Wednesday, September 11, 2019

Hard Driving Lawyer Gets Suspended

The New York Appellate Division for the Second Judicial Department has suspended an attorney for one year based on sanctions imposed by the United States District Court for the Eastern District of New York

The underlying proceeding involved allegations that the respondent engaged in a relentless campaign to extort a settlement by publicly releasing documents that had been sealed by a federal court, and that in furtherance of that effort, the respondent intentionally defied the orders of three different judges in the Southern and Eastern Districts of New York as well as the United State Court of Appeals for the Second Circuit (hereinafter Second Circuit), filed a slew of frivolous motions and lawsuits, and repeatedly accused the courts of illegal and fraudulent conduct.

Felix Sater was the object of this campaign

In 1998, Felix Sater was prosecuted for his involvement in a securities fraud and money laundering scheme. On December 10, 1998, Sater pleaded guilty before the Honorable I. Leo Glasser, in the United States District Court for the Eastern District of New York, to an information charging him with violating the Racketeer Influenced and Corrupt Organizations Act (18 USC § 1962[c]; hereinafter RICO). As part of his plea, Sater entered into a cooperation agreement with the United States Attorney’s Office for the Eastern District of New York. Because of the sensitive nature of the information Sater was providing and the potential danger to Sater’s life if his identity were to be revealed, Judge Glasser sealed the action and its docket sheet. A press release in March 2000 announced Sater’s conviction, but not the cooperation agreement. On October 23, 2009, Sater was sentenced and ordered to pay a fine in the sum of $25,000. Sater’s criminal case remained sealed.

In 2002, Sater joined Bayrock Group, LLC (hereinafter Bayrock), a real estate development firm. Jody Kriss was Bayrock’s Director of Finance from 2003 to 2008, and Joshua Bernstein was employed there from November 2006 to September 2008. Kriss hired the respondent as his attorney in 2007, and introduced the respondent to Bernstein.

During his employment at Bayrock, Bernstein maintained a hard drive that contained copies of all of Bayrock’s files from its servers. The files included emails and documents Sater had sent to his attorney in connection with the criminal proceedings, including his cooperation agreement, a United States Department of Justice financial statement dated December 10, 1998, two proffer agreements, and a presentence investigation report (hereinafter PSR) dated June 28, 2004 (hereinafter collectively the sealed materials).

In September 2008, Bernstein’s employment at Bayrock was terminated and he took the hard drive with him. He kept the hard drive and the sealed materials, despite being instructed to return them. Bernstein thereafter turned over the sealed materials to the respondent. In May 2010, the respondent filed a civil RICO complaint against Sater and 29 other defendants in the Southern District of New York on behalf of Kriss and another Bayrock member, alleging a RICO conspiracy involving tax evasion, money laundering, embezzlement, and fraud. The respondent attached portions of the sealed materials as exhibits to the complaint. The complaint also referred to information in the sealed materials, including details about Sater’s cooperation with the government against certain members of organized crime.

The case was originally assigned to United States District Judge Naomi R. Buchwald in the Southern District of New York. On May 13, 2010, Sater’s counsel informed Judge Buchwald that the respondent had filed the complaint publicly, and that it had been uploaded by the online news service Courthouse News to its website. That same day, Judge Buchwald directed that the complaint be sealed and enjoined further dissemination of the complaint and exhibits, pending further order of the court.

Sater sought injunctive relief

On July 16, 2010, as part of his response to the TRO, the respondent filed a signed declaration in which he made a number of accusations against Judge Glasser and the United States District Court for the Eastern District of New York. Such accusations included, among others, that Judge Glasser presided over a “star chamber” and “maintained a constitutionally illegal super-sealed docket system of private justice.”

On July 20, 2010, Judge Glasser found that the respondent knew that the documents were sealed before he filed them publicly, that Bernstein had obtained the documents wrongfully and that the respondent “had documents which he knew or perhaps should have known may have been improperly obtained by Bernstein and passed on to him.” Judge Glasser directed the respondent to return the PSR, including all copies, and prohibited its dissemination. Despite Judge Glasser’s explicit injunction in his previous ruling, the respondent continued to maintain copies of the PSR. Judge Glasser issued a further TRO prohibiting the dissemination of any copies.

The Second Circuit affirmed Judge Glasser's finding he had knowingly flouted the court order but then

On February 5, 2012, the New York Times published an article entitled By Revealing Man’s Past, Lawyer Tests Court Secrecy, in which the respondent revealed his identity and referred to Sater as John Doe.

On February 10, 2012, Sater’s counsel moved by order to show cause to hold the respondent and his attorney, Richard Lerner, in civil contempt on the ground that the respondent violated the Second Circuit’s February 14, 2011, order by revealing Sater’s identity in the article. Judge Cogan directed that a hearing be held on February 27, 2012.

The contempt is apparently not yet adjudicated.

A committee of the federal district court considered ethics violations

The District Court Committee rejected all of the respondent’s procedural defenses, and found that the evidence was insufficient to conclude that the respondent violated rule 3.1 (frivolous conduct) and rule 3.2 (dilatory tactics) of the Rules of Professional Conduct (22 NYCRR 1200.0). However, the District Court Committee found by clear and convincing evidence that the respondent violated Rules of Professional Conduct (22 NYCRR 1200.0) rule 3.3(f)(2) (discourteous conduct)...

Here reciprocal discipline is imposed

we find that the imposition of reciprocal discipline is warranted based on the findings of the District Court Committee. The respondent showed no regret for his behavior. His aggressive behavior did not consist of an isolated outburst, but rather, a prolonged course of conduct. The respondent’s relentless insults and attacks in multiple filings directed at Judge Glasser, Judge Cogan, the Eastern District, and the Second Circuit, coupled with his campaign to extort a settlement using improperly obtained materials, constitute undoubtedly serious professional misconduct. We conclude that a suspension from the practice of law for a period of one year is warranted.

(Mike Frisch)

Bar Discipline & Process | Permalink


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