Hedge Fund Founder Pleads Guilty To Fraud In Connection With Bribery Of Former Correction Officers Union Leader

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced today the guilty plea of MURRAY HUBERFELD to wire fraud conspiracy in connection with funds used to bribe the former president of the nation’s largest municipal correction officers union.  Specifically, HUBERFELD, founder of the Platinum Partners hedge fund (“Platinum”), pled guilty to conspiring with an intermediary, Jona Rechnitz, to cause the 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.  Instead, as HUBERFELD knew, the actual purpose of the payment was to reimburse Rechnitz for having paid Norman Seabrook, then-president of the Correction Officer’s Benevolent Association (“COBA”), for Seabrook’s efforts to get COBA to invest millions of dollars in Platinum.  HUBERFELD pled guilty before U.S. District Judge Alvin K. Hellerstein.

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Murray Huberfeld caused his former hedge fund to pay tens of thousands of dollars to a criminal partner in order to enable another crime – paying off the head of the correction officer’s union for the investment of millions of its members’ funds.  We will continue to work with our law enforcement partners to fight fraud and corruption.”

According to the Superseding Information, Superseding Indictment, Indictment, and Complaint filed in this case, other public filings, statements made during the plea proceeding, and evidence and testimony presented at trial proceedings in October and November of 2017:

HUBERFELD was the founder of Platinum, a hedge fund that he continued to help operate unofficially even after his formal affiliation with the fund had ceased.  In late 2013, HUBERFELD and Rechnitz, a real estate businessman who was an acquaintance of HUBERFELD, sought to attract public and institutional investors to the fund.  At or around that time, Rechnitz told HUBERFELD that a contact of his – COBA President Norman Seabrook – would likely invest COBA’s money in Platinum.  Over the next few months, Seabrook caused COBA to invest approximately $20 million of its funds into Platinum, including $15 million from a retirement benefits program funded by the City of New York that invests money for correction officers’ retirements.

In or around December 2014, arrangements were made to pay Seabrook personally for the millions of dollars the Union had invested over the course of that year.  Rechnitz paid Seabrook $60,000 in cash, delivered to Seabrook in a men’s luxury handbag.  HUBERFELD and Rechnitz then arranged for Platinum’s management company to receive a fraudulent invoice for $60,000 – generated by Rechnitz – that, on its face, billed Platinum for eight pairs of courtside tickets to New York Knick games given to Platinum by Rechnitz, who owned Knicks season tickets.  In truth, and as HUBERFELD knew, the reason given to Platinum was false, and no Knicks tickets had changed hands.  The real purpose of the payment was to reimburse Rechnitz, who had paid Seabrook for his efforts in securing COBA’s investments.  Three days later, Platinum issued Rechnitz a $60,000 check.

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HUBERFELD, 57, of Lawrence, New York, pled guilty to one count of conspiracy to commit wire fraud.  The charge carries a maximum term of five years in prison.  HUBERFELD is scheduled to be sentenced on September 14, 2018.  The maximum potential penalty is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Trial against Seabrook, on charges of (i) conspiracy to commit honest services wire fraud, (ii) the substantive offense of honest services wire fraud, and (iii) the substantive crime of wire fraud with respect to COBA’s right to control its assets, is scheduled to commence on July 30, 2018, before Judge Hellerstein.  As to Seabrook, the charges in the various charging instruments are merely allegations, and Seabrook is presumed innocent unless and until proven guilty.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation and the New York City Police Department, Internal Affairs Division.

This case is being handled by the Office’s Public Corruption Unit.  Assistant United States Attorneys Martin S. Bell, Russell Capone, and Lara Pomerantz are in charge of the prosecution.

Navajo Woman from Navajo, N.M., Sentenced to Ten Years for Federal Assault and Child Abuse Conviction

ALBUQUERQUE – Elmira Curley, 22, an enrolled member of the Navajo Nation who resides in Navajo, N.M., was sentenced today in federal court in Albuquerque, N.M., to 120 months in prison for her conviction on assault and child abuse charges.  Curley will be on supervised release for five years after completing her prison sentence.

The FBI and Navajo Nation Division of Public Safety arrested Curley on July 6, 2016, on an indictment charging her with abusing a child resulting in great bodily harm.  The indictment alleged that Curley committed the crime on the Navajo Indian Reservation in McKinley County, N.M., on March 14, 2016.

On Feb. 13, 2018, Curley pled guilty to a two-count felony information charging her with assault resulting in serious bodily harm and child abuse.  In her plea agreement, Curley admitted that on March 14, 2016, she committed the crimes of assault and child abuse in Navajo, N.M., which is on the Navajo Indian Reservation.  Curley admitted committing these crimes by putting the legs and feet of a nine-month-old infant into a bathtub of scalding hot water and causing the infant to sustain severe burns.  Curley acknowledged that the infant-victim was hospitalized for several weeks for medical treatment and received skin grafts to repair some of the second- and third-degree burns she sustained as the result of the assault and abuse.

