Marc Dreier prominent attorney was ordered jailed without bail

Marc Dreier prominent attorney was ordered jailed without bail Thursday after a federal prosecutor estimated losses of $380 million in an alleged hedge fund fraud.
Magistrate Judge Douglas Eaton denied bail for Marc Dreier, whom prosecutor Jonathan Streeter called a "Houdini of impersonation."Streeter said Dreier was "in a desperate situation and the only way out of the desperate situation is to flee."
"His life has completely unraveled," said the prosecutor, adding that the fraud has been going on since at least 2006 and Dreier had duped "some of the most sophisticated investors in the world."Dreier had traveled extensively in the last year and had contacts abroad where money might be hidden, said Streeter.
Dreier's lawyer, Gerald Shargel, who calls the case "very complicated," had sought a $10 million bail package with electronic monitoring.The scandal has stunned Dreier LLP, a mid-size law firm that has represented celebrities, including retired football star Michael Strahan and former News Corp. publishing executive Judith Regan.Dreier LLP partner Joel Chernov said in court papers that many lawyers have left the firm, rent is overdue and BlackBerry service is being terminated. He says $27 million appears to be missing from the firm's escrow accounts.Dreier also is charged in Toronto with impersonation in connection with the attempted sale of $45 million of notes to a hedge fund.Streeter cited "over $380 million actual loss."
"There's a large amount of money completely unaccounted for," said Streeter, who did not elaborate further. A judge denied bail on Thursday for a prominent New York lawyer accused of selling sham investments to hedge funds, a scheme that prosecutors now say may have been much larger than originally thought.
The case against Marc Dreier, founder and sole equity partner at the 250-attorney law firm Dreier LLP in New York, has stunned the city's legal community. The Harvard Law School graduate is a 30-year veteran lawyer, whose firm has specialties in bankruptcy, litigation and employment law.Assistant U.S. Attorney Jonathan Streeter said in court the actual monetary losses in the case may now exceed $380 million, compared with about $100 million when the case was announced on Monday. He said the fraud has likely been going on since January 2006.Dreier was ordered to remain in custody. He was arrested on Sunday for what authorities called a "stunning" and "brazen" scam.Streeter said Dreier had been fooling some of the world's most sophisticated investors. He is accused of scheming to market fake debt from a New York-based real estate developer to hedge funds and other institutional investors. Prosecutors say he cajoled his way into real estate and pension fund offices and created fake documents to try to convince investors that the worthless debt securities he touted were real.

"I'm going to order detention based on risk of flight," U.S. Magistrate Judge Douglas Eaton said at a hearing.

Eaton said he may revisit that ruling at a later date, but that for now, too much is unknown about Dreier's finances, such as whether the attorney has access to money abroad or has close associates who could potentially help him flee.
"The investigation is just beginning," the judge said.
Dreier, 58, faces federal criminal securities and wire fraud charges, as well as civil fraud charges brought by the U.S. Securities and Exchange Commission.
He has not yet responded to the charges in court, but his lawyer, Gerald Shargel, told the judge his client would cooperate fully with the court-appointed receiver hired to oversee the law firm's finances.Dreier looked disheveled and unshaven, wearing a dark blue jail uniform and orange tennis shoes. His lawyer said he has been held under "inhuman" conditions at a Manhattan detention center and has been only allowed to shower infrequently.
Shargel had sought to have Dreier released on a $10 million bond and offered to have him placed under house arrest at Dreier's large home in Quogue, a village in Long Island, New York, with two armed guards on the premises at all times.But Streeter said Dreier should remain in custody, calling him a scam artist of "exceptional ingenuity."
"Mr. Dreier is in a desperate situation and the only way for him out of the desperate situation is for him to flee," he said, calling him a "Houdini of impersonation and false documents."