Saturday, May 15, 2021

Hedge Fund Co-Founder Gets 30 Months for Role in Alleged Bribery Scheme

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The co-founder of defunct hedge fund Platinum Partners was sentenced to 30 months in prison for what federal prosecutors said was his role in a scheme to bribe the former head of New York City’s jail officers union.

Murray Huberfeld, 58 years old, pleaded guilty last year to conspiracy to commit wire fraud. On Tuesday, U.S. District Judge Alvin Hellerstein sentenced him to the prison term, plus three years of supervised release and $19 million in restitution.

“I stand before you today a broken person,” said Mr. Huberfeld, breaking into tears, in front of a courtroom packed with his family and members of his Jewish community. “Simply put, I failed.”

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As part of his plea agreement, Mr. Huberfeld admitted he had submitted a fake $60,000 invoice to Platinum Partners. While the invoice purported to be for courtside New York Knicks tickets, the money was intended to pay the businessman Jona Rechnitz, Mr. Huberfeld admitted. Mr. Rechnitz then paid Norman Seabrook, the then head of the New York City jail officers union, to get him to invest union money in Platinum Partners, prosecutors said.

Prosecutors said the payment to Mr. Seabrook—$60,000 cash delivered in a luxury bag—was a kickback and part of a scheme that caused the jail officers union to ultimately lose $19 million of the $20 million that Mr. Seabrook had steered to Platinum Partners.

“The payment was not a mere finder’s fee,” federal prosecutors wrote in court filings. “It was a criminal payment.”

A lawyer for Mr. Rechnitz, who pleaded guilty and cooperated with the government, declined to comment. Lawyers for Mr. Seabrook, who was convicted after a retrial, have said he maintains his innocence.

Tuesday’s sentencing was unusual because Judge Hellerstein was clear from the outset that he believed Mr. Huberfeld deserved a stiffer sentence than the 12 months that prosecutors had requested.

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Judge Hellerstein noted he had sentenced Mr. Seabrook last week to 58 months in prison. “Is the bribe giver less culpable than the bribe taker?” the judge asked the lawyers in front of him.

Henry Mazurek, a lawyer representing Mr. Huberfeld, said his client was different from Mr. Seabrook, who had a fiduciary duty to his union members.

Assistant U.S. Attorney Martin Bell agreed, noting that the union members—the ultimate victims of the crime—were an abstraction to Mr. Huberfeld.

The prosecutor then acknowledged the irony of making the same argument as the lawyers at the table behind him. “I’m sounding like some future version of myself 10 years from now when I have another job,” Mr. Bell added.

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