Norman Seabrook in July 2016. PHOTO: EDUARDO MUNOZ/REUTERS
The retrial of Norman Seabrook began Thursday in Manhattan federal court with arguments about whether the onetime powerful union leader’s investment of $20 million in a risky hedge fund—which ultimately lost $19 million—was a corrupt deal or an unfortunate financial strategy.
Mr. Seabrook, the head of New York City’s jail-officers union for two decades, was an outspoken political figure known for his brash manner and vast control over the jail complex at Rikers Island.
In 2016, Mr. Seabrook and Murray Huberfeld, co-founder of now-defunct hedge fund Platinum Partners, were arrested and charged with conspiracy and fraud. Both were tried this past fall, and in November, a federal judge in Manhattan declared a mistrial after jurors said they were deadlocked.
In May, Mr. Huberfeld pleaded guilty to one count of wire-fraud conspiracy. Mr. Seabrook is now on trial alone. Mr. Huberfeld, who isn’t cooperating with the government, is slated to be sentenced in September.
During opening statements Thursday, Assistant U.S. Attorney Lara Pomerantz said Mr. Seabrook’s union post made him powerful but not rich. “Norman Seabrook wanted to get paid,” she said.
Mr. Seabrook arranged to invest $20 million in union funds with Platinum in exchange for a percentage of the profits, she said. As a kickback, he received $60,000 in cash in a Salvatore Ferragamo bag, she said, delivered by the businessman Jona Rechnitz.
The exchange could have been a scene out of a movie, she said in the opening statement. “The bag. The bills. The handoff,” she said. “It was all real.”
Platinum Partners went bankrupt, ultimately losing $19 million of the union members’ dues and retirement funds, Ms. Pomerantz said.
Defense attorney Margaret Lynaugh, who represents Mr. Seabrook, told the jury the case is called U.S.A. v. Norman Seabrook, but should be called Jona Rechnitz v. Norman Seabrook.
“At bottom, this is a one-witness case,” she said. Mr. Rechnitz, whom she called a pathological liar, is the only one who can testify to presence of the cash in the bag, she said.
A lawyer representing Mr. Rechnitz, who is cooperating with the government, declined to comment.
During opening statements,Mr. Seabrook , wearing a lavender shirt and purple-patterned tie and pocket square,looked at the jury, occasionally fiddling with a pen. He faces up to 20 years in prison if convicted.
After the jury had left the courtroom, Assistant U.S. Attorney Martin Bell told the judge he had heard an audible expletive from Mr. Seabrook during the government’s statements.
“Something along the lines of, ‘That’s bullshit,’ ” Mr. Bell said. The judge said he hadn’t heard the remark, but he told Mr. Seabrook to be impassive.
Write to Corinne Ramey at Corinne.Ramey@wsj.com
