Sources Say Marc Dreier Has Opened Up to Feds

While legal procedures make their way through the system, as seen in the article below, Marc Dreier is apparently sticking to his own strategy, according to sources. Dreier has been telling the Feds everything he can remember: the big-money deals, the schemes and the names of the well-connected people and companies involved. "It's going to get real messy," says one source. "Marc possesses a well of information that others have corroborated in exchange for immunity. A lot of people made a lot of tainted money with this guy [Dreier]." 

"The last I heard, Dreier was still thinking he wouldn't have to do any time," says another source. "With what information he's providing, I could see him doing less than 5 years- instead of life. But he's crazy thinking he won't do a day..." 

Ex-Dreier Lawyers Face Subpoenas for Alleged Interference With Trustee
The New York Law Journal by Noeleen G. Walder - May 26, 2009

Two lawyers who worked at a California-based affiliate of now-defunct Dreier LLP could be subpoenaed for allegedly interfering with a trustee's efforts to marshal assets of Marc S. Dreier's estate. Last week, Southern District Chief Bankruptcy Judge Stuart M. Bernstein issued an order granting Chapter 7 trustee Salvatore LaMonica's request to examine Peter J. Rho, whose "possible deceptive actions" have stalled the trustee's collection of Dreier Stein Kahan Browne Woods George's outstanding accounts receivables. Mr. Rho, who represented such high-profile clients as South Korean pop star "BoA" during a two-year stint at Dreier Stein, joined the Los Angeles office of Snell & Wilmer in the wake of the collapse of the Dreier affiliate. The order came a week after Judge Bernstein granted the trustee's application to examine John C. Kirkland, a former Dreier Stein partner now at Luce, Forward, Hamilton & Scripps, whom Mr. LaMonica claims "failed to respond to countless telephone calls, e-mails and letters from the Trustee and his counsel." The judge also has given the trustee the green light to subpoena the managing partner of Luce Forward's Los Angeles office and request documents relating to clients Mr. Kirkland brought with him from Dreier Stein. Under Rule 2004 of the Federal Rules of Bankruptcy Procedure, the orders are issued ex-parte and give Mr. LaMonica, a partner at LaMonica Herbst & Maniscalco of Wantaugh, N.Y, authority to issue subpoenas to Messrs. Kirkland and Rho and Kathy A. Jorrie, Luce Forward's managing partner, who can in turn challenge the trustee's request.

Earlier this month, Mr. Dreier, 59, pleaded guilty to selling more than $700 million in fictitious real estate development notes and fake pension plan notes. The elaborate four-year scheme, which netted roughly $400 million, led to the implosion of Mr. Dreier's 250-attorney firm, Dreier LLP, and its affiliates, including Dreier Stein. In an e-mail, Mr. LaMonica explained that since Mr. Dreier was the sole equity holder of Dreier Stein, "his bankruptcy estate has a direct interest in the collection and liquidation" of the firm's assets, including its accounts receivable. And while many of Dreier Stein's attorneys have cooperated with the trustee, Messrs. Kirkland and Rho have not been so forthcoming, according to the trustee. "[D]espite repeated professional requests," Mr. Kirkland "has refused to cooperate with the Trustee, return a phone call or provide information regarding accounts receivable" of Dreier Stein, Mr. LaMonica's attorney, Joseph Maniscalco, wrote in an application in support of an order directing Mr. Kirkland's examination."As a result of the Witness' willful refusal to cooperate with the Trustee," a "significant portion" of the firm's accounts receivable remain outstanding, Mr. Maniscalco wrote. The filings do not specify how or when Mr. LaMonica attempted to contact Mr. Kirkland. As for Mr. Rho, the associate initially appeared willing to cooperate with the trustee's effort to collect his "substantial outstanding accounts receivable," according to court papers filed by the trustee's attorney. Mr. Rho claimed to have reached out to and even encouraged Mr. LaMonica to directly contact clients, the papers state. But when the trustee followed up with Mr. Rho's clients, the papers say he "received conflicting information." Some of the clients received Dreier Stein's bills, but were "unsure why payment was not authorized." And on one occasion, an accountant "may have informed the Trustee that she was told to disregard the Firm's bill." As a result of Mr. Rho's "possible deceptive actions, the collection of outstanding accounts receivables is stalled," according to the trustee's filings.

'Mudslinging' Attempts 

In an interview last week, Mr. Kirkland said, "So far this has all been one-sided, no one has heard my side of the story." Calling Mr. LaMonica's accusations "generic" attempts at "mudslinging," Mr. Kirkland insisted he does not quarrel with Mr. LaMonica's attempts to liquidate Dreier Stein's assets. All the accounts receivable for "work done before I left Dreier is payable to the old firm," Mr. Kirkland said. "That's just the rule," even if you move because a firm is "vaporized," he explained. "That's got nothing to do with me." In fact, last month, Mr. LaMonica sent a letter to Mr. Kirkland's clients informing them that attempts by Mr. Kirkland to "act or bind" his old firm "with respect to outstanding accounts receivable" would "be met with an order of the court." Asked if Dreier Stein still existed, Mr. Kirkland said he had a sense that a winding-down team was collecting old accounts receivable, but had been kept in the dark. They treated ex-employees like "mushrooms," he said. As for the trustee's purported attempts to contact him, Mr. Kirkland said he received an e-mail from Mr. LaMonica and a phone call from Dreier Stein's managing partner around the same time. While he did not return the e-mail, Mr. Kirkland and the managing partner exchanged a couple of calls, but never connected. Mr. Kirkland explained that he will respond to Mr. LaMonica's requests "if and when" he is served with a subpoena in California. Until then, Mr. LaMonica has no jurisdiction over him, he said. In any case, Mr. Kirkland said that neither he nor Ms. Jorrie have documents that would be "responsive" to Mr. LaMonica's subpoena since he left all documents relating to old accounts receivable behind when he left Dreier Stein in late January. The trustee and his attorney declined to comment on the substance of the Rule 2004 applications or orders. Mr. Rho and Ms. Jorrie did not return requests for comment.  Meanwhile, Mr. Dreier remains under house arrest at his 151 E. 58th St. penthouse pending his July 13 sentencing.