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July 13, 2009

Dreier gets 20-year federal prison sentence

As detailed in this Bloomberg article, "Marc Dreier, the New York law firm- founder, was sentenced to 20 years in prison for defrauding hedge funds of more than $400 million and stealing money from his clients."  Here are more details from the sentencing:

U.S. District Judge Jed Rakoff in Manhattan today sentenced Dreier, 59, to a term far shorter than the 145 years sought by prosecutors. Dreier’s lawyers asked for a sentence of as few as 10 years. Dreier was also ordered to pay $387.7 million in restitution....

“Mr. Dreier’s crimes, despicable though they may be, pale in comparison to Mr. Madoff’s,” Rakoff said, referring to investment manager Bernard Madoff who pleaded guilty in March to a $65 billion Ponzi scheme. “But one must still be appalled” by his crimes, he said. “This is a huge fraud by any standards,” the judge said....

Rakoff said that Dreier, who he said had a life expectancy of 80 years, was not “beyond redemption.” The judge said he was surprised that Dreier’s letter showed an “understanding” of his crimes. Letters that victims wrote to the judge depicted Dreier as “arrogant, condescending and cruel,” Rakoff said.

UPDATE: The New York Law Journal provides additional coverage of the Dreier sentencing in this piece, headlined "Dreier Gets 20 Years for 'Betrayal of Trust'."

July 13, 2009 at 09:45 PM | Permalink


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Congratulations to Rakoff, for sentencing so far below the prosecution's request. Twenty feels about right.

Posted by: Marc Shepherd | Jul 13, 2009 10:32:48 PM

This outcome, taken together with earlier posts about the Eighth Circuit's opinion on GVR, and the 150 years given Madoff, confirm how completely we have entered the anything-goes era of sentencing.

I might well agree with Marc Shepherd that the Dreier sentence "feels about right." The problem is that what "feels right" to two people could "feel wrong" to two others, or two thousand others.

Sentencing can never be an exact practice, but surely we can do better than this. Indeed, we DID do better when there were mandatory guidelines. The defense bar fought mandatory guidelines tooth and nail, and their ship came in with Booker. The ship got turned into a luxury liner in Gall and Kimbrough.

What got missed in all this was that the real driving force behind the defense bar's anger was less the mandatory character of the guidelines (although that was surely there), but the fact that, in their view, the sentences mandatory guidelines produced were too long.

So now we have the current do-as-you-please "system." For some defendants -- probably most in the current climate -- this will indeed produce more downward variances, and thus lower sentences. But two things should be borne in mind.

First, it won't last. Public opinion about crime runs hot and cold. It ran hot in the Sixties, but a resurgent crime rate starting in the latter part of that decade and running into the Seventies led to a Thermidor (it also led to Nixon, who campaigned successfully on a tough-on-crime agenda). The current relatively liberal view of crime will run its course, as did its ancestor 40 years ago. When that happens, uncheckable upward variances will start to replace uncheckable downward variances, and the defense bar will turn a wistful eye to the days of mandatory guidelines. But by that time it will be too late.

Second, even now, there are plenty of judges ready to give defendants the Bernie Madoff treatment, rather than try Nancy Gertner imitatiions. Defendants before the sterner judges have nowhere to turn. The government is stuck with the Nancy Gertners of the world, but the defense is stuck with the many judges who don't see the world her way at all.

Mandatory guidelines were never perfect, and no one said they were. But they at least were the foundation of bringing the rule of law to sentencing. You could not defend a sentence in the court of appeals by saying it "feels right." You actually had to have something that resembled a legal argument.

For all practical purposes, that is over with now. We have taken a big step backwards, to the era of personal preference and (sometimes) nothing more than judicial mood swings. This cannot be, and is not, a salutary development.

Posted by: Bill Otis | Jul 14, 2009 8:26:49 AM

Obviously, my “feels right” comment wouldn’t pass muster as an appellate opinion; I am speaking as a private citizen. Most likely an appellate court would say that Judge Rakoff followed the correct procedure, and that the sentence imposed was not an abuse of discretion.

