Legal News

No Bailout for Marc Dreier, Argue Feds

By Nathan Koppel

Federal prosecutors today pushed back at Marc Dreier’s request, filed last week, to be free on bail.

In a letter brief filed with New York magistrate Douglas Eaton (link not available), prosecutors offered new details about Dreier’s alleged fraudulent scheme in support of their claim that he should remain in jail.

As readers recall, Eaton denied bail in December out of concern that Dreier posed a potential flight risk. In a filing last week, Dreier claimed he should be free on bail, because all of his assets have allegedly been identified and frozen, thus depriving him of the means to flee.

Not so, according to the government. Mark Pomerantz, the receiver for the defunct Dreier LLP, is still searching for the proceeds of the alleged fraud, prosecutors assert in today’s filing.

The brief includes new allegations: Dreier’s fraud allegedly began in 2004 and exceeds $400 million, which is longer and more damaging than previously claimed, and Dreier allegedly stole from vendors and employees of the firm, broadening the pool of alleged victims beyond hedge funds and firm clients. The attorney faces a possible prison sentence of 30 years to life, according to prosecutors, who wrote that he “has little to lose by fleeing in order to avoid a long jail sentence.”

Gerald Shargel, counsel to Dreier, tells the Law Blog his client has fully cooperated with Pomerantz. “We have done all we can to show that there are no hidden assets,” he says. “They are saying the receiver has not dug deeply enough, but it’s the prosecutors’ burden to establish a risk of flight.”

As for the new allegations, Shargel adds, “the question is whether [Dreier] poses a risk going forward, not what conduct he allegedly engaged in in the past.”

The bail hearing is scheduled for tomorrow afternoon.

Full post as published by Law Blog - WSJ.com on January 21, 2009 (boomark / email).