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Bid to Create 'Private Prison' at Issue in Dreier Bail Determination
Defense attorney says Dreier's relatives have offered to pay $70K a month for round-the-clock security to ensure that Dreier does not flee
New York Law Journal
February 5, 2009
For two months, attorney Marc S. Dreier has been jailed without bail at the Metropolitan Correctional Center. But if he gets his way, he soon will be released to less spartan accommodations -- his own midtown luxury apartment.
First, however, Dreier has to convince Southern District Judge Jed S. Rakoff it would be fair to allow the lawyer to create his own "private prison" with financial resources available to him.
According to his attorney, Gerald Shargel, Dreier's sister and brother-in-law have offered to pay $70,000 a month for round-the-clock security guards to ensure that Dreier does not flee before charges that he bilked investors of $400 million are adjudicated.
Judge Rakoff is expected to rule today or tomorrow on the bid of Dreier, the founder and sole equity partner of Dreier LLC, to be released on bail.
At a bail hearing before Rakoff on Monday, Shargel argued that his client was "penniless" after being stripped of all his assets in the wake of his Dec. 2 arrest in Toronto and his Dec. 7 arrest in New York City and does not pose a flight risk.
At the Metropolitan Correctional Center, Dreier lives in a small cell with a bunk mate, and has limited contact with the outside world. He is permitted to meet once a week with his ex-wife and teenage daughter and his 19-year-old son, Spencer Dreier. He receives an allotment of 320 minutes per month for phone calls, which includes calls to his lawyer. He can see Shargel every day.
Shargel contends the 1984 federal Bail Reform Act, 18 U.S.C. §3142(c)(1)(B), requires the court to release Dreier, provided a set of conditions exist that will "reasonably assure" his appearance and the safety of the community.
House arrest with armed guards stationed inside Dreier's apartment would meet those requirements, Shargel said Monday night at the bail hearing.
Indeed, that arrangement would go further than the house arrest reportedly imposed on Bernard L. Madoff, the alleged mastermind of a massive Ponzi scheme, who has armed guards sitting in a car outside his Park Avenue penthouse.
Magistrate Judge Douglas Eaton previously had ruled that Dreier, 58, could be released if he posted a $20 million bond, $10 million of which would be secured by a minimum of four financially responsible persons.
Shargel said his client could not meet those conditions but suggested an uncollateralized bond signed by Dreier's 85-year-old mother, Mildred, and his son.
Further, he proposed temporary preventive detention at Dreier's apartment monitored by security guards, who could use "reasonable force" to thwart a potential breakout.
While Rakoff, who is not bound by Eaton's ruling, seemed responsive to Shargel's arguments at the Monday hearing, he said the relatively "rare" issue of using armed guards to secure a defendant's appearance raised two fundamental questions: Is it appropriate to permit "people with means or access to means" to effectively create their own "private prison?" And do armed private guards have the same ability to prevent a defendant's flight as a U.S. marshal or a prison guard?
The tab for private security would dwarf the cost of jailing Dreier. The average cost of housing a defendant in a federal correctional institution is $68 a day, a spokesperson for the federal prison agency said; a separate breakdown is not available for the MCC.
In court, Shargel responded that while defendants who have money have "an unquestionable advantage" and can "finance a better defense," they should not be penalized for that fact if conditions can be crafted to assure their appearance in court.
In an interview, Shargel said that "the size of a person's pocket" should not be a factor when a court is considering bail. Rather, the bail determination is a matter of "customizing conditions" to make sure a defendant shows up when required.
FIREARMS 'UNNECESSARY'
But Assistant U.S. Attorney Jonathan Streeter urged at Monday's hearing that it would be "unseemly" and "bad public policy" to allow a "very small class of people" to buy their way out of jail.
Moreover, Streeter, said he was concerned about whether private guards would have the authority to detain Dreier if he tried to escape.
"There is a difference between being in an apartment in Manhattan and the [Metropolitan Correction Center]," Streeter said, raising the question of whether private guards could use deadly force.
In papers submitted to Rakoff Tuesday, Streeter concluded that under state law, "absent an imminent threat of deadly force by the defendant, private security guards would have no authority to use firearms or other deadly force against the defendant, either to prevent flight or otherwise."
Shargel, in his own submission to the court, backed away from earlier suggestions the guards would be armed.
He wrote that Dreier, "has no history of violence." Further, his client "is not a physically large or imposing individual," and would be guarded by "physically fit" retired law enforcement agents stationed in front of his apartment's single exit.
"It seems unnecessary to require that the agents carry firearms in order to enforce Dreier's home confinement," he said.
Shargel compared the conditions he was proposing for Dreier to those in United States v. Sabhnani, 493 F. 3d 63 (2nd Cir. 2007), in which a Long Island couple accused of enslaving two Indonesian housekeepers was released on bail with an elaborate set of conditions, including "24-hour a day visual surveillance of their Long Island home by on-site private security guards answerable to the court."
"Armed or unarmed, the use of bail enforcement agents employed by the defendant should, in this case, reasonably assure the appearance" of Dreier, as required by the bail act, Shargel wrote in his brief.
'NAGGING CONCERN'
Susan C. Wolfe of Hoffman & Pollok in Manhattan, who represents the wife in the Sabhnani case, said that in most cases using private security to monitor defendants on bail is "overkill," and that the same ends usually can be accomplished by electronic monitoring.
Wolfe said it would be inequitable to prevent individuals of means from hiring private security to permit their release.
"People who have more financial resources are more likely to be considered risks of flight" because they have the money to escape, she explained.
"If those resources can be diverted in order to ameliorate any risk of flight, it's only fair," Wolfe said.
According to Daniel C. Richman of Columbia Law School, who specializes in federal criminal law, the Bail Reform Act always has presented the "nagging concern" that white-collar defendants facing detention could buy themselves out of jail.
"On the one hand the statute is so capacious in its invitation to come up with conditions to ensure a party's appearance and the security of a community, yet at the same time makes no provision for indigent defendants or poor defendants to be funded in their establishment of such conditions," Richman said. "The risk is that the statute's language can be used for the creation of private prisons for the rich, leaving indigents stuck in the MCC."
Charles Stillman of Stillman, Friedman & Shechtman, a white-collar defense attorney, agreed that the act gives federal judges considerable discretion to decide what conditions to impose on Dreier's release.
If Rakoff finds it appropriate to release Dreier on bail with private guards, "then he should do it," he said.
