United States v. Seabrook

UNITED STATES OF AMERICA, v. NORMAN SEABROOK, Defendant.

No. 21 Civ. 8767 (AKH), 16 Cr. 467 (AKH)

United States District Court, S.D. New York

March 9, 2022

ORDER DENYING HABEAS PETITION IN PART AND ORDERING ADDITIONAL BRIEFING IN PART

ALVIN K. HELLERSTEIN, UNITED STATES DISTRICT JUDGE

On August 15, 2018, a unanimous jury convicted Petitioner Norman Seabrook of one count of honest services wire fraud in violation of 18 U.S.C. § 1349 and one count of conspiracy in violation of 18 U.S.C. §§ 1343, 1346. On September 21, 2020 the Second Circuit affirmed Petitioner's conviction. Petitioner filed the instant petition pursuant to 28 U.S.C. § 2255 to vacate his convictions for conspiracy to commit honest services wire fraud and committing honest services wire fraud. Petitioner also moves for a new trial under Rule 33 of the Federal Rules of Criminal Procedure, based on the purported discovery of new evidence. For the reasons that follow, the petition is denied in part, additional briefing is ordered in part, and the motion for a new trial is denied.

BACKGROUND^[1]

Seabrook's convictions for honest services wire fraud and conspiracy to commit honest services wire fraud stemmed from a bribery scheme during his tenure as the president of the Correction Officers Benevolent Association ("COBA"), the nation's largest correction officers' union, Pursuant to the bribery scheme, Seabrook invested $20 million of COBA funds, substantially all COBA's pension fund including reserves, into the hedge fund Platinum Partners in three tranches over the course of 2014. Seabrook did so in exchange for a promise of a share of the yearly revenue that the fund would charge for the investment, to be paid personally to him. Seabrook was promised approximately $100, 000 the first year of investments, and equivalent sums to follow. However, he was paid $60, 000 in cash in December 2014, stashed inside a Ferragamo men's handbag. Jona Rechnitz arranged the bribe of Seabrook on behalf of Platinum and advanced the $60, 000 bribe payment, which was paid by Murray Huberfeld, one of the principals of Platinum Partners. When Platinum Partners failed, COBA lost $19 million of the $20 million invested. Federal law enforcement agents arrested Seabrook on June 8 2016 and executed a search warrant that authorized the seizure of any cash in an amount greater than $5, 000 and any Ferragamo shoes or bags. Among other things, Federal law enforcement agents recovered a Ferragamo handbag and $21, 000 in cash found within three bank envelopes with handwritten markings of "5M," "10M," and "10M."

Seabrook first was tried with Murray Huberfeld as co-defendant and Judge Andrew L. Carter as trial judge. It concluded with a hung jury, and on November 16, 2017, a mistrial was ordered. Two issues from that trial are relevant to the motion before me. In limine, before the first trial, Judge Carter ruled that evidence of the extent of COBA's loss would be inadmissible because loss was not an element of the crime of honest services wire fraud. Jona Rechnitz, a cooperating witness, was cross-examined at length on numerous instances of bribery, lying, acts of fraud and, in addition, on a prior use of blackface.

I was assigned to preside over the re-trial. During pre-trial Huberfeld pled guilty, not to defrauding COBA, but to defrauding his own his company, Platinum Partners. I accepted his plea, commenting that I regarded Platinum Partners as a beneficiary of Huberfeld's crime that COB A was the real victim, and that I likely would sentence accordingly. See ECF No. 203, This left Seabrook as the only defendant.

In limine before the re-trial of Seabrook, the Government sought reconsideration of Judge Carter's previous ruling excluding evidence of the extent of COB A's loss. I ruled that such evidence was admissible. The defense was intent on offering evidence of the reasonableness and suitability of the investment, but this evidence, I believed, was not relevant to a case alleging that the investment was procured by bribeiy. I ruled that if defendant planned to present such evidence, the outcome of the investment also could be offered to present the entire context of the investment. See ECF No. 219.

Before trial, the Government advised that one of its witnesses would be a former officer of Platinum Partners, Gilad Kalter. Kalter had been a summer intern for me years before, when he was in law school, and his mother and my wife had been friends and co-officers of a charity. I commented that these facts would not affect my rulings and, in my opinion, did not raise an appearance of conflict. Nevertheless, I asked the parties to consider the matter, and for the Government to write to state if either party objected (without revealing which party that was). The Government's letter of July 16, 2018 represented that neither party objected or sought recusal. See ECF No. 218.

