Russian-born entrepreneur Felix Sater is breathing a sigh of relief after a tax fraud case against him was dismissed in Manhattan court in September 2017. Sater is a former business acquaintance of President Donald Trump, and also a cofounder of Bayrock Group LLC, a real estate conglomerate out of New York City.
The case against Sater was a qui tam (whistleblower) lawsuit filed on the state’s behalf that gives the attorney general’s office an option to intervene. The State has the right to intervene, but is not required to do so. Qui tam lawsuits are brought under the False Claims Act, and reward whistleblowers in cases where the government successfully recovers funds that were lost due to fraud.
Attorney Fred Oberlander has been identified as the whistleblower in this case. Not too long ago, Oberlander represented Sater’s former business partner Jody Kriss, in a suit against Tevfik Arif Bayrock.
Last year, attorney general Eric Schneiderman sent a letter to the New York Supreme Court describing how Oberlander’s press release misled the public by stating that Schneiderman would pursue the case when the opposite was true.
Based on information provided by another attorney present at the hearing, Oberlander based his qui tam lawsuit specifically on information that federal judges struck from the complaint because the information was confidential. Despite the low probability of success based on these circumstances, Oberlander still moved forward with his complaint.
Recently, the case had been dismissed. Wolf revealed that the case was dismissed on the merits, which means the decision was reached based on facts, law and evidence rather than technical or procedural defenses.
Finally, Oberlander has been referred to the Department of Justice for criminal contempt in connection with the suit. In addition, Robert Lerner, another attorney involved in the case against Sater, has also been referred to the DOJ for his conduct in the same suit. Despite the recent dismissal of the case, Lerner told a reporter he still plans to appeal the decision.
Trouble first began in 2010, when the organization’s former finance director, Jody Kriss, filed a lawsuit against Sater and the organization alleging bribery; conspiracy; extortion; money laundering; tax evasion; mail, wire, and bank fraud; and embezzlement. The complaint alleges that Sater and the organization’s founder, Tevfik Arif, engaged in misconduct through fraud, money laundering, and racketeering that caused him to lose millions of dollars.
According to the complaint, Trump was not informed of Sater’s criminal past when Arif and Sater suggested partnering with the Trump Organization to market certain projects under the Trump Brand. In a past deposition, Trump admitted he would not have considered working with Sater and his organization for the Trump SoHo project if he was aware of the allegations against Sater.
Kriss told Bloomberg that Trump was exploring the possibility of investing in Russia, and he valued Sater’s connections in Russia. An anonymous source that fears for their safety alleged that Sater and Trump held regular weekly meetings. Trump, however, remained unaware of the allegations against Sater. Despite Oberlander’s persistence, the case against Sater has been dismissed on the merits.