Eric Schneiderman

Eric Schneiderman will inherit one case from Andrew Cuomo that may come to haunt the new attorney general.

The AG who owes his election to the New York Times will soon take over the case against Steve Rattner, the lifelong friend and financial adviser of Times owner Arthur Sulzberger. Sulzberger just hosted a book party to celebrate the release of “Overhaul,” Rattner’s tale of the rescue of the auto industry that he spearheaded at President Obama’s behest.

And that’s just the visible angst.

Right below the surface is Lewis Liman, the bulldog litigator who’s recently been beating down Cuomo’s door on behalf of Rattner. Liman is still listed on Schneiderman’s campaign website as an endorser and he was one of 50 former prosecutors listed as backing the candidate at a September 23 press conference.

Liman, a partner at Cleary Gottlieb who also warred with Cuomo on behalf of Bank of America in another still-pending case, is the son of one of New York’s most famous criminal attorneys, Arthur Liman, who died in 1997. In perhaps Liman’s most publicized case, he represented Michael Milken, the King of the Gordon Gecko greed days of the 80s who became Rudy Giuliani’s white whale, eventually harpooned.

Ironically, Milken’s investment firm, Drexel Burnham, was represented by none other than Irwin Schneiderman, the father of the incoming AG who’s still at Cahill Gordon. The senior Liman and Schneiderman were allied for years, but Drexel settled with Giuliani and split with Milken in the end. Drexel went bust anyway, and Milken went to jail.

Liman has recently joined Jamie Gorelick and Bill McLucas, Washington lawyers with Wilmer Hale, in handling the Cuomo and SEC probes of Rattner. McLucas, who headed enforcement at the SEC for eight years, actually settled the case against Milken. While neither of them has a known connection to Schneiderman, another Wilmer partner in the Securities unit that McLucas heads, Fraser Hunter, gave $11,000 to Schneiderman since 2005, with the latest contribution coming on October 12, shortly before the general election. A frequent Democratic donor, Hunter gave far more to Schneiderman than to any other candidate.

“Eric has been my next door neighbor for 13 years and is a friend,” Hunter tells the Voice.

So far, Hunter says he’s had “no involvement in the case.” His bio describes him as part of the Securities Litigation & Enforcement Practice Group and the Business Trial Group. Maybe even more appropriately, he’s part of something Wilmer calls the Securities Litigation/Controversy Department.

In Den of Thieves, the Pulitzer Prize-winning reporter James Stewart describes the moment when Drexel president Fred Joseph, counseled and encouraged by Irwin Schneiderman, did precisely what Rattner’s partners at Quadrangle did earlier this year: dumped Milken to try to save the firm. When Joseph told the senior Liman he was going to settle with Giuliani, reports Stewart, Liman compared the decision to settling with the Nazis. “That’s the first step towards concentration camps,” Liman said, charging that Drexel was selling Milken out.

Joseph replied: “Mike did what he did.”

Quadrangle condemned Rattner in similar terms in a settlement with Cuomo a few months ago and paid a $12 million penalty. Rattner sued his former firm yesterday, claiming they stabbed him in the back.

Research Credit: Lily Altavena, Samantha Cook, Ryan Gellis