“Prestigious Manhattan Law Firm 499 Park Avenue, New York — EVERYTHING MUST BE SOLD” reads a notice on the Web site of the auctioneer for the court-ordered liquidation of Dreier LLP scheduled for Thursday.
But a new criminal indictment released last week against disgraced attorney Marc S. Dreier has created a tug of war between prosecutors and the bankruptcy trustee that casts a cloud over the value of the items up for auction.
According to the superseding indictment, which adds a count of money laundering to the host of charges against Dreier, the 58-year-old attorney not only must forfeit hundreds of millions of dollars and a vast array of luxury vehicles, homes and artwork, but “all assets of Dreier LLP.”
“Tremendous uncertainty … now hovers over this case” as a result of the government’s “complete turnaround,” attorney Howard D. Ressler told Southern District Chief Bankruptcy Judge Stuart M. Bernstein at an emergency hearing Friday in the Chapter 11 proceeding of Dreier LLP. Ressler, a partner at Diamond McCarthy, is counsel to Sheila Gowan, the bankruptcy trustee in this case.
The government’s uncertainty about whether it will proceed with the criminal forfeiture of the firm’s assets could decimate the value of those assets and leave unsecured creditors “wiped out,” Ressler said.
This represents “one of the first collisions of the bankruptcy statute and the criminal forfeiture law … that we know of,” Tracy L. Klestadt of Klestadt & Winters, who serves as counsel to the creditors’ committee, explained in an interview.
Dreier, the former sole equity partner of now-defunct 250-lawyer Dreier LLP, was arrested on Dec. 7 in New York on wire and securities fraud charges after returning from Toronto where he was caught impersonating an Ontario Teachers’ Pension Plan executive trying to sell pension plan notes to a hedge fund.
On Jan. 29, a month after Dreier LLP filed for Chapter 11 bankruptcy protection, prosecutors