(Adds background and details on trial, paragraphs 4-11)
NEW YORK, Nov 16 (Reuters) - A U.S. judge on Thursday ordered a mistrial in the corruption case against the former head of New York City's correction officers' union and a co-founder of the now-defunct hedge fund firm Platinum Partners, after jurors said they were deadlocked.
Norman Seabrook, who once led the Correction Officers' Benevolent Association, and Murray Huberfeld, from Platinum, had been on trial for conspiracy and fraud.
Federal prosecutors had accused Seabrook of steering $20 million of union funds into Platinum in exchange for a bribe.
Their two-week trial was dominated by the testimony of former real estate developer Jona Rechnitz, who told jurors he introduced Seabrook and Huberfeld and helped further the bribery scheme.
Rechnitz, who has pleaded guilty to a corruption charge and is cooperating with prosecutors, said he handed Seabrook a bribe in the form of $60,000 in cash stuffed in a Ferragamo bag in December 2014.
Seabrook's lawyer, Paul Shechtman, and Huberfeld's, Henry Mazurek, both assailed Rechnitz's credibility in their cross-examinations and closing arguments, delving into his admitted history of dishonesty in dealing with city officials and others.
Rechnitz drew extra attention to the trial when he testified that he enjoyed a close relationship with New York City Mayor Bill de Blasio, for whom he raised money. He said he would call the mayor on his personal phone to ask for favors.
A spokesman for the mayor, who was easily reelected on Nov. 7, has denied that Rechnitz enjoyed any corrupt influence. Federal and state prosecutors closed an investigation into de Blasio's fundraising in March without bringing charges.
The case against Seabrook and Huberfeld was the first trial to emerge from a wide-ranging corruption probe that has also led to charges against police officials and others.
Platinum Partners largely shut down operations after seven people affiliated with the firm, including co-founder Mark Nordlicht, were charged last December with running a $1 billion fraud that prosecutors said was "like a Ponzi scheme." They have pleaded not guilty.
Platinum's assets are being liquidated under the oversight of court-appointed receivers. (Reporting by Brendan Pierson in New York; Editing by Jonathan Oatis and David Gregorio)