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Dreier Gets 20 Years for 'Betrayal of Trust'
New York Law Journal
July 14, 2009
Seven months after he was arrested for defrauding investors of hundreds of millions of dollars and stealing from clients, disgraced attorney Marc S. Dreier was ordered to serve 20 years in prison Monday.
"At this point all I can do is express my shame and remorse," Dreier told Southern District of New York Judge Jed S. Rakoff. "I'm sorry to all the people I stole from. I'm sorry to the clients I betrayed. I'm sorry to the lawyers at my law firm for dishonoring their profession."
Rakoff rejected an initial request by Assistant U.S. Attorney Jonathan R. Streeter for 145 years in prison as well as Streeter's fall-back request for 30 years in prison, which would be the equivalent of a life sentence for the 59-year-old former head of Dreier LLP.
Read "Law Firm and Personal Bankruptcies Continue" and "Key Dates in the Case of Marc S. Dreier."
But the part of Streeter's argument that resonated with the judge, and worked in part on his refusal to grant the request of defense attorney Gerald L. Shargel for a sentence in the 10-to-12 year range, was Dreier's abuse of trust.
"The real heart of these crimes, the most appalling fact is the betrayal of trust," Judge Rakoff said. "Mr. Dreier betrayed the trust of investors," colleagues, clients, friends and "to some extent even betrayed the trust of his family. This goes beyond the fact that he did this in part cloaked in the aura of a lawyer."
Dreier pleaded guilty May 11 to one count of conspiracy to commit securities fraud and wire fraud, one count of money laundering, one count of securities fraud and five counts of wire fraud.
In broad outlines at his guilty plea, and in greater detail in a letter to the judge last week, Dreier admitted he began stealing from a client settlement account in 2002, moved on to pitch bogus investments and then hit on the idea of fleecing hedge funds with promissory notes that did not exist.
Judge Rakoff, no fan of the sentencing enhancements that drive guidelines ranges sky-high based on the amount of the loss, asked Streeter if he was "serious" in asking for 145 years.
But Streeter argued forcefully to the judge that, while the guidelines "may have run amok" in some cases "they haven't run amok here."
Streeter also referred to one of the most striking aspects of Dreier's fraud, the hijacking of the identity of Solow Realty Development Corp., his biggest client, to market phony promissory notes in Solow's name to hedge funds.
Shargel had a sympathetic ear in Rakoff when he argued against the "absurd" results from loss calculations under the guidelines, but he could not persuade the judge to drop the sentence into the low teens.
"This offense was crazy. It was crazy for Mr. Dreier to think this is something he could get away with," Shargel said. "It was by some perverse stroke of luck that he wasn't caught years earlier."
The U.S. Probation Department had recommended a sentence of 25 years.
