NEW YORK (CBSNewYork/AP) -- Norman Seabrook, the leader of the union that represents New York City corrections officers, was arrested on federal fraud charges Wednesday.
As CBS2's Hazel Sanchez reported, police said Seabrook, head of the Correction Officers' Benevolent Association, was arrested without incident at his home in the Bronx. He appeared in U.S. District Court in Manhattan Wednesday afternoon.
"I feel like a million dollars," Seabrook said as he left court.
Seabrook has been president of COBA for 21 years.
Seabrook was arrested for allegedly taking kickbacks in exchange for directing millions in union money to a hedge fund, CBS2's Hazel Sanchez reported. He has now been suspended without pay from the Correction Department pending the investigation by the city.
WEB EXTRA: Read The Complaint
"In November 2013, Seabrook complained to a friend about working hard to invest COBA's money without any personal financial benefit – asserting that it was time that Norman Seabrook got paid," said FBI New York Field Office Special Agent-in-Charge Diego Rodriguez.
U.S. Attorney Preet Bharara alleged that Seabrook indeed did get paid. In March 2014, the COBA annuity fund made an initial investment of $10 million to Platinum Partners -- a Manhattan hedge fund run by co-defendant Murray Huberfeld. In total, around $20 million was invested into the fund over three tranches of investments, according to court documents.
Huberfeld was also in court Wednesday facing fraud and conspiracy charges.
"Not only was this the first time COBA invested in a hedge fund, it was also the first time that Platinum had received and investment from a retirement fund," Bharara said. "We allege this was not a coincidence. It was corruption."
Bharara called the defendants' alleged actions "a straightforward and explicit bribery scheme" during a press conference Wednesday afternoon.
"Seabrook wielded power and control over the lives of thousands of corrections officers he represented," he said, adding that Seabrook believed he was entitled to more.
According to the complaint, the initial kickback received by Seabrook amounted to $60,000, 1010 WINS' Juliet Papa reported. The intermediary in the transaction, who later worked with the FBI as a confidential informant in the investigation, said he purchased a $820 bag from Salvatore Ferragamo -- described as Seabrook's "favorite luxury goods" store -- placed the money in the bag and then gave it to Seabrook.
The witness, identified in documents as CW-1 and by sources as businessman and major de Blasio campaign donor Jona Rechnitz, was friendly and had done business with Huberfeld. He allegedly told Huberfeld that Seabrook would likely invest COBA money in Platinum if he were willing to pay Seabrook money.
Toward the end of 2014, Seabrook wanted the first kickback payment and demanded it from CW-1. CW-1 went to Salvatore Ferragamo on Fifth Avenue and allegedly bought an expensive bag to put the money in and then give to Seabrook, who was a few blocks away. The witness and Seabrook are then reported to have gone to dinner and a Torah dedication ceremony. The events were corroborated by phone records, emails, and a receipt from Salvatore Ferragamo, Bharara said.
"For a Ferragamo bag stuffed with $60,000 in cash, Seabrook allegedly sold himself and his duty to safeguard the retirement funds for his fellow corrections officers. Seabrook made decisions how to invest the nest egg for thousands of hard-working public servants, based not on what was good for them, but on what was good for Norman Seabrook," Bharara said.
Seabrook and Huberfeld face one count of conspiracy to commit wire fraud and one count of conspiracy to commit honest wire fraud, according to the complaint.
Seabrook and Huberfeld are allegedly linked to one of several corruption investigations focused on campaign fundraising for Mayor Bill de Blasio.
Speaking at a news conference on Wednesday, de Blasio distanced himself from Seabrook – a man he has publicly called his friend. He said Seabrook would be terminated from the force in the wake of the arrest.
"These are allegations," de Blasio said. "But I'll say this – if proven true, it's disgusting and it's very, very sad. It means he's stolen money from his own workers."
Authorities said the money exchange between Seabrook and Huberfeld stopped after a 2014 federal investigation of de Blasio's fundraising campaign lead investigators to subpoena the corrections officer and Platinum.
Federal interest in Seabrook started in 2013, after authorities learned the union leader had allegedly developed a relationship with businessmen Rechnitz and Jeremy Reichberg, who served on de Blasio's inaugural committee in 2013 and contributed to his campaign.
In 2013, FBI agents were alerted to a series of large transfers and deposits in multiple bank accounts held by a small wholesale liquor business in Harlem, the law enforcement officials said.
Ultimately, investigators concluded that a Harlem restaurant owner was using the accounts to run a $12 million Ponzi scheme, in which Rechnitz and Reichberg were investors.
Rechnitz and Reichberg have also been tied to a federal probe involving corruption within the NYPD.
So far, at least nine other police officials have been transferred or stripped of their guns and badges as internal affairs detectives and FBI agents examine whether officers accepted gifts and trips from businessmen in exchange for police escorts, special parking privileges and other favors.
It is believed Rechnitz referred Seabrook to Huberfeld, WCBS 880's Marla Diamond reported.
While Reichberg and Rechnitz were not mentioned by name in Wednesday's complaint, sources identified Rechnitz as the unnamed CW-1 -- and said Rechnitz has also been questioned about his political donations to the mayor.
Sources told CBS2 that Rechnitz has also been questioned about his political donations to the mayor.
"The complaint does say that he is assisting in other investigations as well," Bharara said.
Rechnitz and his wife donated $9,900 to de Blasio's 2013 election campaign, CBS2 Political Reporter Marcia Kramer reported. He also reportedly collected another $41,600 from others, gave $50,000 to de Blasio's nonprofit Campaign for One New York, and anted up $100,000 for de Blasio's 2014 effort to defeat state Senate Republicans.
Despite Rechnitz's cooperation with federal authorities, de Blasio said he had done nothing wrong.
"No, I don't think it's right to connect those dots in that fashion," de Blasio said. "When the truth comes out on all these pieces, I feel very, very comfortable that we'll be in a good place."
But when asked if he regretted taking money from Rechnitz, de Blasio said: "Look, I wish I'd never met the guy. If we had any inkling that this was the kind of human being he was, I never would have gone near him."
Rechnitz's attorney, Alan Levine, had no comment.
De Blasio also noted that the most recent charges impacted COBA, which operates as a separate entity from the NYPD. Although federal probes continue into the possibility of corruption within the NYPD, de Blasio said that "most of the problems" had been addressed and that "action was being taken."
Seabrook has been president of COBA for the past 21 years and has served as a corrections officer in New York City since 1985.
Union representatives did not immediately respond to requests for comment.
There was no immediate information on an attorney who could comment on Huberfeld's behalf.
Bharara praised the investigative work of the FBI, NYPD Internal Affairs Bureau, and the Internal Revenue Service's Criminal Investigations Division. He notes that the investigation is ongoing and that the charges are merely accusations.
(TM and © Copyright 2016 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2016 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
for more features.