U.S. Supreme Court rejects review of LI lawyer's gag order

The Supreme Court on Monday refused to review

The Supreme Court on Monday refused to review the propriety of intervention by federal courts and prosecutors in New York in a closely watched case involving a Long Island lawyer's efforts to sue a high-level government informant for fraud. (March 25, 2013) (Credit: Getty Images)

The Supreme Court Monday refused to review the propriety of intervention by federal courts and prosecutors in New York in a Long Island lawyer's controversial efforts to sue a high-level government informant for fraud.

Lawyer Fred Oberlander of Montauk was slapped with a gag order and threatened with sanctions when he included in a 2010 lawsuit papers from a sealed criminal docket that indicated the defendant was a one-time stock swindler who had pleaded guilty to racketeering in 1998 and had become a secret informer against the mob.

Oberlander, with the support of press freedom and crime victims' groups, had argued that Supreme Court review was needed because sealing entire criminal dockets violated both victims' rights to restitution and the public right of access to courts. He called the gag orders a "flagrant affront" to his First Amendment rights.

Lawyers for the government and the defendant, identified in recently unsealed court papers as Felix Sater, a businessman from Nassau County, argued that the disclosures had put Sater's safety at risk, and that lawyers like Oberlander have less latitude than the press in distributing documents they receive.

The Court's decision means that rulings of the Second U.S. Circuit Court of Appeals approving the restrictions on Oberlander will not be disturbed for now. But two pending civil suits against Sater and a motion for sanctions against Oberlander promise to keep the fight going.

"While we are disappointed," said Richard Lerner, a lawyer for Oberlander, "we are proud to have shined a light on the illegally hidden cases . . . and on the deliberate and illegal failure of federal judges to impose congressionally mandated orders of restitution."

"We are obviously very pleased," said Michael Beys, a lawyer for Sater. He said Oberlander and his lawyers "have shown extreme contempt of court orders, and we are looking forward to prosecuting our motions for civil contempt against them."

A spokesman for Brooklyn-based U.S. Attorney Loretta Lynch declined to comment.

Sater pleaded guilty to racketeering before U.S. District Judge I. Leo Glasser in Brooklyn federal court in 1998 for participating in a $40 million mob-linked "pump and dump" securities fraud scheme. The transcript of the plea and the docket were sealed.

According to filings Glasser has now released, Sater worked as informant for the next 10 years, helping to prosecute mob-linked Wall Street fraud and also helping on "national security" matters that have not been detailed. In 2009, Glasser finally sentenced him to just a $25,000 fine.

The National Organization for Victim Assistance filed a brief urging Supreme Court review of the apparent failure to comply with laws requiring notification and restitution for fraud victims. Lynch's spokesman has declined to explain prosecutors' position.

Oberlander, according to court filings, says an employee of Sater provided, unsolicited, the records revealing his criminal past in 2010. Last week, Oberlander filed a new multi-million-dollar suit against Sater on behalf of victims of the original 1990s criminal fraud.

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