Intrigue surrounds NYC judge’s withdrawal from case against Murray Huberfeld

A Manhattan federal judge has abruptly withdrawn from a case involving a crooked hedge fund founder who screwed the correction officers’ union out of $20 million — and sources say it’s due to the judge’s close relationship with an executive who testified about the fund swindling investors.

Judge Alvin Hellerstein, 86, transferred Murray Huberfeld’s case to another court Tuesday without explanation. The move came only weeks before Hellerstein was to re-sentence Huberfeld for his role in a bribery scheme involving former jails union boss Norman Seabrook and notorious Mayor de Blasio donor Jona Rechnitz.

Sources say that behind the scenes, defense attorneys argued Hellerstein should not be on the case because he is close with Andrew Kaplan, a former executive at Huberfeld’s hedge fund, Platinum Partners. Huberfeld recently hired a new attorney, Andrew Levander, records show.

“One of the defendants in the Platinum case ... is Andrew Kaplan. I have known Andrew Kaplan since he was born. He and one of my daughters grew up together, went to school together, were friends together. His sister and my eldest daughter remain close friends. His father was a good friend of mine but passed away about five, six years ago, and his mother remains a very good friend of mine, so there is that relationship,” Hellerstein said at a 2018 hearing. “I can’t see that whatever happened, whatever conduct occurred at Platinum affects the issues of this case, which is an honest services issue.”

Online records show Kaplan and Hellerstein’s names on newsletters for The Jewish Center synagogue on the Upper West Side, as well as other charities.

The revelation came after Huberfeld pleaded guilty but had not been sentenced for his role in a $60,000 bribe to Seabrook in December 2014 in exchange for a $20 million investment of union money in Platinum Partners. The union lost its money when the hedge fund went bankrupt. The Correction Officers’ Benevolent Association is still fighting in court to recover the loss. Seabrook asked last week to serve his 58-month sentence in home confinement due to the coronavirus pandemic.

Kaplan pleaded guilty, signed a cooperation deal and took the stand in Brooklyn Federal Court last year. He testified in a trial over Platinum’s collapse that he lied to investors about the hedge fund’s health as it struggled to find cash.

Huberfeld’s attorneys argued the fund’s downfall, which cost Kaplan his reputation and financial health, gave the appearance Hellerstein had a motive to slam Huberfeld with a harsh sentence of 2½ years, sources said. The sentence was five times more than what prosecutors sought. The 2nd Circuit vacated the sentence in August because Hellerstein used the wrong sentencing guidelines.

“Vacatur is warranted because we cannot be confident, despite the district court’s statement to the contrary, that it would have imposed the same sentence had it instead used the correct guideline,” the Appeals court wrote in August.

Huberfeld’s attorney, Henry Mazurek, declined comment. The financier is worth over $100 million.

“Murray Huberfeld is a bad guy. Murray Huberfeld has so much money — more money than God — and he bought his way through many nefarious, fraudulent schemes,” said attorney Gerald McMahon, who has followed the case. “He’s using every tool in the toolbox to get out from under this. Hellerstein, being an old fashioned guy, whacked him.”

McMahon said the appearance of the conflict should have resulted in Hellerstein’s recusal.

“I have a little sweet spot for (Hellerstein) because I don’t think he’s malicious. I just think he’s lost it,” McMahon said.