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Tuesday, May 12, 2009

Once Respected 'Officer of Court' Pleads Guilty to Mini-Madoff Fraud

Dreier Pleads Guilty to Fraud Scheme, Remains Free on Bail
The New York Law Journal by Mark Hamblett - May 12, 2009

Attorney Marc S. Dreier said "guilty" eight times but remained free on bail after admitting yesterday evening to selling fictitious promissory notes in a scheme that ripped off investors of hundreds of millions of dollars and ended with the implosion of his 250-member law firm. Southern District Judge Jed S. Rakoff said that allowing Mr. Dreier to remain free pending his July 13 sentencing was a close call in a case where Mr. Dreier "has disgraced the honorable profession of law." Jonathan Streeter, assistant U.S. attorney for the Southern District, argued that every day Mr. Dreier was allowed to remain in his 151 E. 58th St. penthouse interfered with the sale of the apartment and slowed the delivery of monies to victims. The judge urged Mr. Streeter and defense attorney Gerald L. Shargel to compromise and agree that Mr. Dreier surrender one month prior to his sentencing. However, after Messrs. Shargel and Streeter briefly conferred during a break, Mr. Shargel told the court the government had refused to consent.  In the end, Judge Rakoff found that Mr. Dreier was not a flight risk or a danger to the community and said he was bound to follow the statute despite his "repugnance for Mr. Dreier's crimes."

"As an abstract matter there are a hundred good reasons why Mr. Dreier should be remanded," the judge said. "By his own admissions here today, he has shown that he is to be ranked with those who have committed some of the most egregious frauds in history." Mr. Dreier, who turns 59 today, pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of money laundering, one count of securities fraud and five counts of wire fraud. The former head of Dreier LLP agreed that everything he had done was "illegal and wrong" when asked about the first seven counts of the indictment. But he hesitated when Judge Rakoff asked him about the eighth and final count - a money laundering charge based on Mr. Dreier's actions on Dec. 4, 2008.  On that date - with his world collapsing in New York while under arrest in Canada for yet another scheme to sell fake notes - Mr. Dreier arranged to have $10 million transferred from attorney trust accounts at Dreier LLP into his personal account.

Mr. Shargel had a quick word with his client, and Mr. Dreier said he understood that the money transfer was done in furtherance of his broader scheme to defraud. Nonetheless, he stubbornly added, "It was not my intent." Judge Rakoff told Mr. Dreier that intent was not the issue on the charge, and the judge went on to settle an unfinished piece of business by accepting the argument of Mr. Streeter that the notes Mr. Dreier sold and attempted to sell were, indeed, securities. Mr. Shargel had asked the judge to dismiss the securities fraud charge. All of the counts carry maximum penalties of 20 years in prison save the conspiracy count, which carries five years.  With the guilty plea concluded, the parties turned to the question of whether Mr. Dreier would be allowed to remain free pending sentencing or be remanded to the Metropolitan Correctional Center. Mr. Shargel said his client, whose assets have been frozen, has neither the means nor the ability to flee.

While Judge Rakoff pointed out that "the virtual certainty of meaningful prison time" now "looms with a greater immediacy" than previously, Mr. Shargel responded that he had made clear from the beginning that the case would "end in a guilty plea." "This day comes as no surprise," Mr. Shargel said, adding that a "very effective mechanism" is in place to ensure his client does not flee. Mr. Dreier has been confined in his penthouse since his release on bail in February. His whereabouts have been monitored 24 hours a day by armed guards. The government countered that Mr. Dreier no longer has a constitutional right to bail. However, Judge Rakoff said that if Mr. Dreier has a "statutory right to get bail, he should get bail," regardless of how it may appear to anyone in the world, including the media. Sheila Gowan, the trustee for the Chapter 11 bankruptcy proceeding against Dreier LLP filed on Dec. 16, told the judge she expected to interview Mr. Dreier approximately two more times and suggested the meetings could more effectively occur in his apartment.  She also said Mr. Dreier did not believe he could be "clear and lucid" if a May 18 deposition scheduled in a fee dispute involving his former firm occurred in the correctional center's special housing unit.

