Prominent NY Lawyer Dreier Stays in Jail

A high-profile New York lawyer accused of running an investment scam that allegedly caused $380 million in losses failed to make bail on Thursday when a U.S. judge set conditions he could not meet.

After a hearing in which comparisons were made with accused swindler Bernard Madoff's release on $10 million bail and his being placed under house arrest and 24-hour surveillance, attorney Marc Dreier returned to the jail where he has been held since his Dec. 7 arrest.

"I believe the risk of flight is greater in Mr. Dreier's case than in Mr. Madoff's case," U.S. Magistrate Judge Douglas Eaton said in U.S. District Court in Manhattan.

Eaton presided over the initial court appearance by Madoff on Dec. 11 after authorities said he confessed to a securities fraud with potential losses of $50 billion. Prosecutors have failed to persuade two judges to jail Madoff.

Typically under U.S. bail laws, white-collar crime defendants are allowed out on bail, often with restrictions on their movements.

In the Dreier case, a U.S. prosecutor argued that Dreier should remain jailed before trial because investigators have not tracked down all his money, and he is a flight risk.

The Harvard Law School graduate has been accused of running a scheme in which he tried to convince investors that worthless debt securities were real.

The case against Dreier, 30 years a lawyer and founder and sole equity partner at the now-bankrupt law firm Dreier, stunned New York's legal community.

Dreier, 58, is charged with securities fraud and was denied bail at his initial hearing in December. His lawyer had argued for his release under conditions similar to Madoff's.

On Thursday, the judge said he was prepared to release Dreier on $20 million bail with collateral and at least four co-signers of the bond who were "financially responsible and acting meaningfully."

Dreier, who was dressed in prison blue garb and frequently talked to his lawyer in court, has been able to offer only two co-signers, his mother and his 19-year-old son.

"You are imposing a financial condition that will keep my client in jail," Dreier's lawyer, Gerald Shargel, told the judge.

Shargel argued that Dreier should be released on bail because all of the money the government alleges he received has been accounted for. He was cooperating with a receiver and was not a flight risk, his lawyer said.

Court documents showed that his possessions included two yachts and four cars, and that he owned several properties in New York and the West Indies.

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