Let me review two separate streams of information which are critical to understanding the story. First, here are some basic and well-attested facts about Felix Sater.
Sater began his professional life as a New York City stock broker; spent 15 months in prison for stabbing a man in the face with a broken wine glass in a bar fight; and then became involved in a pump and dump penny stock scheme in association with the Gambino and Genovese crime families. When he and his associates were arrested in the securities fraud scheme in 1998, Sater tried to make a deal to save himself.
According to reliable accounts, what Sater offered to do was work with the CIA to facilitate the purchase of Stinger missiles on the weapons black market in post-Soviet Central Asia. According to his accomplice and business partner, Salvatore Lauria, who wrote a book detailing the story, the CIA was more keen on working with Sater than was the FBI, which had recently been burned by its longstanding and close working relationship with Whitey Bulger. The plan eventually fell apart. It seemed like Sater and Lauria might end up doing hard time. They had defrauded investors over more than $40 million. Then 9/11 happened and everything changed. Suddenly the federal government was much more interested in Sater’s help.
Lauria later disowned the book which he had cowritten with an AP reporter, David Barry, claiming it was fiction. But Barry insists that he reported out everything contained in the book.
Sater’s attorney Robert Wolf made various seemingly hyperbolic claims about Sater’s cooperation for federal law enforcement and intelligence. He told The Washington Times in early 2015 that Sater worked on “the most serious matters of national security, battling our greatest enemies at tremendous risk to his own life and for the benefits of all citizens of our country … [saving] potentially tens of thousands, if not millions, of our citizens’ lives.”
Needless to say this all sounds wild and improbably novelistic. And you would expect Sater’s attorney to make extravagant claims about the value of his clients cooperation. Despite being well-attested, we don’t know directly from the US government that any of these wild claims are true. But the statements and actions of federal law enforcement strongly suggest that even if some of the details are off, Sater’s assistance was of an exceptional character.
The US government went and continues to go to extreme lengths to keep Sater’s cooperation and work for the government a secret. Until quite recently, it went to great lengths to keep Sater’s conviction itself, and all documents related to it, a secret. It took the extraordinarily rare step of managing the entire adjudication of Sater’s crimes in secret, with all documents kept secret. Federal judges even pursued what might reasonably be called a vendetta against two lawyers who used leaked information about Sater’s case in lawsuits growing out of a failed Trump building venture, Trump Fort Lauderdale, as well as lawsuits on behalf of victims in the original pump and dump scheme.
The federal government also kept Sater on as a cooperating witness for fully 11 years before finally sentencing him in 2009 for the plea deal in 1998. In a $42 million securities fraud case, Sater received no jail time, was not forced to pay restitution and was fined a mere $25,000. In other words, he walked away from the crime with close to no punishment. The controversy over the government’s secrecy in the Sater case, as well as his minimal punishment, got enough attention that it eventually bubbled up from the criminal courts to the governmental and political realm. During her 2015 confirmation hearings, Attorney General Loretta Lynch was asked about the propriety of the government’s cooperation with Sater, in part because she had been the US Attorney for the Eastern District of New York, where Sater’s case was adjudicated.
In response to questions from Sen. Orin Hatch, Lynch wrote (emphasis added):
The defendant in question, Felix Sater, provided valuable and sensitive information to the government during the course of his cooperation, which began in or about December 1998. For more than 10 years, he worked with prosecutors from my Office, the United States Attorney’s Office for the Southern District of New York and law enforcement agents from the Federal Bureau of Investigation and other law enforcement agencies, providing information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of La Cosa Nostra. For that reason, his case was initially sealed.
Lynch’s references to “national security” has been echoed by other judges involved in Sater’s case, ones who have gone to great length to prevent the release of documents tied to Sater’s case.
It is impossible to know precisely what Sater was doing during this decade. But statements from government officials, news reports and Lauria’s book make clear that it required him to have extensive associations with and knowledge of the mafia and touched not just on organized crime but specifically on critical matters of national security. Based on published reports and Lauria’s book, it seems extremely likely that it also required him to have extensive knowledge of and contacts in the criminal underworld in the former Soviet Union. Clearly the US government saw Sater’s cooperation as highly important. Otherwise it would not have gone to such lengths to get it, to keep it secret and to protect Sater after the fact. Lynch’s words to Hatch speak volumes.
Then there’s Mikhail Sater, aka Michael Sheferofsky, Felix Sater’s father.
In 2000, two years after Felix was arrested in the securities fraud scheme, Mikhail Sater was charged along with Ernest “Butch” Montevecchi, a soldier in the Genovese crime family, for running an extortion ring in Brighton Beach between 1990 and 1999. . .