Lerner, Oberlander Barred from Unsealing Inquiry

Eastern District Judge I. Leo Glasser Tuesday barred the press and two lawyers facing a contempt investigation from a hearing to examine whether 70 documents, which are part of the sealed criminal file of a government cooperator, should be released to the public.

One of the two lawyers, Frederick M. Oberlander, said in an interview after his expulsion that he would seek immediate relief from the U.S. Court of Appeals for the Second Circuit within 24 hours. The other lawyer, Richard E. Lerner, said he would review the matter further before making a decision.

Both Mr. Oberlander and Mr. Lerner are the subject of an investigation for criminal contempt stemming from the heated litigation over whether Mr. Oberlander should have used information from the sealed file when he sued the cooperator, Felix Sater, in May 2010.

Mr. Oberlander represents the plaintiffs in a derivative action filed in the Southern District of New York, claiming that Mr. Sater’s sealed plea in 1998 to a $40 million stock scam enabled him years later to pull off a $500 million real estate fraud. Mr. Lerner is representing Mr. Oberlander. Judge Glasser presided over Mr. Sater’s criminal case which did not end until 2009 when he was sentenced to probation and a $25,000 fine.

The two lawyers maintain that Mr. Sater’s sentence violates federal law because no notice of his sentencing was given to the victims, depriving them of the opportunity to seek restitution.

Lerner Exits Wilson Elser

At the outset of Tuesday’s proceeding, Mr. Lerner advised Judge Glasser that he had withdrawn from Wilson Elser Moskowitz Edelman & Dicker where he had been a partner for 16 years.  Instead, he said he was appearing for Mr. Oberlander in his new capacity as a solo practitioner.

The split had been foreshadowed by the firm’s decision to seek to withdraw as counsel in the case in April, shortly after Eastern District Judge Brian M. Cogan asked the U.S. Attorney’s Office in Brooklyn to open a criminal contempt investigation of the two lawyers. Mr. Lerner publicly differed with his firm and filed papers opposing the firm’s efforts to get out of the case. More recently, Mr. Lerner has been in tense negotiations with the firm over his departure. Read story.

Yesterday, Mr. Lerner had only kind words for his firm. “Wilson Elser is the finest firm, and it has been an honor to work with them,” he said. He did acknowledge, however, “a difference of opinion,” over whether the firm should have withdrawn from the case. Mr. Lerner would only say that there had been  “a resolution” with the firm. Typically in such situations a departing partner is required to agree to a non-disparagement clause.

At the outset of the hearing, Judge Glasser justified the closing saying the presence of the public could “risk harming the integrity of the governmental determination of whether the records should remain confidential.”

John Riley, a reporter for Newsday, objected and asked to be heard, but Judge Glasser did not recognize him.

Is Government Seeking to Seal Public Documents?

An examination of documents that were public prior to the hearing reveals that the government is asking for, in one instance, the sealing of a court transcript which up to now had been public, and the further redaction of two transcripts of proceedings that have so far been available to the public. All three transcripts were from different dates of the hearing that Judge Glasser conducted during to the summer of 2010 to determine how Mr. Oberlander had gotten ahold of material from Mr. Sater’s sealed file.

The government’s letter, dated Oct. 5, identified the three documents as transcripts from three days of the hearing—June 14, June 21 and July 20, 2010.

According to the June 14 transcript, Judge Glasser “so ordered” the release of its contents so long as Mr. Sater was referred to as John Doe. Similarly, the June 21 transcript reflects that Judge Glasser granted the request of Mr. Sater’s lawyer that his name be masked in the transcript as “John Doe.”

The July 21, 2010 transcript contains the following exchange between Mr. Lerner and the lawyer then representing Mr. Sater:

Lerner: “My client wishes to know whether these proceedings are sealed.”

Sater’s lawyer: “Your honor, all I ask is that the name be redacted to John Doe.”

The June 14 transcript provides a window into why the government has fought so hard to keep Mr. Sater’s criminal file out of the public domain. In it, Judge Glasser said that the case “might also significantly affect matters of national interest.” Later in the proceeding, he noted that, at the time he sentenced Mr. Sater, there were present in his courtroom “fairly significantly placed members of a national security agency. I should say agencies plural.”

On Aug. 27, Judge Glasser ordered the unsealing of docket sheet, which now contains all the entries filed in Mr. Sater’s criminal case, U.S.A. v. Sater, 98-cr-1101. Read story.

The government in its Oct. 5 letter also agreed to release documents reflecting the entry of Mr. Sater’s guilty plea in 1998 and the terms of his sentence in 2009 (probation and a $25,000 fine).

As of the close of business Tuesday, no ruling had been posted on the PACER system, which the courts use to make decisions available to the public.

DanielJWise ©

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