January 22, 2009 4:20 PM

BREAKING: Dreier to Remain in Jail

Posted by Zach Lowe

The suspense is over: Bernard Madoff may get to remain under house arrest, but Marc Dreier will be staying in jail. 

A federal magistrate judge called Dreier's alleged criminal conduct "reckless, clever, and improvising," and said it "suggests a mental disorder," according to our colleague Alison Frankel, who braved the scene at federal court in Lower Manhattan this afternoon.

Frankel reports that federal magistrate judge Douglas Eaton ruled that Dreier could be released only if he finds a way to post a $20 million bond, with $10 million of it backed by real assets. Unfortunately for Dreier, a court has frozen all of his assets, save for $50,000 that he is allowed to use to pay legal fees.

Dreier's attorney, Gerald Shargel, told Eaton that it's unlikely that the disgraced lawyer will be able to pony up for such a bond. Eaton ruled that Dreier would also have to find four cosigners on the bond--in addition to his 19-year-old son, Spencer.

Shargel had previously requested a $10 million bond and he offered Spencer and Dreier's 85-year-old mother, Mildred, as cosigners. 

As Shargel told us he would, he tried to sway Eaton by contrasting Dreier's situation with Madoff's, but the judge woudn't bite. 

Shargel has also said Dreier is not a flight risk, and that he has no reservoir of assets waiting overseas. He pointed out that Dreier voluntarily returned to the U.S. after his Dec. 4 arrest in Toronto despite knowing that he would be arrested again upon arriving in New York.

But prosecutors filed papers on Wednesday in which they claimed Dreier could not be trusted to remain in the U.S. if he were released from jail. Eaton appeared to agree during Thursday's hearing, saying Dreier knew he was in trouble even before he flew to Toronto and did so anyway in a last-ditch attempt to continue what prosecutors allege was a $380 million scam. 

In related news, Dreier's lawyer in Canada on Thursday attended the first hearing so far in Dreier's criminal case there, according to our colleagues at the National Law Journal. His lawyer in that case (Todd White of Greenspan, White) told the court in Toronto he has not spoken directly to Dreier since Dreier's arrest. Another hearing is scheduled for March 5, the NLJ says.

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