to cause Huberfeld’s hedge fund to pay $60,000 to Rechnitz’s company by falsely representing that the money was payment for courtside tickets to eight New York Knicks basketball games.
Prosecutors said that money was really intended for Seabrook, a payment for making the investment of the union’s funds. Rechnitz had testified in Seabrook’s trial that he delivered $60,000 in cash to Seabrook in a Salvatore Ferragamo bag in 2014 after the union’s funds were invested with Platinum.
“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,” said Manhattan U.S. Attorney Geoffrey S. Berman in a statement. “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.”
Huberfeld’s attorney, Henry Mazurek of Manhattan, said Huberfeld admitted submitting a false invoice of $60,000 to Platinum Partners but that he and his counterparts in the U.S. Attorney’s Office were surprised at such a stiff sentence.
Huberfeld has repaid $7 million to the union, according to court filings. Prosecutors urged Hellerstein to follow advisory federal guidelines that called for a prison term of no more than 12 months.
“The judge got it wrong,” Mazurek said in a telephone interview after the proceeding. “The prosecution agreed with us that Mr. Huberfeld did not deserve such a sentence. There will be an appeal and we are confident this sentence will be corrected.”
Huberfeld will remain free on bail pending his appeal, Mazurek said. He was also sentenced to 3 years of supervised release and ordered to pay restitution in the amount of $19 million.
Seabrook, the one-time head of the nation’s largest municipal correction officers union, was convicted in August of conspiracy and bribery-related fraud and sentenced this month to 58 months in prison and ordered to pay $19 million in restitution.
Platinum Partners is in bankruptcy.
With John Riley