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February 5, 2009

Fascinating "personal prison" offer considered in prominent white-collar case

The New York Law Journal has this fascinating new piece headlined, "Bid to Create 'Private Prison' at Issue in Dreier Bail Determination."  Here is the first part of a long article:

For two months, attorney Marc S. Dreier has been jailed without bail at the Metropolitan Correctional Center. But if he gets his way, he soon will be released to less spartan accommodations -- his own midtown luxury apartment. First, however, Dreier has to convince Southern District Judge Jed S. Rakoff it would be fair to allow the lawyer to create his own "private prison" with financial resources available to him.

According to his attorney, Gerald Shargel, Dreier's sister and brother-in-law have offered to pay $70,000 a month for round-the-clock security guards to ensure that Dreier does not flee before charges that he bilked investors of $400 million are adjudicated.

Judge Rakoff is expected to rule today or tomorrow on the bid of Dreier, the founder and sole equity partner of Dreier LLC, to be released on bail.

At a bail hearing before Rakoff on Monday, Shargel argued that his client was "penniless" after being stripped of all his assets in the wake of his Dec. 2 arrest in Toronto and his Dec. 7 arrest in New York City and does not pose a flight risk.

At the Metropolitan Correctional Center, Dreier lives in a small cell with a bunk mate, and has limited contact with the outside world. He is permitted to meet once a week with his ex-wife and teenage daughter and his 19-year-old son, Spencer Dreier. He receives an allotment of 320 minutes per month for phone calls, which includes calls to his lawyer. He can see Shargel every day.

Shargel contends the 1984 federal Bail Reform Act, 18 U.S.C. §3142(c)(1)(B), requires the court to release Dreier, provided a set of conditions exist that will "reasonably assure" his appearance and the safety of the community. House arrest with armed guards stationed inside Dreier's apartment would meet those requirements, Shargel said Monday night at the bail hearing.

UPDATE:  I just learned, via this New York Law Journal piece, that Judge Rakoff has issued this eight-page decision in the case.  Here is how that opinion starts:

How glorious to be an American citizen.  In so many countries, the rights of citizens are not worth the paper they are printed on.  But here, any citizen – good, bad, indifferent, famous, infamous, or obscure – may call upon the courts to vindicate his constitutional rights and expect that call to be honored.

Here, citizen Marc Dreier, whom the Government accuses of colossal criminality, calls upon the Court to fulfill the pledge of the Eighth Amendment to the Constitution that “Excessive bail shall not be required.”  He argues that the bail set by Magistrate Judge Eaton, which required, among much else, that he post $10 million in cash to secure his release, is excessive, because all his funds have already been frozen by orders previously obtained by the Securities & Exchange Commission and by the U.S. Attorney’s Office.  The Government, for its part, argues that no conditions of bail can reasonably assure against what it considers to be a high risk of flight, and accordingly urges that bail be denied altogether.  Following substantial briefing and a lengthy hearing, this Court, reviewing the matter de novo, see United States v. Leon, 766 F.2d 77, 80 (2d Cir. 1985), concludes that such risk of flight as exists can be so minimized by the by the imposition of conditions that Dreier may likely meet as to warrant his release.

February 5, 2009 at 02:51 PM | Permalink


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OK, well, if the armed guards were so key to this decision, I think I will start asking judges to approve, at court expense, the same services for all of my indigent clients. If they can have counsel and experts appointed under the Criminal Justice Act, why can't we get private prison guards as well?

Posted by: NYC Lawyer | Feb 5, 2009 4:38:16 PM

I have a question related to Gall v U.S. In the opinion, the court upheld Gall's sentence of probation because as oppose to the same number of months in prison required by the guidelines, because it said that being in probation is the same as being in prison because it involves the loss of civil liberties. Could this same argument be made for a person who has been in pre-trial release a number of months/years, to be given time served? Assuming the person in question has been under gps monitoring, month drug testing, and is restricted from exiting his/her home without permission, and is only allowed out for necessary stuff.

I would like to know if this argument has been made, and if so, was it successful?

thank you for your time.

Posted by: E | Feb 5, 2009 9:23:50 PM

Unfortunately, E, your question was answered with a clear No by the Supreme Court in 1995, in a case called Reno v. Koray. The decision was based on the language of the bail statute and the sentence credit statute. By the way, the Supreme Court in Gall did not say that being in prison and being on probation were the same. Obviously, they aren't. They did note, however, that being on probation entails a substantial restriction on a person's liberty.

Posted by: Peter G | Feb 5, 2009 10:48:23 PM

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