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Jailed attorney Marc S. Dreier, whose life has "completely unraveled" since his arrest last month, should remain behind bars since he has "little to lose by fleeing," the government wrote Wednesday in opposing the lawyer's second bid for bail.
In a letter to Southern District Magistrate Judge Douglas F. Eaton, Assistant U.S. Attorney Jonathan R. Streeter argued that the same "resourcefulness" Dreier showed in pulling off a four-year scheme that "netted him hundreds of million of dollars" and "fooled some of the most sophisticated investors" could "easily be committed to fleeing and living abroad."
The government's brief in United States v. Dreier, 08-mag-2676, was filed in anticipation of today's bail hearing and in response to papers submitted last week by defense attorney Gerald Shargel, in which he asked Magistrate Judge Eaton to release his client from the Metropolitan Correction Center. Dreier, 58, has been incarcerated there since his Dec. 7 arrest at John F. Kennedy International Airport.
Dreier is charged with one count of securities fraud and another count of wire fraud. The sole equity partner of the now bankrupt Dreier LLP was arrested after returning to New York following his arrest in Toronto the week before for impersonation.
Shargel, citing Dreier's "ongoing cooperation" with the court-appointed receiver in a related civil case brought by the Securities and Exchange Commission, SEC v. Dreier, 08-cv-10617, said his client should be released to his Manhattan residence, where he would be secured by electronic monitoring and watched around the clock by armed guards paid for by his sister and brother-in-law.
The package proposed by Shargel also provides for a $10 million bond co-signed by Dreier's 19-year-old son, Spencer, and his 85-year-old mother, Mildred.
However, the government Wednesday cautioned Eaton that "the defendant simply cannot ... be trusted" to stick to even the strictest of bail conditions.
Characterizing his alleged criminal conduct as "exceptionally deceptive, brazen" and "creative," Streeter noted that Dreier has an "extensive" travel history, which includes trips to Argentina, Turkey, the United Arab Emirates, Italy and other European nations.
The government also accused the Harvard Law School graduate of failing to come clean with prosecutors about the scope of his overseas contacts and assets.
Dreier "falsely claimed" that he has no business associate in Turkey, Streeter wrote Wednesday, when the government says he has a personal and professional tie to Erinch Ozada, whose hedge fund was one of the attorney's former clients. Ozada and Dreier, who a number of witnesses have told the government were "best friends," not only co-owned a yacht but paired up to invest in a technology enterprise and villas in the Caribbean, the government noted. Moreover, Ozada allegedly accompanied the attorney to a 2007 meeting with one of the victims of his alleged scam.
Streeter informed Eaton that Dreier's 1997 expired passport showed that he had visited "several additional countries," including Germany and France, which he did not list in a declaration accompanying his bail request.
"The defendant's extensive travel shows that he is experienced in traveling to many places around the world and that he could use that experience to flee," Streeter concluded.
In addition to his extensive foreign contacts that would "facilitate flight," the prosecutor said receiver Mark Pomerantz of Paul, Weiss, Rifkind, Wharton & Garrison has only begun to look at Dreier's assets, which include 50 bank accounts in at least seven financial institutions.
In fact, the government contended, Dreier "all but admits" that he sold phony notes to pay expenses for his 250-attorney law firm and fund his lifestyle, instead of giving the money to the purported issuers of the notes.
Tracing all of Dreier's assets will "take many more months and require many more documents than the Receiver currently has," the government added.
ARTWORK, HOMES, CARS
A list of property submitted by Shargel last week revealed that Dreier owned a vast array of contemporary artwork, including photographs, prints and paintings by such 20th-century artists as David Hockney, Keith Haring and Damien Hirst. Of the approximately 150 pieces listed, an untitled oil painting by Mark Rothko potentially could sell for anywhere from $20 million to $40 million, according to art appraiser Victor Weiner.
Dreier's assets, which have been frozen pending the outcome of the SEC case, also include an Aston Martin, two Mercedes, a yacht, two homes in East Quoge and properties in Sag Harbor and West Hampton.
But while Dreier claims he has no money or assets left in the United States or abroad, the government Wednesday told the magistrate judge that the "creative and resourceful" attorney might not be telling the full story.
According to Streeter, Pomerantz "does not regard as credible some of the defendant's explanations of the disposition of his assets," including a claim that he transferred two of his Hamptons properties, valued at approximately $12.5 million, to his son in October 2008.
The government also wrote that it viewed the bail package proposed by Dreier, which was identical to the one previously rejected by Eaton, as "inadequate to secure the defendant's appearance."
The package, the government pointed out, includes no security for the bond. It said that Spencer Dreier recently stated that he would seek "revenge" against people "trying to destroy" his father, and therefore "is simply not a suitable co-signer" to the $10 million bond.
In an interview, Shargel called the prosecution's arguments "palpably weak."
"The government takes a xenophobic view and says that because he has traveled to foreign countries, he is adept at becoming a fugitive," Shargel said. "The connection isn't there."
He added that he remains "confident in our position."
A spokeswoman with the U.S. Attorney's Office declined to comment.
