Members of the city prison guards’ union lost $20 million of their hard-earned money to a troubled and risky hedge fund because their leaders were afraid that if they spoke up they would be exiled to work on dreaded Rikers Island, a new lawsuit charges.
Leaders of the Corrections Officers Benevolent Association, representing 9,000 jail guards, “provided no meaningful check” on ex-President Norman Seabrook, according to the lawsuit filed in Manhattan federal court Monday.
That’s because Seabrook, union president since 1995, stood between them and significant job perks, like avoiding violent Rikers Island jails, according to the lawsuit.
Other perks of serving on COBA’s board — and doing Seabrook’s bidding — included “daytime hours,” “access to cars,” and “tickets to sporting events and concerts,” claims the lawsuit, filed by five angry COBA members.
“We intend to claw back the millions of dollars believed lost and return the money to the hard-working officers that were victims of a corrupt union leadership,” said the lawsuit’s attorney, Phil Seelig.
The board “remained mute to the reckless conduct of Seabrook so they could continue to enjoy the gifts and other benefits of being in Seabrook’s trusted camp,” said Seelig, who was COBA’s president for 14 years.
Seabrook was arrested in June and charged with accepting $60,000 in a black Ferragamo bag in exchange for funneling $20 million of the union’s money to Platinum Partners, a risky hedge fund that has since filed for bankruptcy and is being investigated by the FBI and Brooklyn prosecutors.
Seabrook pleaded not guilty. His lawyer did not immediately return a request for comment about the lawsuit, which alleges civil racketeering, dereliction of fiduciary duties, aiding and abetting and unjust enrichment.
Monday’s lawsuit also targets COBA’s law firm, Koehler & Isaacs; the auditor of the plundered retirement account, Buchbinder Tunick & Co.; and the retirement plan administrator Daniel H. Cook & Associates — saying they, too, turned a blind eye to the risky investment for fear of being fired.
“COBA’s law firm Koehler & Issacs was more loyal to Seabrook than to COBA,” the lawsuit says.
Koehler & Issacs knew about Seabrook’s “high stakes investment,” but didn’t raise any red flags for fear that its contract with COBA “could be imperiled,” it alleges.
“The facts will show that Koehler & Isaacs, along with COBA’s financial advisors, performed a thorough and diligent vetting of the union’s investment in Platinum Partners,” the law firm said in a statement. “We look forward to responding to this suit in court.”
The lawsuit also accuses COBA’s vendors of taking part in the unsavory practice of lavish gift-giving at COBA’s headquarters, as The Post has previously reported.
“Seabrook himself bragged that Koehler & Isaacs provided him with a black no-limit American Express Card,” said the lawsuit, echoing reporting by The Post.
Monday’s lawsuit called Platinum a “high-risk Ponzi scheme,” and named its founders as defendants. A spokesman for Platinum declined to comment.
Seabrook’s $20 million investment in Platinum ate up nearly 20 percent of COBA’s retirement fund and 40 percent of its general fund.
“Had the executive board exercised even a modicum of its oversight responsibility by putting in proper safeguards to prevent illegal and improper activity, it would have been impossible for Seabrook to have invested the monies,” the lawsuit said.
COBA president Elias Husamudeen, who is also a defendant, called the lawsuit “frivolous,” and said the board remains “focused on representing and fighting for our members, twenty-four hours a day, seven days a week.”
http://nypost.com/2016/10/31/prison-guards-were-scared-to-question-unions-risky-investments/