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December 11, 2008 1:00 PM

Breaking: Dreier Denied Bail, Labeled a Lawyer "Houdini"

Posted by Zach Lowe

Update: Our colleague Mark Hamblett at the New York Law Journal attended the Dreier hearing today and provides some amazing details. First, prosecutors allege Dreier has been scamming clients since January 2006, not October of this year as was previously known (and listed below). Second, Dreier apparently kept "a box of cell phones to compartmentalize his deception," the NYLJ says. Wow.

For those of you waiting for the next tidbit of news in the case of Marc Dreier, wait no longer: a federal judge has denied Dreier bail while he faces charges of orchestrating an elaborate fraud to steal about $150 million from three investment funds, according to this article from Bloomberg.

A federal prosecutor called Dreier, the sole equity partner in the nearly defunct Dreier LLP, a "Houdini of impersonation and false documents" during a hearing this morning at U.S. District Court for the Southern District of New York on Dreier's request for a $10 million bond, according to Bloomberg.

The prosecutor, Assistant U.S. attorney Jonathan Streeter, also said the final tally of Dreier's frauds, which started around October, will likely wind up somewhere close to a staggering $380 million.

Dreier is facing criminal charges of wire fraud and securities fraud that carry up to 40 years in prison. The Securities and Exchange Commission has also filed civil charges against Dreier, and SEC attorneys have asked (among other things) that the same judge hear the two cases at the same time, court papers show.

As we wrote yesterday, these charges are just the beginning of problems that may extend to the 250 or so attorneys who worked at Dreier's firm. Tens of millions in client funds are missing from the firm's escrow accounts, and one lender, Wachovia, has already sued every lawyer in the firm over a $14 million debt Dreier owes the bank. More litigation is sure to come.

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