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Tuesday, July 14, 2009

Marc Dreier's Sentencing - 20 years

Marc Dreier, the law firm partner who defrauded his hedge fund clients of hundreds of millions of dollars, was sentenced yesterday by Judge Rakoff in the Southern District of New York.  Although Dreier's attorney had argued for a sentence of 12 and 1/2 years' imprisonment, the 20-year term that Judge Rakoff imposed was far less than the 145 year term that the government had sought in its filings (available here).  So, what lessons can one glean from Dreier's and Bernard Madoff's sentencings?  I arrived at the following four conclusions:

1. Remorse matters.  Whereas Madoff's self-serving statements during his plea allocation had the feel of an attorney-written admission, Dreier's four -page letter felt authentically remorseful and decidedly unlawyerlike (ironic, given that Dreier is a lawyer and Madoff is not).  Sure, Dreier's letter also reeked of self-pity, but it was bluntly honest in recognizing that he had destroyed his life and those of many others.

2. Madoff's sentence remains an outlier.   A few weeks ago, I stated that I did not think that Madoff's sentence would become the new anchor for large-scale frauds.  For now, this appears to be correct.  Judge Rakoff dismissed the notion that Dreier's fraud approached either the degree or type of harm that Madoff inflicted on others.   As soon as the Court indicated that Dreier's crime paled in comparison to Madoff's, the government's request for 145 years' imprisonment became a non-starter.  No surprise then that the Court asked the government if it was being serious when it requested a 145 year term.  (The government responded that anything greater than 30 years would be fine.)


3. Abuse of trust matters - but with limits.  There is no doubt that Dreier abused the trust of his clients.  The Sentencing Guidelines provide a two-level enhancement for offenses fueled by a defendant's abuse of a public or private trust relationship, and Judge Rakoff was rightly disgusted by Dreier's behavior.  But the government seemed to push the abuse of trust argument a bit farther, arguing on page 16 of its submission that a "long term of imprisonment" was necessary to deter the "thousands of lawyers in this and other jurisdictions" who otherwise might be tempted to "steal, cheat  or otherwise dishonor their profession to achieve personal wealth." 

Wow, if "thousands of lawyers" need a 145 year term of imprisonment to deter them from stealing from their clients, our profession is in far worse shape than we thought.  Aside from the hyperbole, the problem with the government's argument is that it seems to view "dishonor to the profession" as a legitimate basis of criminal sentencing.  But is it?

When we say that Dreier has dishonored the profession (Rakoff himself commented during Dreier's plea allocution that he had "disgraced" the profession), we are in effect saying that Dreier made other lawyers look bad.  Presumably, this is harmful insofar as it causes potential clients to distrust their attorneys and avoid seeking legal advice (if you really believe that people will alter their behavior toward attorneys in light of Dreier's brazen, and slightly nutty, scheme).  But how does a 145 year term of imprisonment bring honor back to the profession?  And is the "disgrace" to the legal profession of such a nature that Dreier's abuse of trust should be treated differently than other abuses of trust, such as by stockbrokers, accountants or doctors? 

4. Framing matters. Consider for a moment what would have happened to Marc Dreier had Bernard Madoff not existed.  The most likely point of comparison would have been Worldcom's Bernie Ebbers or Enron's Jeffrey Skilling.  The underlying question would not have been, "Is Marc Dreier as bad as  Madoff," but rather, "Is he worse than Ebbers or Skilling?"  And it is at least possible that in this regard, a court would have concluded that Dreier's crime was worse because Dreier was its sole architect and because the fraud itself was so brazen.  In that regard, Dreier is very fortunate -- both that he was sentenced so soon after Madoff, and that the government sought a sentence that inevitably drew comparisons to Madoff.

Posted by Miriam Baer on July 14, 2009 at 11:26 AM | Permalink

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MADOFF + STANFORD + DREIER + SATYAM + FISERV + ALBERT HU + The 1031 Tax Group LLC - Edward H. Okun = PROSKAUER ROSE & FOLEY & LARDNER
Foley & Lardner partner Patricia J. (Trish) Lane represented FISERV, sue Foley, read on.
Investors who have been burned in these scams should start to seek redress from the lawyers who were involved with these scams. I personally have been trying to notify regulators and authorities of a ONE TRILLION DOLLAR scam that is putting states like New York and Florida at huge risk, as well as, companies like Intel, Lockheed, SGI and IBM. The states and companies involved in the fraud fail to acknowledge the risk exposing shareholders and citizens to impending liabilities. Investigators, courts and federal agents ignoring the crimes and evidence, including a car-bombing attempt on my life. I know how Harry Markopolos felt trying to expose Madoff in a world without regulation.
Did I hear Proskauer Rose is involved in Madoff (involved many clients too) and acted as Allen Stanford's attorney. Investors who lost money in these scams should start looking at the law firm Proskauer's assets for recovery. First, Proskauer partner Gregg Mashberg claims Madoff is a financial 9/11 for their clients, if they directed you to Madoff sue them. Then, Proskauer partner Thomas Sjoblom former enforcement dude for SEC and Allen Stanford attorney, declares PARTY IS OVER to Stanford employees and advises them to PRAY, this two days before SEC hearings. Then at hearings, he lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger. Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all statements made by him and Proskauer, his butt on fire. If you were burned in Stanford sue Proskauer.
Proskauer Rose and Foley & Lardner are also in a TRILLION dollar FEDERAL LAWSUIT legally related to a WHISTLEBLOWER CASE also in FEDERAL COURT. Marc S. Dreier, brought in through Raymond A. Joao of Meltzer Lippe after putting 90+ patents of mine in his own name, is also a defendant in the Federal Case.
The Trillion Dollar suit according to Judge Shira Scheindlin is one of PATENT THEFT, MURDER & A CAR BOMBING. For graphics on the car bombing visit www.iviewit.tv.
The Federal Court cases
United States Court of Appeals for the Second Circuit Docket 08-4873-cv - Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. - TRILLION DOLLAR LAWSUIT
Cases @ US District Court - Southern District NY
(07cv09599) Anderson v The State of New York, et al. - WHISTLEBLOWER LAWSUIT
(07cv11196) Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al.
(07cv11612) Esposito v The State of New York, et al.,
(08cv00526) Capogrosso v New York State Commission on Judicial Conduct, et al.,
(08cv02391) McKeown v The State of New York, et al.,
(08cv02852) Galison v The State of New York, et al.,
(08cv03305) Carvel v The State of New York, et al., and,
(08cv4053) Gizella Weisshaus v The State of New York, et al.
(08cv4438) Suzanne McCormick v The State of New York, et al.
( ) John L. Petrec-Tolino v. The State of New York

Posted by: Eliot Bernstein | Aug 22, 2009 8:57:11 AM

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