Salvatore LaMonica, the trustee in Mr. Dreier's personal bankruptcy, also said he would prefer to continue to meet with Mr. Dreier in his apartment. But he conceded that the unit could be sold more easily if it were empty. Authorities accused Mr. Dreier of receiving $670 million between 2004 and 2008 from the sale of the fictitious securities; they are seeking the restitution of the proceeds.  They say Mr. Dreier spent much of it on a lavish lifestyle, including $39 million in artwork, beachfront homes on both coasts and an $18.5 million yacht, "Lady Seascape." During the hearing, Mr. Streeter said Mr. Dreier held parties in which he invited celebrities and attempted to pitch the notes. Mr. Dreier also approached lawyers he knew in New York and asked them to solicit their clients to buy the notes, Mr. Streeter said. A court-appointed receiver has said $100 million in assets have been identified that can be pursued on behalf of victims who lost more than $400 million. Mr. Dreier also is facing civil charges by the U.S. Securities and Exchange Commission, filed in December. Noeleen G. Walder contributed to this report.


Disgraced attorney Marc Dreier returned to his luxury East Side condo last night after pleading guilty to selling $700 million in phony promissory notes. Manhattan federal Judge Jed Rakoff said he was bound by law to ignore his "repugnance" for the fraudster -- who gets to celebrate his 59th birthday at home today -- because "there is no likelihood" that Dreier would get past the armed guards keeping him in his $10 million pad. "We rarely encounter a less appealing beneficiary of bail," Rakoff said of Dreier, who remains free on $10 million bond. Prosecutor Jonathan Streeter called it unfair for the fallen celebrity lawyer -- who worked his scam at star-studded parties -- to "continue to live rent free in a spectacular apartment bought with his victims' money." But defense attorney Gerald Shargel claimed that Dreier was so broke that his son, a college student, was using his bar mitzvah money to purchase food for him. Rakoff could hit Dreier with as many as 145 years in prison when the two next meet in court, at the July 13 sentence hearing.



manhattan attorney who learned to keep his mouth shut said...

I filed a complaint against this bum Dreier 3 years ago. I knew what Marc was doing and I provided the documentation.

Thomas Cahill and Sherry Cohen threw it in the garbage and I was threatened.

Be careful of two DDC drunken devils: Cahill and Cohen.

galison said...

To the above:

Your complaint against Dreier could be be EXTREMELY valuable.

Can you please post the complaint at this site (anonymously if you prefer) or send it to me at ?



Anonymous said...

Anyone who had dealings with Marc Dreier knew not to respect him. The roll of Judge D. Chin in the Dreier puzzle bearings looking at.

Anonymous said...

Anyone who had dealings with Marc Dreier knew not to respect him. The roll of Judge D. Chin in the Dreier puzzle bearings looking at.

Anonymous said...

Things are not what they seem. There is much more than meets the eye here, but isn't that always the case.

Anonymous said...

the DDC trows out complaints without reading them they rubber stamp every thing and clear the lawyer. The less than 1% of cases that they look at then get thrown out after the laweyr responds. In my case the lawyer did not answer the questions that were raised in the complaint. The lawyer said stuff that was different from the evidence that was submitted from the judge. Despite that the lawyers statement and a letter from the judge said something different the DDC threw out my complaint.
It was not just Cahil and Cohen that was the problem. Thier are others. Including no-show and sometimes come in when you want jobs at the DDC.

Anonymous said...

I have found that many orders/decisions are written contrary the the evidence submitted.. This appears to be a masking technique that allows the other side to say.. hey look the Judge/Committee said all is fine!!! These decision/orders can't hold the weight of the paper they were written on...

watchin' said...

Dear Manhattan Lawyer,

If you have documentation of what you are saying, you could turn this whole boat around. Get it to the press with your name blanked out if need be.

All we need is one bad lawyer to do something really bad and then to find out that the DDC did nothing,

Bingo. Game over.

Anonymous said...

A prayer: Please Lord, enter the heart of Mr. Dreier and cause him to reveal all the corruption he knows. Let his revelations be as Samson's efforts and bring the whole evil pagan temple down upon our judges and lawyers.

Anonymous said...

Poor watching. The press fears reporting corruption as the orginal source. The media knows the corruption exists but feel it's their self interest to cover it up. Other demented souls feel the judiciary will correct all the legislative failures with laws from the bench which is great except when it will be abused. Our judicial and lawyer problems are because the media fails in its duty, due to cowardliness and bling faith.

watchin' said...

sadly, I agree. but tides turn.

There were reasons why Madoff wasn't busted sooner and why he was caught when he was.

Ditto Dreier, Blagojavitch etc....

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