The Gallup, N.M., and Phoenix, Ariz., offices of the FBI and the Window Rock, Ariz., office of the Navajo Nation Division of Public Safety investigated this case, which was prosecuted by Assistant U.S. Attorney Nicholas J. Marshall.

Federal Jury Convicts Five Syndicato de Nuevo Mexico Prison Gang Members on Racketeering Charges

Three Co-Defendants Convicted on Racketeering Charges during Trial in March 2018

ALBUQUERQUE – A federal jury sitting in Las Cruces, N.M., returned a verdict today finding five defendants guilty of participating in a violent racketeering enterprise known as the Syndicato de Nuevo Mexico (SNM) Prison Gang following a seven-week jury trial before U.S. District Judge James O. Browning.  Joe Lawrence Gallegos, 48, of Los Lunas, N.M., Edward Troup, 46, of Albuquerque, N.M., Billy Garcia, 63, of Albuquerque, N.M., Arturo Arnulfo Garcia, 38, of Denver, Colo., and Andrew Gallegos, 50, of Los Lunas, N.M.  Two defendants, Allen Patterson, 47, of Silver City, N.M., Christopher Chavez, 42, of Albuquerque, N.M., were acquitted of the charges against them.

The seven defendants and 23 co-defendants were charged with racketeering offenses in a 15-count superseding indictment filed in April 2016.  Three of the 23 co-defendants were convicted and a fourth was acquitted on racketeering charges on March 12, 2018, during an earlier federal trial, and 17 others have entered guilty pleas.  The remaining co-defendant is a fugitive.  A subsequent second superseding indictment added a witness tampering charge against certain defendants.

On April 9, 2018, trial commenced against Joe Lawrence Gallegos, Edward Troup, Billy Garcia, Allen Patterson, Christopher Chavez, Arturo Arnulfo Garcia, and Andrew Gallegos on the superseding indictment, which charged the seven defendants with committing the following offenses for the purpose of gaining entrance into and maintaining and increasing their stature within the SNM prison gang:

    Count 1 – Joe Lawrence Gallegos, Edward Troup and Billy Garcia with murdering a person identified as F.C. on March 26, 2001, in Dona Ana County;

    Count 2 – Christopher Chavez, Allen Patterson and Billy Garcia with murdering a person identified as R.G on March 26, 2001, in Dona Ana County;

    Count 3 – Edward Troup, Arturo Arnulfo Garcia with murdering a person identified as F.S. on June 17, 2007, in Dona Ana County;

    Count 4 – Joe Lawrence Gallegos and Andrew Gallegos with conspiring to murder a person identified as A.B. on Nov. 12, 2012, in Socorro and Valencia Counties;

    Count 5 – Joe Lawrence Gallegos and Andrew Gallegos with murdering a person identified as A.B. on Nov. 12, 2012, in Socorro and Valencia Counties;

    Count 13 – Joe Lawrence Gallegos with assaulting with a dangerous weapon a person identified as J.G. on March 17, 2015, in Valencia County;

    Count 14 – Joe Lawrence Gallegos with conspiring to murder a person identified as J.G. between Feb. 1, 2016 and Feb. 27, 2016, in Otero and Valencia Counties; and

    Count 15 – Joe Lawrence Gallegos with attempting to murder and with assaulting with a dangerous weapon and causing serious bodily injury a person identified as J.G. on Feb. 27, 2016, in Valencia County.

    Count 16 – Joe Lawrence Gallegos with witness tampering.

The trial concluded this afternoon when the jury returned a verdict finding Edward Troup, Billy Garcia, Arturo Arnulfo Garcia and Andrew Gallegos guilty on the charges against them.  The jury found Joe Lawrence Gallegos guilty on Counts 1, 4 and 5, and acquitted him on Counts 13, 14, 15 and 16.  The jury acquitted Allen Patterson and Christopher Chavez on the charges against them.

At sentencing, Joe Lawrence Gallegos, Edward Troup, Billy Garcia, Arturo Arnulfo Garcia and Andrew Gallegos each face a statutory maximum penalty of life imprisonment.  The defendants will remain in custody pending their sentencing hearings, which have yet to be scheduled.

This case was investigated by Albuquerque Division of the FBI and the New Mexico Corrections Department, with assistance from the New Mexico State Police, Bernalillo County Sheriff’s Office, Metropolitan Correctional Center, Albuquerque Police Department, U.S. Marshals Service, and the El Paso, Phoenix, Denver, Las Vegas and Knoxville FBI Divisions.  Assistant U.S. Attorneys of the U.S. Attorney’s Office for the District of New Mexico are prosecuting the case.