In a brief filed Oct. 2 in federal court, Wilson, Elser, Moskowitz, Edelman & Dicker argues that it must be allowed to withdraw from a controversial case because one of its partners has an “unavoidable conflict of interest,” even though the partner denies any conflict.

The filing with Eastern District Judge I. Leo Glasser involves Wilson Elser partner Richard Lerner and his representation of a Long Island attorney Frederick Oberlander.

Read Wilson Elser’s brief.

Oberlander in May 2010 filed a federal civil racketeering complaint in which he included documents related to the secret conviction of real estate developer Felix Sater in 1998. Sater pleaded guilty under a cooperation agreement to a $40 million stock fraud. In return, his file was sealed, apparently for his protection. Oberlander alleges that the sealing of Sater’s record enabled him to perpetrate a $500 million real estate fraud against investors who were unaware of his criminal past.

After he was publicly identified as the “John Doe” in the 1998 case, Sater asked the court to find Oberlander and Lerner in contempt and Eastern District Judge Brian Cogan referred the matter to the U.S. Attorney for a criminal contempt investigation.

Wilson Elser now wants to withdraw from the case, over the opposition of Oberlander and Lerner, citing the “significant risk that the interests of Mr. Oberlander and Mr. Lerner could diverge.” Lerner had previously told the court that there is no immediate conflict of interest (NYLJ, Sept. 26), but Wilson Elser on Oct. 2 responded to the court that “what Mr. Lerner thinks is irrelevant.”

Read Oberlander’s brief in opposition to the motion to withdraw. 

“There is a significant risk that Mr. Lerner and Mr. Oberlander could very well blame and point the finger at one another when defending themselves in the civil and/or criminal contempt proceedings,” Wilson Elser said in its brief. “The stakes are high and Mr. Lerner obviously has a personal, financial and reputational interests that diverge from that of Mr. Oberlander.”

Wilson Elser also disputed Oberlander’s assertion that the firm deceived the court by not disclosing that Lerner is apparently leaving the firm. The firm said “there is no evidence of Mr. Lerner’s imminent departure.” However, Lerner has retained an employment lawyer, Jonathan Sack of Sack & Sack in Manhattan.

Additionally, Wilson Elser urges Glasser to deny Oberlander’s request for an evidentiary hearing on whether the firm should be allowed to withdraw.

“The request is based primarily on Mr. Oberlander’s assertion that ‘Your honor can hold a hearing that Lerner’s not deranged,’” Wilson Elser partner Thomas Leghorn said in the motion. “The court, particularly in this proceeding, is not the proper forum for making this determination, which is not relevant to the instant motion.”

The contempt investigation of Oberlander and Lerner apparently was prompted by media leaks revealing that Sater was “John Doe.”

However, the government itself has inadvertently identified Sater at least twice—once in a press release and again when a clerk apparently left his name on a public docket report. Additionally, in an affidavit filed with the court a retired lawyer in Texas said that he was easily able to figure out that Sater was “John Doe,” and that he was responsible for providing that information to the media without any assistance or prompting from Oberlander or Sater.

With Sater’s identification now publicly revealed, Glasser has unsealed a docket report and scheduled a hearing for Oct. 9 to determine if other documents in the case should remain sealed. In a Sept. 28 letter to Glasser, the Eastern District U.S. Attorney’s office said there remain 155 documents under seal and “the government anticipates that it will seek to keep relatively few of those documents under seal in their entirety.”