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Dreier Attorneys Warned Not to Count on Pay
New York Law Journal
December 15, 2008
There is little chance that the lawyers affiliated with Dreier LLP will be paid this morning, according to the receiver charged with preserving the firm's assets in the wake of Marc Dreier's arrest for a $380 million fraud.
Many of the assets have been depleted and those remaining are subject to freeze orders or other legal restraints, Mark Pomerantz of Paul Weiss Rifkind Wharton & Garrison, warned current and former firm employees in a notice after his appointment Wednesday evening.
"We cannot provide you with any comfort relative to the continued payment of salary or benefits," Pomerantz said. "Indeed, it is very unlikely that the firm will be able to make its payroll commitment on Dec. 15, 2008."
Dreier was arrested Dec. 7 on charges of securities and wire fraud for selling more than $100 million in fraudulent notes to three hedge funds. He was denied bail on Thursday by Southern District of New York Magistrate Judge Douglas Eaton, who wanted to give Pomerantz more time to identify the remaining assets of Mr. Dreier and the law firm.
With Assistant U.S. Attorney Jonathan Streeter insisting it was logical to assume that Mr. Dreier has assets stashed abroad, Magistrate Judge Eaton said he might consider bail for Dreier once Pomerantz tracks down asset details.
Pomerantz was formally appointed by Southern District of New York Judge Miriam Goldman Cedarbaum on Wednesday to identify and preserve assets in connection with a civil suit filed against Dreier by the Securities and Exchange Commission, SEC v. Dreier, 08 Civ. 10617.
Amid reports that some lawyers have left the firm with both clients and accounts receivable in tow, Pomerantz is moving fast.
His notice warns current and former employees not to remove Dreier property from the offices at 499 Park Ave., including computers, files and artwork.
Personnel may remove laptops on a temporary basis to meet obligations to their clients. Those who want to remove personal property must document the items on a receipt, and client files or working files may be removed only with a receipt.
"Lawyers should be mindful that receivables and amounts owed for work-in-progress for clients of the Dreier Entities is the property of the Dreier Entities, and also may be subject to liens," the notice said.
Pomerantz also cautioned that, given a grand jury subpoena received by Dreier LLP, it is critical that records be preserved and he warned of the consequences of tampering with or destroying them.
As the sole equity partner, Dreier leaves behind 10 separate affiliates. Pomerantz said that "certain practice groups may be able to continue, but the business of Dreier LLP will not continue as before."
