Feeling Sorry For Bernie

As Madoff rots in prison, another psychopathic grifter, Marc Dreier, lives in luxury. Allan Dodds Frank on how Judith Regan and O.J. Simpson keep a $700 million crook in his penthouse.

As you read this, Marc Dreier, a Harvard Law School-educated con man of unprecedented chutzpah is lounging around his $10 million, 34th Floor apartment on a posh block on Manhattan’s East Side. Guarded by security that runs $50,000 a month, he might be sunning himself on the 1,000 square foot terrace, towering over 58th Street and Lexington Avenue. The guards - outfitted in coats and ties—escort guests from the lobby where they try not to disturb Dreier's famous neighbors, including former General Electric CEO Jack Welch and his wife Suzy, entertainers Beyonce and Jay-Z, NBC anchorman Brian Williams and Yankees outfielder Johnny Damon.

The $30,000 a month for Dreier’s mortgage and apartment maintenance comes from the funds intended to reimburse his victims. Meanwhile, his apartment, the largest remaining asset to be liquidated by the bankruptcy trustees, probably can’t be sold until he moves out.

Poor Bernie Madoff. After he pleaded guilty, his judge called him a "flight risk" and rousted him from his $7 million penthouse just five blocks north of Dreier's. So on Monday, when Dreier pled guilty to a $700 million fake securities scheme, it might have seemed to be equal justice if Dreier—whose criminal schemes included impersonating other people—had been locked up immediately. Instead, District Judge Jed Rakoff ranked Dreier with “some of the most egregious frauds in history,” then released him to his gilded cage, where he is restricted by an electronic ankle bracelet. Out on $10 million bail, the 58-year-old faces up to 145 years in prison when he is sentenced in July 13.

Admitting “one rarely encounters a less appealing beneficiary of bail,” the judge nonetheless allowed Dreier to return home on the grounds that he is not a “flight risk,” given that he is being monitored 24 hours a day by armed former FBI agents.

Flight risk or not, Dreier’s presence is not enhancing property values at the building known as One Beacon Court, where the neighborhood bar and takeout joint downstairs is Le Cirque. “I know the building itself—I am often in contact with the lawyer representing the condominium board—they are not happy with this situation. They want it to end as soon as possible,” Assistant U.S. Attorney Jonathan Streeter said in court Monday, arguing that Dreier should go straight to jail.

The $30,000 a month for Dreier’s mortgage and apartment maintenance comes from the funds intended to reimburse his victims. Meanwhile, his apartment, the largest remaining asset to be liquidated by the bankruptcy trustees, probably can’t be sold until he moves out.

The relative freedom Dreier enjoys raises the question of equal justice and whether—under the guise of co-operating with investigators—he may be able to continue perpetrating what one of his adversaries—publisher Judith Regan—calls another giant fraud.

Allow me to refresh your recollection about Marc Dreier. For about 72 hours from December 8 to December 11, 2008, Dreier was the biggest white collar securities fraud crook in captivity, until his audacious fraud was totally eclipsed by Madoff’s dazzling multi-billion dollar Ponzi scheme.

Educated at Yale College and Harvard Law, Dreier was the sole equity owner of Dreier, LLP, a 250-member law firm with a swanky Park Avenue office housing a major art collection. He had flashy clothes, famous clients and friends, boats, private planes, a house in the Hamptons, all the trappings of the ultra-wealthy.

Then he got caught impersonating a pension fund officer in Canada and his five-year long brazen multi-national scheme to sell fake securities unraveled.

Madoff and Dreier are the yin and yang of white-collar captivity. Madoff, at first, stayed out on $10 million bail, then was quickly placed under house arrest before being sent to prison for good after pleading guilty on March 12. Meanwhile, Dreier—deemed an extreme flight risk by the court—was placed in solitary confinement at the Metropolitan Correctional Center immediately after being arrested. Then his lawyer, Gerald Shargel, who once got mobster John Gotti Jr. out with a similar house arrest deal, sprung Dreier in February—on terms similar to Madoff’s.

Today, Dreier remains at home, in part, for the convenience of bankruptcy lawyers—the people charged with recovering money for Dreier’s victims—who would rather not ask him questions in jail because he does not seem to focus as well behind bars. “When I met him at the MCC, he had difficulty remembering the names of people and some difficulty in responding to my questions,” Bankruptcy Trustee Shelia Gowan told Judge Rakoff. “I assume that was due to the stress of incarceration.”

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Then Gowan told the judge about what she considers another asset of the estate. It is Dreier’s claim that Judith Regan owes his law firm more than $2.5 million for its alleged representation in her lawsuit about wrongful dismissal by News Corp. You may remember the case: Regan was planning to publish a book by O.J. Simpson ( If I Did It); the whole thing blew up in controversy and she was fired by Rupert Murdoch’s company.

Well, Regan has been saying for more than a year that Dreier is a liar and cheat who she fired early on after hiring him in February 2007. Dreier, she says, subsequently tried to blackmail her, and cheat her by fabricating documents and falsely claiming that his firm had done more than 1,200 hours of work.

Now the deposition Regan’s legal team plans to take from Dreier is scheduled for his Beacon Court apartment next Monday, and Dreier’s legal team is using that as a justification to keep him out of jail.

Regan was outraged when she learned about what went on in court Monday.“This man is such a dangerous sociopath,” says Regan. “And the bankruptcy trustees are acting as if it (Dreier’s case versus Regan) is a matter of fact, as though they basically need to steal more money from me to reimburse his victims. Right now, he is apparently working fulltime trying to think of ways to screw me because I fired him.”

Gowan, a former Assistant U.S. Attorney, declined to answer my question about how she could consider Dreier’s case against Regan to be truthful and factually correct in light of his now proven history as a consummate criminal.

Finally, you would think that a guy like Dreier would be thankful his legal defense team managed to keep him out of jail for a night—let alone an extra two months.

But Dreier instead had “a hissy fit” with Shargel moments after the judge and news reporters left the court room, according to a witness. It was all about the $70,000 a month—now reduced to $50,000 a month—for Pathfinder, the armed guard service that has been paid by Dreier’s sister, an undisclosed “friend” and his 88-year-old mother.

Dreier yelled at Shargel for somehow allowing Assistant U.S. Attorney Sharon Cohen Levin to tell the court that money from Dreier to his mother had been traced by government investigators. Shargel objected in court, then the lead prosecutor Streeter offered this clarification: “I don’t think we have any evidence that since his release there has been some surreptitious transfer of money. The point is that there is a distinct possibility that some of the money that his mother has is money she got from Mr. Dreier and that’s money he got from victims.”

Allan Dodds Frank is a business investigative correspondent who specializes in white-collar crime.