Former Wilson, Elser, Moskowitz, Edelman & Dicker partner Richard Lerner and Long Island attorney Frederick Oberlander, who are under investigation for criminal contempt, have been ordered by a federal judge to show cause why they should not be sanctioned for flooding the court with a “vexatious” and “oppressive” 742-page “documentary stew.”

Eastern District Judge I. Leo Glasser (See Profile), who is considering a motion to unseal records related to a 1998 criminal case, said in a four-page order issued Nov. 13 that Lerner and Oberlander submitted an enormous file “having no relevance to the very discrete issue pending before the Court.”

The attorneys submitted the documents earlier this month (NYLJ, Nov. 5) in an apparent attempt to show that information they are suspected of leaking has been in the public domain for several years. Oberlander and Lerner are under investigation for divulging records of the 1998 conviction of Felix Sater, who pleaded guilty to securities fraud and, in return for his ongoing cooperation, was promised anonymity. It is unclear exactly what assistance Sater provided in return for the plea deal, but there have been indications that it involved issues of national security.

Oberlander, represented by Lerner, attached documents related to the Sater prosecution to a civil action alleging the sealed record enabled Sater to engage in a fraud because investors, lenders and partners in a real estate venture were unaware of his criminal history.

Lerner, who left a longtime partnership at Wilson Elser after a dispute over Oberlander’s representation, said yesterday the documents are relevant and pertinent to the unsealing issue.

The recent filing by Oberlander and Lerner includes a presentence report of another defendant from the 1998 case and multiple other documents and records publicly identifying Sater long before the attorneys were involved.

But Glasser said Oberlander and Lerner, in submitting the documents as attachments to a request for judicial notice, evinced “an indifference to their irrelevance to the discrete pending issue of document sealing.” He scheduled a show cause sanctions hearing for Nov. 18.

Glasser in August unsealed the docket report (NYLJ, Aug. 29) after it became obvious that Sater was the “John Doe” of the 1998 case and is considering whether to unseal the underlying documents. Prosecutors with the Eastern District U.S. Attorney’s Office are arguing to keep some of the documents under seal (NYLJ, Oct. 10).

In his Nov. 13 order, Glasser said the voluminous records Lerner and Oberlander submitted have nothing to do with the issue at hand—”whether unsealing any sealed document is required by a compelling interest that overrides the qualified First Amendment and common law rights of access.” Glasser said in his order that he has held two closed-door hearings on the issue and “given the volume of the documents required to be examined” anticipates that one or two more hearings will be necessary.

Sater’s attorney, Michael Beys of Beys, Stein & Mobargha in Manhattan, said in an interview yesterday that the “improper filing” by Oberlander and Lerner offers “a mere glimpse of their illegal litigation tactics.”

But Lerner in an email said, “For the past two and a half years, my client has been vilified for allegedly revealing what, as the documents show, has been public for a decade.”

“The public has a right to full access to every document in the Sater case, so the public may learn how and why Sater, having pled guilty to defrauding investors of $40 million, was able to avoid jail, keep his ill-gotten gains, pay only a $25,000 fine, and continue defrauding other investors out of hundreds of millions of dollars,” Lerner said.

He added, “There can be no compelling interest in maintaining any document in the case under seal, for there can be no compelling interest in perpetuating a system that gives a free pass to favored cooperators.”

In response, Beys said, “Oberlander and Lerner can pretend to wrap themselves in the First Amendment, but the fact is they are under investigation for criminal contempt and face civil contempt and sanctions, for their illegal actions.”

Oberlander and Lerner “are not trying to gain access for the public,” but to garner leverage in ongoing litigation, Beys said.