Likely Giuliani Replacement Is Defense Lawyer in Insider Cases

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Times Staff Writer

The likely nominee to succeed Rudolph W. Giuliani as the top federal prosecutor in New York is a respected defense lawyer who colleagues say probably will be less likely than his predecessor to use the racketeering laws against Wall Street securities law violators.

Otto G. Obermaier, 52, a top New York defense lawyer specializing in white-collar crime who formerly served as both an assistant federal prosecutor and a Securities and Exchange Commission attorney, was picked by Sen. Alfonse D’Amato (R-N.Y.) as the likely successor to Giuliani. The recommendation must be reviewed by the Justice Department and approved by President Bush and the Senate. But, by tradition, the recommendation of a senator of the same party as the President is usually approved.

The position of U.S. attorney for the Southern District of New York is considered a crucial one for prosecution of insider trading and other securities law violations, since the district’s territory encompasses Wall Street. Giuliani, who has announced his resignation, carried out a sweeping crackdown on Wall Street crime during his five years in office. The numerous indictments prompted complaints of overzealousness and publicity seeking from securities firms and defense lawyers.


Obermaier currently represents several Wall Street figures indicted by Giuliani, including Robert Chestman of Gruntal & Co., who is due to go on trial in federal court next week.

In interviews Friday, defense lawyers and prosecutors lauded the choice of Obermaier, and several on both sides called him a “superb” choice. He is regarded as scholarly, having frequently contributed articles on white-collar crime to the New York Law Journal and other legal publications, and he is noted for a particularly dry sense of humor. While Giuliani appeared to court the press through frequent news conferences--sometimes two or three a week--Obermaier is expected to be less concerned about focusing the spotlight on himself.

A number of prominent defense lawyers also predicted that Obermaier would make less use of the federal racketeering statute in white-collar crime cases. They said, too, that he may leave more securities law violations to be handled in civil proceedings by the SEC rather than through criminal indictments.

“I think he’s going to be a very tough man, and at the same time he’s very fair,” said Stanley Arkin, a New York defense lawyer who was a strong critic of Giuliani. “I think he (Obermaier) is going to be conscious of the extent to which the criminal process should be used in these sorts of regulatory cases.”

Obermaier, for his part, denied that as the Bush nominee he would take a kinder, gentler attitude towards Wall Street malefactors. In a telephone interview, he said “securities laws are intended to be enforced and should be enforced.” He said that, at least for the moment, he doesn’t have any plans to change the office’s policy on the handling of cases.

But he seemed to acknowledge that his views on the use of the federal racketeering law, the Racketeer Influenced and Corrupt Organizations Act, known as RICO, may vary from Giuliani’s. “It is a judgment call as to whether a particular case warrants the imposition” of RICO, Obermaier said. “On that, people of good faith may differ.”


RICO, originally intended by Congress as a weapon against Mafia-type organized crime, carries stiff penalties, including forfeiture of assets and lengthy prison sentences.

Through a spokeswoman, Giuliani on Friday declined to comment on D’Amato’s selection of Obermaier. But in the past, Giuliani reportedly expressed strong reservations about Obermaier as a possible successor.

Giuliani early last year abandoned plans to run for Senate against Daniel Patrick Moynihan (D-N.Y.), in part, according to newspaper accounts at the time, because he objected to D’Amato’s expected choice then of Obermaier as Giuliani’s successor. Giuliani aides at the time said he thought Obermaier would have had to excuse himself from too many cases handled by the prosecutor’s office because they involved his law firm’s clients.

Paul Windels, a New York attorney in private practice who headed a seven-member screening committee for D’Amato, said the committee this time decided not to contact Giuliani for his views on Obermaier. Windels said the issue of possible conflicts of interest by Obermaier would be left for the Justice Department to review.

Obermaier said he believes that he would need to excuse himself from only a small number of cases. He also emphasized that assistant prosecutors would be appointed to supervise the handling of those cases, adding that “those cases will go on.”

In a written statement, D’Amato on Friday said Obermaier “is one of the most distinguished and respected practitioners in New York” who has “extensive experience in the federal courts in both civil and criminal matters.”