Disgraced attorney Marc S. Dreier will journey this afternoon from midtown Manhattan to a downtown federal courthouse, where he is expected to plead guilty to peddling fictitious notes to investors.
It is uncertain whether Dreier will be allowed to return to his penthouse apartment at 151 E. 58th St. before imposition of what will surely be a lengthy prison term.
But the principal job of defense lawyer Gerald Shargel will be to keep his client out of jail for as long as possible.
Starting with the December arrest of the former head of now-defunct, 250-attorney Dreier LLP, Shargel waged an extended battle with Assistant U.S. Attorney Jonathan Streeter to have his client released from pretrial detention, eventually prevailing when Southern District of New York Judge Jed S. Rakoff ruled Feb. 5 that Dreier could be confined to his apartment under guard pending resolution of the case.
"We're going to have an issue about bail pending sentencing because the government is seeking to have him remanded and I'm trying to keep him out," Shargel said Friday.
The problem for Shargel, who met with his client at his apartment on Thursday to prepare for today's hearing, is that, once Dreier pleads guilty, the burden shifts to the defense on the question of remand.
"We have to show by clear and convincing evidence he is not a risk of flight nor a danger to the community," Shargel said. "And we believe we can do that."
At the hearing scheduled for 5 p.m. today before Rakoff, Dreier is expected to admit to every count in an indictment charging him with selling fictitious notes to at least 13 different funds and three individuals between 2004 and 2008: money laundering, conspiracy to commit securities and wire fraud, one substantive count of securities fraud and five substantive counts of wire fraud.
Dreier, 58, faces a sentence of 20 years in prison on each of the most serious charges against him, but Shargel's hope is for a sentence that leaves open the possibility that he will get out of prison before the end of his life.
In a recent proceeding, Shargel stressed to Judge Rakoff that his client was prepared to accept full responsibility for his actions, a fact that could be considered in his favor at sentencing.
Shargel would not comment on sentencing issues Friday. But with a client who was caught red-handed, the veteran defense attorney has indicated from the outset that the case would be resolved short of trial with a guilty plea.
"Given the facts and circumstances of the case, I thought both the public and the people involved in the matter had every right to know what our position was," Shargel said Friday.
Dreier will not contest a forfeiture allegation that calls for him to surrender $700 million in proceeds from the note sales, money which he no longer controls. The prosecution has alleged that investors in Dreier's schemes lost about $400 million.
Whatever property Dreier has not put up to guarantee his return to court -- millions of dollars worth of artwork, real estate, cars and boats -- is now in the custody of U.S. marshals.
How that property will be distributed, whether through an ongoing bankruptcy proceeding, a government-instituted forfeiture, or an order of restitution in conjunction with sentencing, has yet to be determined.
Dreier was arrested in December and charged with defrauding hedge funds by selling hundreds of millions of dollars in counterfeit promissory notes that were purportedly being issued by Dreier's former client, Solow Realty.
According to the indictment, Dreier relied on confederate Kosta Kovachev to impersonate a high-level executive with the real estate development firm to help him sell the notes and reassure skittish hedge fund managers who had become suspicious about those investments. At one point, the two commandeered a conference room at Solow as a meeting place to assuage a hedge fund manager.
Kovachev, who was paid $215,000 from Dreier LLP firm accounts to help Dreier peddle the notes, has also been charged.