Jailed NY lawyer Dreier requests bail: court papers

By Grant McCool

NEW YORK (Reuters) - A prominent New York lawyer accused of selling sham investments to hedge funds should be released on bail because all of the money the government alleges he received has been accounted for, his lawyer said on Thursday.

The accused lawyer, Marc Dreier, was arrested on December 7 on charges he ran a scheme that amounted to losses of $380 million. Prosecutors said he cajoled his way into offices and tried to convince investors that worthless debt securities were real.

Dreier, 58, has been jailed since his arrest on a charge of securities fraud and denied bail.

In a bid to have Dreier released pre-trial, his lawyer said in a memorandum to a federal judge on Thursday that Dreier is cooperating with a court-appointed receiver for his assets.

"The Receiver found no indication that the defendant has available to him any substantial, unaccounted-for holdings or assets," the memo in U.S. District Court in Manhattan by attorney Gerald Shargel said.

Shargel proposed that Dreier be released on $10 million bail, but under home detention, electronic surveillance and armed guards. He argued Dreier's pre-trial release "would pose no actual risk of flight".

"There is certainly no reason to believe the defendant has any criminal connections to enable him to flee the country and live as a fugitive," the memo said.

A spokeswoman for the U.S. Attorney's office in Manhattan declined comment.

The case against Dreier, founder and sole equity partner at the 250-attorney law firm Dreier LLP in New York, stunned the city's legal community. The Harvard Law School graduate is a 30-year veteran lawyer whose firm works in bankruptcy, litigation and employment law.

A hearing on bail for Dreier was scheduled for January 22.

The conditions proposed for Dreier are similar in many respects to those imposed on disgraced investment adviser Bernard Madoff, who is charged with running one of the biggest Wall Street frauds in history. Madoff, who prosecutors argued should be jailed pre-trial, is out on bail, but he may leave his apartment only for court appointments.

(Editing by Andre Grenon)