Dreier Pleads Not Guilty, Judge Will Rule by Friday on Bail

Jailed attorney Marc S. Dreier renewed his efforts Monday to be released on bail. Indicted last week by a federal grand jury on charges that he bilked hedge funds and other investors of more than $400 million, Dreier pleaded not guilty at his arraignment before New York federal Judge Jed S. Rakoff, who promised to rule no later than Friday on whether to release Dreier on bail. The judge ordered both sides to submit briefs on what lengths private armed guards could go to if Dreier attempted to flee his apartment.

Noeleen Walder

New York Law Journal

2009-02-03 12:00:00 AM

Attorney Marc S. Dreier, who has been jailed since Dec. 7, renewed his efforts Monday night to be released on bail.

Indicted last week by a federal grand jury on charges that he bilked hedge funds and other investors of more than $400 million, Dreier pleaded not guilty Monday at his arraignment before Southern District Judge Jed S. Rakoff.

Following a nearly four-hour hearing last night, Rakoff promised to rule no later than Friday on whether to release Dreier on bail. The judge ordered both sides to submit briefs by 5 p.m. today on what lengths private armed guards could go to in the event Dreier attempted to flee his Park Ave. apartment.

The government has suggested that Dreier has access to hidden funds and Assistant U.S. Attorney Jonathan Streeter said some of Dreier's co-conspirators still may be at large.

Rebutting arguments that his "penniless" client was a flight risk, Gerald Shargel, Dreier's attorney, argued that any money missing from Dreier LLC, which Dreier founded and where he was the only equity partner, had gone to support the operations of the firm, to purchase luxury goods for himself, and to pay interest on the phony promissory notes he allegedly peddled.

Rakoff arranged an impromptu conference call with Mark Pomerantz of Paul, Weiss, Rifkind, Wharton & Garrison, who is serving as a receiver in the case, to probe Dreier's finances. Reached at the airport en route to San Francisco, Pomerantz said he had seen "nothing to indicate that there will be substantial unaccounted for assets." He estimated that Dreier's apartment was worth $12 million, his artwork more than $40 million and his yacht $18 million.

Pomerantz said a forensic accounting of Dreier's assets had not been done, but he "would be surprised at the end of the day if there is even $15 or $20 million left for Mr. Dreier."

On Jan. 22, Southern District Judge Douglas Eaton held that Dreier could be released on $20 million bail, provided he found four financially sound persons to secure half of that amount, a package Shargel called "excessive" and said his client could not meet. Rakoff was not bound by that decision, however.