The system imposed under the Sentencing Reform Act was awful, and I was not sorry to see it die. Perhaps a more intelligent (and constitutionally sound) system of mandatory guidelines will make a comeback someday. In the meantime, what we have isn’t so bad. The Republic survived happily with broad judicial discretion for a long time. The guidelines still provide a break against runaway judges, because they still have to be calculated in every case, and the judge at least needs to give a reason for departing from them. It may not be perfect, but it’s better than we had before the SRA. If the judge just departs because he “feels like it,” there is always the Court of Appeals.

I would not describe the current view of crime as “relatively liberal.” Even with departures downward taken into consideration, the average Federal sentence today for practically every crime is considerably higher than it would have been a half-century ago. Of course, you could add to that all the crimes that the Federal government formerly had no authority to punish at all. Every year, Congress adds a few more, generally by duplicating a state crime statute and adding the word “interstate.”

Posted by: Marc Shepherd | Jul 14, 2009 8:58:56 AM

Marc --

I have to leave just now, so I'll be very brief and just say that, in my view, Stevens's dissent to the remedial portion of Booker reached the correct result for the correct reasons. It would have preserved Congress's intent, satisfied the Apprendi rule and provided much more of a brake on idiosyncratic district court sentencing decisions.

Posted by: Bill Otis | Jul 14, 2009 9:10:06 AM

You points are sound, Bill, but what do you make of the fact that the Booker remedy has now lasted nearly 5 years? For good or for bad, right now Congress and a lot of others seem content with the status quo and even think the system is better than it was before Booker. Though I think the status quo is MUCH more law-oriented than your comment suggests, I also think the harms of too much (too severe) law remain to be felt and continue to lead many folks (including at least a few prosecutors) to believe the current system is better than what came before.

Posted by: Doug B. | Jul 14, 2009 9:10:20 AM

As a matter of law, I think the Stevens remedial opinion in Booker was better. He interpreted the statute; Breyer rewrote it. But as a matter of policy, I think the Breyer opinion turned out to be the better solution. So ironically, although I don’t approve of Breyer’s methods, he happened to land on the right answer, or at least a better answer.

My complaint with the guidelines is that they give too much weight to factors that can be calculated numerically; that the acceptance-of-responsibility reduction is too modest; and that the ranges are too narrow. The Stevens opinion would have left these infirmities intact.

Posted by: Marc Shepherd | Jul 14, 2009 9:36:17 AM

Bill, I think it's a bit hyperbolic to declare we have entered "the anything-goes era of sentencing." The great majority of cases still receive a GL sentence when the government is asking for one. And the cases where a non-GL sentence is imposed, it's based on reasoning. Careful reasoning based on the individual circumstances of a case does not mean the system is lawless. The three examples you cite (i.e. Dreir, Madoff and Feemster) don't convince me otherwise. In fact, those cases each lead me to believe the system is working just fine. Dreier isn't the same as Madoff. And it's a positive development when the law allows a sentencing judge to recognize that. And Mr. Feemster was a person who needed to be severely punished. 10 years followed by 8 sup.rel. is severe, especially to a 27 year old who never served anything like that kind of time before. It promotes the rule of law when a sentencing judge has the ability to sentence based on individualized facts rather than boxes on a grid.

You state: "Sentencing can never be an exact practice, but surely we can do better than this. Indeed, we DID do better when there were mandatory guidelines." I disagree. Sentencing can never be an exact practice, and, accordingly, we surely ARE doing better then we were under the mandatory guidelines.

Marc, I entirely agree with you. The correct legal remedy in Booker was a mandatory GL system with the 6A right engrafted onto it. I was actually angered by the remedial opinion when I first read it. In practice, however, I'm fairly convinced that an advisory GL system is better policy.

Posted by: DEJ | Jul 14, 2009 12:47:11 PM

Here's a cute exercise in math. First convert the 150-year sentence to days. Then divide ...

54,000 days / USD 65,000 million = 0.83 days in prison per million in the Madoff fraud ...

If one multiplies 0.83 days in prison by the USD 400 million for Dreier, you get 332 days.

(Seriously, my guess is that there is a log function by which one can get from 150 years for 65 billion to 20 years for 400 million. Just wanted to make people chuckle.)

Posted by: Edmund Unneland | Jul 14, 2009 2:56:08 PM

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