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Friday, December 12, 2008

Dreier Stole $380 Million, U.S. Says; Denied Bail as 'Enormous' Flight Risk

Dreier Stole $380 Million, U.S. Says; Denied Bail as 'Enormous' Flight Risk
The New York Law Journal by Mark Hamblett - December 12, 2008

A prosecutor yesterday more than tripled, to $380 million, the sum the government says attorney Marc Dreier has stolen from hedge funds and investors. The prosecutor, Assistant U.S. Attorney Jonathan Streeter, also told a federal magistrate judge that Mr. Dreier's frauds, initially reported as occurring since October and amounting to $113 million, stretched back at least to January 2006. Arguing successfully that Mr. Dreier should be held without bail while a full accounting of his assets is pursued by a court-appointed receiver, Mr. Streeter called Mr. Dreier the "Houdini of impersonation and false documents." "Mr. Dreier is in a desperate situation and the only way out of this desperate situation is for him to flee," Mr. Streeter argued yesterday before Southern District Magistrate Judge Douglas Eaton. "He faces almost certain conviction given the mountain of evidence that is growing every day."

Mr. Dreier, a commercial litigator who founded Dreier LLP, was arrested at LaGuardia Airport Sunday night on a bare-bones complaint charging one count each of securities and wire fraud for trying to sell, and selling, to three hedge funds fictitious notes he claimed had been issued by a real estate company. Along the way, he allegedly hijacked the identity of both Solow Realty and an accounting firm to make the sales. Based on what Mr. Streeter said yesterday in court, Mr. Dreier could face additional charges. "He has been fooling some of the most sophisticated investors in the world," Mr. Streeter said. Defense Attorney Gerald L. Shargel came close to persuading Magistrate Judge Eaton to allow Mr. Dreier his freedom while the charges are pending. Mr. Dreier - unshaven, looking tired and wearing a prison-issued blue jumpsuit - watched the proceedings carefully, leaning in to speak to Mr. Shargel on two occasions to advise his lawyer to add a point to his argument. Mr. Shargel proposed little in the way of financial guarantees that would ensure his client would return to court, instead offering to have Mr. Dreier remain under house arrest at his home in Quogue, Suffolk County, monitored by a GPS and watched round the clock by armed guards. But Mr. Streeter said there was no reason to believe that someone who kept a box of cell phones in his office to compartmentalize his deception could be trusted to stay in the country. Mr. Dreier had traveled extensively in the last year, including to Qatar, United Arab Emirates, Spain, St. Martins and Turkey, and had contacts abroad where money might be hidden, Mr. Streeter said.

"He is a person of exceptional ingenuity and exceptional resourcefulness" who has the ability to escape the United States and "get to that pile of money that he must have somewhere," Mr. Streeter said. Mr. Shargel made his bail argument, in part, on the strength of Mr. Dreier's decision to return to the United States from Canada, where he was arrested on a charge of impersonation - a charge Mr. Streeter said was leveled because Mr. Dreier had gone to Canada to commit another fraud. Mr. Shargel said he flew to Canada last week to meet with his client. Mr. Dreier had been released on $100,000 Canadian bond. Edward Greenspan, "one of the best lawyers," Mr. Shargel said, had assured Mr. Dreier that he could stay and "fight extradition and he could get bail and it would be two years to get back to the United States." "And Mr. Dreier refused that option," Mr. Shargel said. Mr. Shargel said he called the Southern District U.S. Attorney's Office from Canada and spoke to Guy Petrillo, head of the criminal division, who could not comment on the investigation but confirmed the names of the prosecutors working on the case. Mr. Shargel said he knew what was awaiting Mr. Dreier upon his return to New York, but his client made the trip anyway. Mr. Shargel also told the court Mr. Dreier took two trips out of the country in the fall - one when he knew his victims were going to the authorities and a second when "he knew he would be arrested" - yet returned both times.

'Enormous Risk of Flight'

