Dreier Bail Decision by Friday; Madoff Enjoying Bon Bons at Home

Dreier Pleads Not Guilty, Judge Will Rule by Friday on Bail
The New York Law Journal by Noeleen Walder - February 3, 2009

Attorney Marc S. Dreier, who has been jailed since Dec. 7, renewed his efforts last night to be released on bail. Indicted last week by a federal grand jury on charges that he bilked hedge funds and other investors of more than $400 million, Mr. Dreier pleaded not guilty yesterday at his arraignment before Southern District Judge Jed S. Rakoff. Following a nearly four-hour hearing last night, Judge Rakoff promised to rule no later than Friday on whether to release Mr. Dreier on bail. The judge ordered both sides to submit briefs by 5 p.m. today on what lengths private armed guards could go to in the event Mr. Dreier attempted to flee his Park Ave. apartment. The government has suggested that Mr. Dreier has access to hidden funds and Assistant U.S. Attorney Jonathan Streeter said some of Mr. Dreier's co-conspirators still may be at large. Rebutting arguments that his "penniless" client was a flight risk, Gerald Shargel, Mr. Dreier's attorney, argued that any money missing from Dreier LLC, which Mr. Dreier founded and where he was the only equity partner, had gone to support the operations of the firm, to purchase luxury goods for himself, and to pay interest on the phony promissory notes he allegedly peddled.

Judge Rakoff arranged an impromptu conference call with Mark Pomerantz of Paul, Weiss, Rifkind, Wharton & Garrison, who is serving as a receiver in the case, to probe Mr. Dreier's finances. Reached at the airport en route to San Francisco, Mr. Pomerantz said he had seen "nothing to indicate that there will be substantial unaccounted for assets." He estimated that Mr. Dreier's apartment was worth $12 million, his artwork more than $40 million and his yacht $18 million. Mr. Pomerantz said a forensic accounting of Mr. Dreier's assets had not been done, but he "would be surprised at the end of the day if there is even $15 or $20 million left for Mr. Dreier." On Jan. 22, Southern District Judge Douglas Eaton held that Mr. Dreier could be released on $20 million bail, provided he found four financially sound persons to secure half of that amount, a package Mr. Shargel called "excessive" and said his client could not meet (NYLawyer, Jan. 23). Judge Rakoff was not bound by that decision, however.