Ex-NYC union chief loses bribery appeal; hedge fund exec wins resentencing

FILE PHOTO: Norman Seabrook, (C) the head of New York City's prison guard union, exits the Manhattan District court house in New York, U.S., July 22, 2016. REUTERS/Eduardo Munoz

NEW YORK (Reuters) - A federal appeals court on Tuesday upheld the bribery conviction of Norman Seabrook, the once-powerful head of New York City’s correction officers’ union, and ordered the resentencing of a former hedge fund executive on a related guilty plea.

Seabrook, who led the Correction Officers’ Benevolent Association, was appealing his August 2018 conviction and 58-month sentence for steering $20 million of union members’ money to the hedge fund firm Platinum Partners, which prosecutors said he knew was risky, in exchange for a $60,000 cash bribe delivered in a Salvatore Ferragamo bag.

The 2nd U.S. Circuit Court of Appeals in Manhattan rejected Seabrook’s arguments that it was too prejudicial for jurors to have been told the union lost money on its investment, and that U.S. District Judge Alvin Hellerstein, who oversaw Seabrook’s trial, appeared biased toward prosecutors.

Platinum’s main hedge funds went bankrupt in 2016 and the union, which said it has about 18,000 active and retired members, lost $19 million of its investment.

In a related ruling, the appeals court set aside the 2-1/2 year prison term for Platinum co-founder Murray Huberfeld, who pleaded guilty to a conspiracy charge, and reversed an order that he pay $19 million in restitution to the union.

The court said Hellerstein mistakenly took into account an uncharged bribery scheme the government dropped in exchange for the guilty plea, and that it was not “confident” Huberfeld would get the same sentence again.

It also said the union was not a “victim” of Huberfeld’s criminal conduct because it invested with Platinum before that conduct occurred, and therefore did not qualify for restitution.

Lawyers for Seabrook and Huberfeld declined to comment. The union and a spokesman for Acting U.S. Attorney Audrey Strauss in Manhattan did not immediately respond to requests for comment.

The cases are U.S. v. Seabrook et al, 2nd U.S. Circuit Court of Appeals, Nos. 19-436, 19-472, 20-1918.

Reporting by Jonathan Stempel in New York; Editing by Richard Chang