Prosecutor Told 2nd Circuit in 2011 Sater Cooperation Included ‘Russian Organized Crime’

Forbes magazine  and one of its top investigative reporters late Wednesday, March 22, asked the U.S. Court of Appeals for the Second Circuit to unseal its records in the case of a government cooperator, Felix Sater, who acted as a go-between for a rogue Ukrainian legislator, who was promoting a pro-Russian peace plan to end the fighting in eastern Ukraine, and President Donald Trump’s personal counsel.

In seeking the release of the records, Forbes’ unsealing motion at p.2 cites “significant public interest in understanding President Trump’s connection to Sater and Sater’s connections to Russia,” especially so because of the ongoing investigations into Russian interference in the 2016 presidential election.

“Documents critical to the public understanding [of those connections] sit sealed on [the Second Circuit’s] docket, wrote Forbes’ lawyers from the prominent First Amendment law firm, Levine Sullivan Koch & Schulz, and a student  clinic at Yale Law School, specializing in prying loose documents hidden from public view.

Moreover, Forbes’s motion reveals at p. 9 that, when the Second Circuit first reviewed the sealing of Sater’s criminal file in 2011, the government’s lead prosecutor informed the court during an oral argument, conducted under a shield of court-ordered secrecy, that Sater’s cooperation “involves violent organizations such as Al Qaeda, it involves foreign governments, it involves Russian organized crime.”

That information remained out of public view for nearly six years because of the Second Circuit’s blackout of the oral argument. Forbes’ lawyers were only able to expose Sater’s dealings with Russian organized crime because the transcript of the argument became public last July when the judge presiding over current proceedings ordered it unsealed in the absence of an objection from prosecutors.[1]

There is a supreme irony in this turn of events. It is highly doubtful that the Second Circuit has ever transparently displayed so much rage in ordering a file sealed as it did in protecting Sater’s record, in a case in which he pleaded guilty and cooperated with prosecutors in bringing down a $40 million pump-and-dump stock scheme linked to organized crime in 1998.

The Second Circuit did not get involved in Sater’s case until 2011, in the wake of a lawsuit brought by a Long Island lawyer, claiming that Sater had used the sealing of his stock fraud conviction as a cover for pulling off an alleged $400 million real-estate scam[2]. The lawyer, Frederick Oberlander, had incorporated material from Sater’s criminal file into his civil damage action against Sater and others associated with him.

The Circuit, in affirming the order of Eastern District Judge I. Leo Glasser, who presided over Sater’s criminal case, enjoined Oberlander and his lawyer, Richard E. Lerner, from referring in any way to the sealed materials in Sater’s file. Lerner is the son of a former presiding justice of the Appellate Division in Manhattan, Alfred D. Lerner.

The panel’s umbrage was palpable. It directed the appointment of a second Eastern District judge to enforce Judge Glasser’s and its own gag orders. The  panel also warned Oberlander that continued use of vexatious tactics would result in his being ordered to get approval of the court before filing any more papers, a restriction usually reserved to rein in pro se litigants.

The Second Circuit expressed this vessel-popping anger even though the facts of Sater’s arrest had been published in a Business Week article[3] at the time of his arrest in 1998. In addition, four years before the case came before the Circuit, the New York Times[4] had run an article reporting on Sater’s connection with Trump and his involvement with the Central Intelligence Agency in attempting to buy black market weapons that Osama Bin Laden had been trying to unload.

Additionally, the U.S. Attorney’s Office in Brooklyn itself disclosed Sater’s cooperation when it revealed in a footnote to a press release p. 194, 197-8, announcing the indictment of 19 additional defendants in the stock scheme, to which Sater had pleaded guilty two years earlier.The press release also stated that the defendants had connections to three mob families: Genovese, Bonanno and Colombo.

Pursuant to the Circuit’s order, Eastern District Judge Brian M. Cogan was appointed in 2012 as the enforcement judge, and he quickly ordered the U.S. Justice Department to determine whether Oberlander and Lerner should be charged with criminal contempt.[5] Five year later, that investigation is still pending in the U.S. Attorney’s Office in Syracuse, N.Y.

The last time that the criminal contempt investigation was mentioned in open court was on May 11, 2016 when Judge Cogan pressed Northern District prosecutor, Stephen Green, as to when the office could give him a status report on its investigation. Expressing impatience, Cogan gave Green a choice, 30 or 60 days. Sheepishly in a barely audible voice, Green took the 60-day option.

Instead, Cogan adjourned the case for roughly 30 days. By the time the June 15 adjourned date came up, the case had disappeared from Cogan’s calendar on that day with no notification to the press or explanation, and has not surfaced publicly since.[6]

At the May 11, 2016 conference, Cogan issued his ruling granting a motion made by the Associated Press, in which he released the vast majority of records, which the wire service contended belonged in the public domain. In doing so, he emphasized that Oberlander and Lerner continued to be enjoined from referring to any of the roughly 240 documents he had just ordered be made available to the public.

New Developments Create New Perspective

Will Cogan and the Second Circuit back off from their Inspector Javert-like pursuit of the two lawyers, now that Sater’s role as a critical intermediary in the delivery of the pro-Russian peace proposal to Trump’s personal counsel has made headlines around the world? Sater’s own actions, including his willingness to be interviewed by the New York Times and many other news outlets, certainly signals that he is unafraid that physical harm would result from disclosure of his identity.

Recent events have cast the Circuit’s 2011 decisions to gag the lawyers and keep the files under seal, despite the broad dissemination of the key facts at the time, in an entirely different perspective. Just two days ago, FBI Director James B. Comey publicly disclosed that the FBI commenced a counterintelligence investigation in mid-July into whether the Trump campaign had been involved in Russian efforts to tilt the 2016 election in Trump’s favor. In January, according to the New York Times, U.S. intelligence agencies concluded that Russian President Vladimir V. Putin had personally ordered such an effort.

In light of those developments, statements made by then Assistant U.S. Attorney Todd Kaminsky, during the closed oral argument in 2011, offer tantalizing new leads and do not just merely reflect upon Sater’s value as a cooperator. Combined, these factors, as the Sullivan Levine/Yale Clinic motion so forcefully argues, have created a greater need for the information in the sealed files than any justification the government could offer for the need to protect cooperators and to encourage them to testify against co-defendants.

[1] PACER, U.S. v. Sater, 16-mc706 (EDNY), entry dated July 22, 2016

[2] PACER, Kriss v. Bayrock Group, 10-cv-3959 (SDNY)

[3] Business Week, Nov. 11, 1998, “The Gym Bag that Squealed”

[4] New York Times, Dec. 7, 2007, “Real Estate  Executive With Hand in Trump Project Rose from Tangled Past”

[5] New York Times, dated March 6, 2012, “Charges Weighed for Lawyer Who Revealed Witness’s Name.”

[6] Inquiry made by the author of this article.

Correction: The sealed transcript of the 2011 argument before the Second Circuit was unsealed in July 2016 not July 2017.


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