Eastern District Judge Brian M. Cogan issued a highly unusual order last week, attempting to jawbone the U.S. Justice Department to bring criminal contempt charges against two New York lawyers, whom I wrote about extensively in 2012 and 2013, Frederick M. Oberlander and Richard E. Lerner. View WiseLawNY stories dated Aug. 8, 2012 and Aug. 22, 2012.
The springboard that Cogan used to demand an end to the investigation against the two lawyers was a motion brought by the Associated Press to open a sealed file, containing information about a mob-connected criminal cooperator, Felix Sater, who has had business dealings with Republican presidential candidate Donald Trump. Read Cogan’s order.
Back in 2010, Oberlander set off a firestorm when he brought a lawsuit, claiming that a secret plea deal given to Sater, in 1998, in return for his cooperation in prosecuting a $40 million “pump and dump” stock scheme, enabled him to subsequently defraud investors by concealing his criminal record, which resulted in losses of upwards of $500 million. Oberlander’s complaint in the 2010 lawsuit revealed Sater’s cooperation agreement and his pre-sentencing report. Sater’s entire criminal file was under seal, according to files maintained by the Eastern District of New York’s Clerk’s Office.
The reaction to the disclosures from both Glasser and the Second Circuit was fast and furious. Within a week, Glasser and a second judge in the Southern District of New York had issued orders prohibiting Oberlander from further disseminating any records from Sater’s criminal file in the Eastern or Southern Districts. On appeal, the Second Circuit excoriated Oberlander’s disclosures and ordered the appointment of a judge to enforce its own and Glasser’s orders enjoining Oberlander. Read the 2nd Circuit Order. Lerner has represented Oberlander in his efforts to get the sealing orders lifted. Cogan was subsequently appointed as the enforcement judge in 2012.
Fast forward to the present, with Donald Trump in striking distance of becoming the Republican Party’s candidate for president later this year. In this morning’s article, the Associated Press made it clear that it was looking for information that might shed greater light on Trump’s relationship with Sater, who in a 2000 indictment was linked to four mob families. Today’s article stated, “The AP reported in December that, even after learning about Sater’s background, Trump tapped Sater for a business development role in 2010 that included the title of senior adviser to Trump. Sater received Trump Organization business cards and was given an office within the Trump Organization’s headquarters, on the same floor as Trump’s own.” Read the AP Story.
Instead of dealing with the AP’s assertions of public interest in the disclosure of the contents of the court file during the four years the enforcement proceeding has been pending before him, Cogan concentrated his fire on the government’s failure to bring criminal contempt proceedings against Oberlander and Lerner.
In his six-page opinion, he recites a history in which he has twice in the past four years referred Oberlander and Lerner to the Eastern District U.S. Attorney’s Office for investigation to determine whether they should be charged with criminal contempt for disclosing information from a sealed court file. In each instance, he reported, the Eastern District office claimed a conflict of interest. After consulting with superiors in the U.S. Justice Department, the Eastern District sent the referral to the U.S. Attorney’s Office in the Northern District of New York, which, to date, has not reported any decision on the matter.
In his March 14 opinion, Cogan left little doubt as to where he stands on the question of enforcement, writing:
“Whatever damage Sater has suffered as a result of the alleged dissemination, the Government has done little to signal to future informants and cooperators that the same fate (or worse) will not befall them. It is hard to fathom how the Government expects to receive continued assistance from informants when the Government’s inaction here demonstrates only that, once assistance is procured, the informant will be hung out to dry, left to fend for himself. Although that assessment is, again, within the Government’s prerogative, it seems more than passing strange that the Government declines to exercise its prerogative one way or the other.”
As a prod to the government, Cogan, on his own motion, ordered the Justice Department to show cause by April 18 whether it would oppose AP’s motion to unseal the entire file in the case. Again, Cogan used strong language likely push the government’s decision toward prosecution. The government appears “to take lightly” the risk of harm to Sater, he wrote. Cogan made no mention of either Oberlander or Lerner’s having any interest in lifting the cloud over them, which had resulted from the judge’s two referrals.
Cogan further wrote, it is “not incumbent” upon the Court to protect government investigations where the government “appears indifferent” to continued sealing.
Prosecutors May Be Reluctant to Bring Charges
There may well be significant reasons why the Eastern and Northern Districts would be reluctant to move forward with a contempt proceeding. Most importantly, Eastern District prosecutors may be open to the charge that their insistence in keeping Sater’s criminal past off the record for so many years enabled Sater to carry out a subsequent, and much larger, real estate scam because Sater’s new investors had no way finding out about his criminal past.
Moreover, much of the information that the government seeks to protect has long been in the public record:
- On March 2, 2000, the government issued a press release acknowledging that Sater had previously pled guilty to the same “pump and dump” scheme as to which 19 other defendants, with ties to “Organized Crime Families of La Cosa Nostra,” were indicted two years later. Find the press release at pages 194-5.
- Due to an error in the Eastern District’s Clerk’s Office, the entire file in Sater’s criminal case (CR-98-1101) was made available electronically for a week in August 2012 on PACER, the electronic system the federal courts use to make court documents available to the public.
- During the period the file was available to the public, I viewed some of the documents in the file and copied down the following notations: “ORDER, as to Felix Sater, ‘On October, 23, 2009,’ John Doe, by his real name, ‘was sentenced to probation and a $25,000 fine.’ ” The docket sheet also contained an entry on Dec. 10, 1998 stating that Mr. Sater had pleaded guilty on that date.
- The public file of the lawsuit that Oberlander filed in the Southern District of New York, charging a far larger real estate fraud (Kriss v. Bayrock Group, 13-cv-3905) contains a copy of Sater’s cooperation agreement at Entry # 36, dated Sept. 2, 2013.
- The public file of Sater’s prosecution in U.S. v. Doe, EDNY 98-cr-1101 contains a 25-page transcript of the Sater’s sentencing hearing dated Oct. 23, 2009 [Entry #202(1)].
In defending the continued secrecy of the files in the case before him Cogan has a tiger by the tail. Whatever interest the private parties (Sater, Oberlander and Lerner) have in avoiding injury to their reputations, it is indisputable that the public’s interest is paramount in exploring the relationship between Trump and Sater, whom the government has linked in its own press release to mob ties.