Sentencing Looming, Dreier Asks For No More than 12 1/2 Years

[WSJ_law_blog]

The day of reckoning is coming fast for Marc Dreier, who pleaded guilty in May to eight felony charges related in connection with his scheme to sell fictitious promissory notes.

In advance of his sentencing Monday, Dreier’s lawyer, Gerald Schargel, filed a sentencing memo Wednesday asking the court to sentence him to no more than 12 ½ years in prison. Click here for the memorandum; here for the exhibits to the memorandum, which include an incredible four-page letter from Dreier himself to the court, as well as letters from others.

Under the federal sentencing guidelines, Dreier, 59, faces a possible sentence of 145 years — “until age 204,” the filing states. The filing acknowledges that “victims of [Mr. Dreier’s] crimes have suffered tremendous financial losses,” stating that the attorney has “had to witness the shame and suffering that his actions have brought upon his family.”

Yet, Dreier’s counsel, Gerald Shargel, argues in the filing that the recommended sentence under the guidelines places an unfair emphasis on the amount of losses caused by Mr. Dreier’s fraud, which are estimated to be in excess of $400 million. A sentence of 121-151 months is “a sentencing range with a rational basis,” states the filing, which also makes much of the assistance Dreier has provided in recovering assets for the victims of the fraud.

The thrust of Shargel’s argument: that shorter sentences for white-collar defendants provide adequate deterrence. In other words, since his reputation has been so damaged, his prison term aside, he’d never be able to pull off another like scheme.

For our purposes, the letter from Dreier himself is worth a look. Excerpts follow:

Dear Judge Rakoff,

Please consider this letter in connection with my sentencing on July 13, 2009.

I know of course that no words can diminish the harm I have caused to so many people. Those who were victimized by my bogus loans lost millions of dollars. Clients of my law firm lost escrow funds they entrusted to me. The attorneys and staff at my firm who put their faith in my lost their jobs. My friends and colleagues have been tainted by their association with me. And the families of all these people have no doubt shared in the suffering — as has my own family. My children have lost the father they knew, as well as their good name and the happiness they deserve. I have betrayed the people I care about most, and I suffer from the shame and self-loathing and regret with which I will always have to live.

After law school I spent 20 years in several prominent law firms, first as an associate, then as a partner. I performed well, but I was achieving less satisfaction and recognition than I expected. Colleagues of mine and certainly clients of mine were doing much better financially and seemingly enjoying more status. By my mid-forties, I felt crushed by a sense of underachievement.

So I started my own firm in 1996 . . .

I had planned poorly, however, for the expenses. . . I was funding the firm partially with advances from some clients but primarily through “factors” who charged exorbitant fees and interest and were highly intrusive in monitoring the firm’s accounts. By 2001 I was deeply in debt.

In January 2002, my wife sued for divorce. . .

All this left me feeling overwhelmed — by my debt, by a disappointing career, by a failed marriage. And so, incomprehensibly, in 2002 I started stealing. . . . [S]oon I stumbled upon the brazen idea of arranging fictitious loans from hedge funds, ostensibly to [Solow] and diverting the loan proceeds to myself.

As I sit here today, I can’t remember or imagine why I didn’t stop myself. It all seems so obviously deplorable now. I recall only that I was desperate for some measure of the success that I felt had eluded me. I felt that my law fimr was my last chance to make a mark for myself, and I was fearful of seeing it fail. . . . I lost my perspective and moral grounding, and really, in a sense, I just lost my mind.

At the beginning, I spent most of the money on growing the law firm. . . . But as time went on, I was more and more self-indulgent. I bought extravangant things — a beach house, an dapartment a boat, expensive art. Obviously, other men suffer through divorce and “mid-life crisis” and manage not to steal. And other people grow their business without resorting to crime. I just wan’t in control of myself.

. . . [W]ithout ever actually planning to, I found myself running a massive Ponzi scheme with no apparent way out.

. . . [I]n early December 2008, I was unable to resotre about $40 million to [a] client account as the due date for its disposition was nearing. As a result, I engaged in the most desperate and irrational act yet — impersonating an attorney from the pension fund in Toronto in order to “close” a loan from a hedge fund. . . . I knew very well that this time I would most likely be caught. I was caught, and that escrow money was not restored.

In some sense, begin caught was a relief. I ahd been living a self-inflicted nightmare, scrambling every day to sustain the charade. I had three “full-time” jobs: First, I was managing a large active law firm, with all the daily challenges that come with such responsibility. Second, I was head of the firm’s litigation department, with a very heavy active practice and a caseload of my own. Finally, I was managing a huge portfolio of fraudulent loans, which required me to constantly prepare and update bogus financial statements and loan documents, field inquiries from lenders and prospective lenders . . . and do all that was necessary to keep the scam a secret.

. . .

For me, the punishment that I receive from this Court will only be apart of my sentence. I have already been disgraced beyond anything I could ever have imagined. Despite whatever good I once accomplished in my life, and whatever I hoped to accomplish, I will always be remembered as a thief. I have lost all my friends. I have lost my law firm, my law license and all that I have ever owned. . . And now will lose my freedom as well, and rightly so.

. . .

I don’t know what gives some men the strength of character to lead virtuous lives for all of their lives and what causes others, such as myslef, to lose their way. There is no excuse whatsoever for what I have done. I have explained it the best I can. I will try to learn from this, and hopefully others will as well.