One of the Government's major witnesses was Jona Rechnitz, a cooperating witness who had testified in the first trial that he had arranged and helped to accomplish Huberfeld's bribe of Seabrook. Seabrook's counsel extensively cross-examined Rechnitz on his involvement in other bribes of City officials, and brought out other facts affecting his credibility. In the first trial, defense counsel had elicited that Rechnitz once had appeared in blackface, but did not cross examine him on his use of black face in the second trial.

At the conclusion of the retrial, on August 15, 2018, the jury delivered its verdict, finding Seabrook guilty of both counts. I sentenced Seabrook on February 8, 2019 to a Guidelines sentence of 58 months' imprisonment, ^[2] three years of supervised release, and restitution to COBA in the amount of its $19 million loss, at a rate of 10% of Seabrook's monthly net income. See ECF Nos. 298, 302. Seabrook also moved for a new trial, a motion I denied on June 15, 2020.

I sentenced Huberfeld on February 12, 2019, and gave him 30 months imprisonment, three years of supervised release and immediate restitution of COBA's loss.^[3] I explained my sentence as reflecting the culpable equivalence of the bribe giver and the bribe taker, and Huberfeld's considerable assets, Thirty months reflected adjustments under the Guidelines that added to Seabrook's sentence and diminished Huberfeld's sentence because Huberfeld had not committed a breach of trust and had accepted responsibility. See Huberfeld Sentencing Tr., ECF No. 300, at 42:15-43:6; 59:10-21.

I sentenced Rechnitz on December 19, 2019. Rechnitz, the Government represented, had given considerable and useful cooperation in a number of cases, and the Government asked me to consider that extensive cooperation in determining his sentence. I gave Rechnitz 5 months' imprisonment and 3 years' supervised release, the first 5 months of which would be served under house arrest. See 16 Cr. 389, ECF Nos. 80, 84.1 ordered $19 million restitution to COBA but, recognizing Rechnitz' assistance and financial pleas, ordered that his contribution was to be capped at $10 million, and that he should make payments at the rate of $500, 000 per year. Rechnitz Sentencing Tr., 16 Cr. 389 ECF No. 80, at 87:9-11.

Seabrook appealed from the judgment against him, and from the denial of his motion for a new trial. The Second Circuit affirmed Seabrook's judgment and sentence on September 9, 2020. ECF No. 334. Huberfeld appealed separately, as did Rechnitz.

As to Huberfeld, the Second Circuit reversed my order as to restitution, holding that the Government's choice of the crime to which Huberfeld had pleaded guilty-a fraud of $60, 000 against Platinum Partners to cover the bribe to Seabrook, and not a $19 million fraud against COBA-absolved Huberfeld from a restitution obligation to COBA. See United States v. Seabrook, 968 F.3d 224 (2d Cir. 2020). Huberfeld was subsequently resentenced by Judge Lewis J. Liman to seven months' imprisonment and ordered to pay restitution of $60, 000. See ECF Nos. 402, 420.

Rechnitz' appeal was delayed by COBA's motion for full restitution under the Crime Victim Rights Act ("CVRA"). In ruling on that motion, I reevaluated Rechnitz' culpability and financial conditions and held Rechnitz liable to COBA for the balance of the restitution owed, amounting to $12 million. See 16 Cr, 389, ECF No. 156. His appeal is now pending.

Meanwhile, with COVID raging, I allowed Seabrook to postpone his reporting date to the Bureau of Prisons. Represented by a third attorney, Seabrook filed several motions to obtain evidence of bribery efforts by Rechnitz of New York City officials claimed to be in the Government's files. I denied the motions on July 1, 2021 as repetitive of the considerable evidence at trial, and denied reconsideration twice thereafter, on August 27, 2021 and November 22, 2021. Petitioner is now in custody and filed the instant motion under 28 U.S.C. § 2255 on October 26, 2021.

DISCUSSION

In his Section 2255 petition, Petitioner identifies two grounds for relief: (1) ineffective assistance of counsel, and (2) failure of the Government to disclose material evidence as required by Brady v. Maryland, 373 U.S. 83 (1963) and Giglio v. United States, 405 U.S. 150 (1972). He argues also, notwithstanding the denial of his appeal, that (3) evidence of COBA's loss was improperly admitted, and (4) he received a disproportionately harsh sentence in violation of his right to due process, and argues that he should be given a new trial pursuant to Rule 33 of the Federal Rules of Criminal Procedure.

To obtain collateral relief under Section 2255, a defendant must demonstrate "a constitutional error, a lack of jurisdiction in the sentencing court, or an error of law or fact that constitutes a fundamental defect which inherently results in a complete...