Mr. Shargel also cited United States v. Sabhnani, 493 F.3d 63 (2007), where the U.S. Court of Appeals for the Second Circuit, citing "extraordinary" physical restrictions imposed on a Long Island couple accused of enslaving two Indonesian girls, ordered that the couple be released pending trial (NYLJ, July 10, 2007). But Mr. Streeter said the Sabhnani case did not "involve the kind of extraordinary, elaborate deception that this crime involved." Magistrate Judge Eaton noted key distinctions between the two cases in issuing his ruling. In Sabhnani, he said, the couple had answered an "exhaustive list" of questions posed by prosecutors about their finances and the bonds were fully secured by $4.5 million. He said he would not rule out the possibility of revisiting the bail issue once several unresolved questions about Mr. Dreier's finances are answered by a court-appointed receiver, Mark Pomerantz, particularly whether or not Mr. Dreier has money stashed abroad. The magistrate judge was ultimately persuaded that the "government's evidence does appear to show an enormous risk of flight." Mr. Shargel protested his client's incarceration at the Metropolitan Correctional Center, where, ostensibly because of a shortage of beds, he said Mr. Dreier is being held in solitary confinement, where he has been permitted only one shower since his arrest, and no phone calls or visitors, not even a book. "You can lose your mind in there in three weeks," Mr. Shargel said. "It's just inhuman for him to be in a facility for people who have committed some infraction," he said. "It's a constitutional violation." Magistrate Judge Eaton said he would do what he could to get Mr. Dreier moved to a less restrictive environment pretrial. And Mr. Streeter said he would do what he could to make it easier for Mr. Dreier to assist the receiver. After the hearing, Mr. Shargel said his options were to press the bail issue de novo before a district court judge or "pick up on what Magistrate Judge Eaton said and supply a fuller financial picture" - something he assured the court his client is committed to doing. Mr. Shargel also argued that a different form of incarceration for his client would also make it easier for Mr. Pomerantz to do his job.

Mr. Pomerantz, of Paul Weiss Rifkind Wharton & Garrison, has been meeting with Dreier LLP partners in an effort to get a handle on the firm's assets even as lawyers are leaving and taking clients, and their accounts receivable, with them. Vincent Pitta of the 13-lawyer Pitta & Dreier, one of 10 entities in which Mr. Dreier was the sole equity partner, said yesterday the firm is in "dire financial straights." "All the related Dreier LLP bank accounts have been frozen," Mr. Pitta said. "We are working with the receiver to try and arrange health care coverage and to make sure there is attorney malpractice insurance and Workers' Compensation coverage. "We're trying to keep calm, which is almost impossible, and trying to get people opportunities to interview with other law firms," he said. "We're having a job fair on Monday." In addition to the criminal account, Mr. Dreier faces civil actions filed by the Securities and Exchange Commission and Wachovia Bank.


Anonymous said...

All TV networks Fox 5, NBC, CBS
channel 11 and 9.
No one ever covers anything thier this guy and the other guy that was disbarred. It is like they are protecting the lawyers and judges.
Is it that they are afraid that more people will come foward that these people did more wrong what they were charged with?

Anonymous said...

They fear going before other judges and lawyers and don't want to be at a disadvantage beecause judges are angry because they have outed other judges. i.e. Illinois Governor asked for editors and reporters to be removed. Things are only reported after a court decision is made. That's why this site is important.

Anonymous said...

To the above writer regarding the TV Network Media..even if people did come forward to the Media, they have their ways SQUASHING it...I'm saying this through my own personal experience when the media aired my story regarding my sexual abuse case...They're all in bed together.

Anonymous said...

Crooks, crooks and more crooks..Give these guys COAL and send them off to JAIL forever. Judges are committing crimes. lawyers are committing crimes, criminals are committing crimes..Where are they now? Still committing crimes..What's wrong with this picture?

Anonymous said...

How is it that a clerk in Canada brought this guy down? With all the lawyers and big deal investment bankers and CEO's making millions, they couldn't see he was a fraud? Maybe Patterson can get this guy to come down here for a while and sniff out all the other crooks.

Anonymous said...

There were complaints against Marc Dreier that were killed. This guy was protected and he could walk on water. Anyone who spoke against him was punished and the state and feds sat on their hands withthe complaints. A full investigation is in order, protect no one, let the chips fall where they may.

Anonymous said...

his former enployes want health care and benifits to continue.
yeah right, about a 25% of the population wants health care also.
Why don they use their fat bonuse checks from years past and pay for thier own healthcare.
Now they also want workman compensation to be paid by the Govt. when they were working for this guy i am sure someone of the lawyers knew 100% of what was going on.

Anonymous said...

Where is Saint Andrew. Is he trying to help this biggest sinner? Is Saint Andrew getting the money back to those from whom it was taken or his concern for all the crooked lawyers out of work?

Anonymous said...

Don't ever underestimate a clerk in any country...they have all the knowledge, too much work, little respect and can open any closet of skeletons, from any lawyer and judge at the drop of a request!

OCA should have learned that before their crap hit the fan...they were at least smart enough not to put one clerk on the record...of course... because they understood they could not alter that record, as it was from a freelance reporter hired by both counsel... with pltf's atty confirming! No OCA junk in the trunk here.

You should always assess your enemy before you maybe that Canadian clerk mentioned above did and thusly succeeded! Time also is of the essence in preparing for big lying the more you get...the easier it becomes...a loving thank you... to those who provided that time!

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