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Dreier’s Lawyer Expects Guilty Plea; Firm Lawyers at Risk in Bankruptcy Case

Posted Mar 20, 2009 6:06 AM CDT
By Debra Cassens Weiss

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Marc Dreier will likely plead guilty to charges he sold $700 million in phony securities to investors, his defense lawyer told a judge yesterday.

Dreier, who was the only equity partner at his 250-lawyer New York law firm, entered a plea of not guilty to a new money laundering charge against him during the hearing yesterday. But Dreier's lawyer, Gerald Shargel, said he expects his client will eventually plead guilty, the Associated Press reports.

Meanwhile a lawyer representing unsecured creditors of 360networks is apparently weighing claims against some Dreier lawyers, Reuters reports.

A court filing in the company’s bankruptcy case says Dreier called two partners and the controller of his law firm from a jail cell in Canada where he was initially arrested to say he could sell his pricey art collection to replace missing law firm funds, the story says. The missing money included cash from $38.6 million held in escrow on behalf of the communications company’s unsecured creditors, the story says.

"It is apparent from evidence available to date that other Dreier LLP employees had indications of questionable activity," the report says. It was filed by lawyer Steven Reisman, appointed to investigate for 360networks’ unsecured creditors, according to the story. Reisman is co-chair of the restructuring and insolvency group at Curtis, Mallet-Prevost, Colt & Mosle, according to an online profile.

Reisman and his law firm plan to gather evidence to find out more about who may have aided Dreier.

The firm's controller, John Provenzano, has said in a sworn statement to the Securities and Exchange Commission that he refused to wire up to $10 million in escrow funds to Dreier after his Canadian arrest. Provenzano said the Dreier law firm owed $38 million to clients in connection with its representation of 360networks, but escrow accounts contained only half of the needed money.

Dreier is currently confined to his $12 million New York home. U.S. District Judge Jed Rakoff reserved judgment on a request by prosecutors to force Dreier's family to pay more than $30,000 a month in mortgage payments, the AP story says.


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