US seeks to keep NY lawyer Dreier jailed pre-trial

NEW YORK Jan 21 (Reuters) - A New York lawyer accused in a multimillion-dollar investment scheme should remain jailed before trial because investigators have not tracked down all his money, U.S. prosecutors said on Wednesday.

The accused lawyer, Marc Dreier, was arrested on Dec. 7 last year on charges he ran a scheme that amounted to losses of $380 million. 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.

Prosecutors said he cajoled his way into offices and tried to convince investors that worthless debt securities were real.

They said in a written brief filed in U.S. District Court in Manhattan on Wednesday that Dreier, 58, could flee the United States if he were allowed out on bail.

On Jan. 15, Dreier's lawyer argued that he should be released on bail because all of the money the government alleges he received has been accounted for. He was cooperating with a receiver and was not a flight risk, his lawyer said.

The prosecutors disputed the claim by Dreier's lawyer.

"The Receiver has advised both the government and defense counsel that he does not regard as credible some of the defendant's explanations of the disposition of his assets," the brief said.

It cited the purported transfer of two properties worth $12.5 million to his son, Spencer Dreier.

A judge was scheduled to hear oral arguments on Thursday.

"I remain confident of our position and I believe we have the better side of the argument," Dreier's lawyer, Gerald Shargel, said in response to Wednesday's government brief.

Typically, white-collar crime defendants are allowed out on bail, often with restrictions on their movements.

The government brief said Dreier had had control of 50 bank accounts with at least seven different institutions in the name of his firm, himself and entities he created.

It said the receiver "views an approximately $33 million transfer from a firm escrow account in early November 2008 as an effort by the defendant to secure funds for himself at the time when his fraud was being exposed and he was running out of money."

The prosecutor's brief also argued that Dreier's teenage son was not a suitable co-signor for bond. The prosecutors alleged that the son, Spencer Dreier, told an unidentified person at the law firm to retrieve cell phones used by his father and take them apart.

Dreier's attorney proposed on Jan. 15 that Dreier be released on $10 million bail, but under home detention, electronic surveillance and armed guards. (Editing by Matthew Lewis)