In other scandal news this week, on Thursday January 22nd 2009, Marc Dreier, the New York lawyer jailed since his arrest for allegedly cheating hedge funds out of more than $400 million, had his detention ruling modified. Rather than being ordered to be held without bail until trial, Marc Dreier, a graduate of Harvard Law School and Yale College and the head of the now bankrupt 250-lawyer legal firm Dreier LLP, is now able to be freed provided that he comes up with a $20 million bond. That bond must be signed by four co-signers in the event that it is satisfied by property or $10 million in cash. Also, Mr. Dreier must then submit to home detention and electronic monitoring as well as seeing a psychiatrist twice a week.
Mr. Dreier's lawyer, Gerald Shargel, told U.S. Magistrate Judge Douglas Eaton that Mr. Dreier would not be likely to satisfy the terms of bail. Hence, Mr. Dreier is likely to remain jailed until his trial where he faces up to 30 years in prison. Mr Dreier was arrested based on a criminal complaint. Prosecutors must file an indictment in court before February 7th according to Mr. Shargel. The case is US v Dreier 08-mj-2676 U.S. District Court for the Southern District of New York (Manhattan).
What is particularly interesting about this decision is that Magistrate Judge Eaton in this case is the same one who set the terms of home detention in the case of Bernie Madoff. Toomre Capital Markets LLC ("TCM") wonders what is so different in Mr. Dreier's case. Bernie Madoff allegedly defrauded many more investors both sophisticated and not out of approximately $50 billion; Mr. Dreier "only" apparently defrauded "sophisticated" hedge funds for only one percent of the amount Madoff apparently confessed to. Both are white-collar professionals who allegedly has traveled extensively abroad and might have funds from the fraud in foreign locales.
Why then was Bernie Madoff's bond famously set at $10 million while Marc Dreier's has been set at $20 million? As Gerald Shargel argued, should not his client get a similar amount of bail and a similar deal? Apparently, Magistrate Eaton felt that the risk of flight is greater in Mr. Dreier's case than that of Bernie Madoff. TCM does agree that, given the high amount of publicity Mr. Madoff has received from the media and the anger of his many investors, it would be virtually impossible for him to move about in the greater New York City area without many "regular" citizens noting his movement. A less public figure such as Mr. Dreier might succeed in fleeing the jurisdiction without notice, but again is very unlikely.