Congratulations to Williams & Connolly and Hughes Hubbard & Reed, the firms that represented Ralph Cioffi, and Brune & Richard, the litigation boutique that represented Matthew Tannin.

Ed. note: This post has been corrected; an earlier version switched the defendants around. Thanks for pointing out the mistake, commenters.

Not Guilty! [Dealbreaker]
Breaking News: Bear Defendants Found Not Guilty on All Charges [WSJ Law Blog]
BREAKING: Bear Stearns Hedge Fund Managers Not Guilty [Am Law Daily]
Bear Stearns Hedge Fund Managers NOT Guilty On All Counts [Business Insider]

Today the winners of Lawyer of the Day honors are obvious. Congratulations to Arthur Cutillo, Michael Kimelman, and Jason Goldbfarb, three attorneys who stand accused of involvement in the infamous Galleon Group insider trading scheme.

Both Cutillo and Kimelman have distinguished pedigrees, with ties to two top firms. Cutillo (left), a holder of an M.S. in chemical engineering as well as a J.D. (both from Villanova), was an associate at the white-shoe firm of Ropes & Gray. Kimelman (right), a partner at Incremental Capital LLC, once worked as an associate at super-prestigious Sullivan & Cromwell. Check out Cutillo’s firm bio and Kimelman’s LinkedIn profile over here.

The third charged lawyer, Jason Goldfarb, apparently worked as a personal injury lawyer in Brooklyn. He allegedly served as a conduit of information between Cutillo and Zvi Goffer — the former Galleon employee apparently referred to as “Octopussy” at the SEC, because “he had his arms in so many insider” trading schemes.

More on our three honorees, after the jump.

The news was first reported by CNBC. See Dealbreaker for more details.

We have phone calls and emails in to Ropes & Gray and are waiting to hear back. We will keep you posted on further developments.

If you have more info, please email us. Thanks.

UPDATE (10:00 AM): According to Bloomberg, the FBI has arrested Arthur Cutillo (pictured). He is no longer on the Ropes & Gray website, but you can find his bio via Google Cache. Interestingly enough, he was an IP litigator, not a corporate attorney.

CNBC is now reporting that a Ropes & Gray employee allegedly provided inside information about various “going private” transactions the firm was involved in. Some of these transactions apparently involved companies heavily dependent upon intellectual property, such as technology companies.

UPDATE (10:10 AM): In case the Google Cache entry is removed, we have posted Arthur Cutillo’s bio after the jump. He graduated from Rutgers (undergrad) and Villanova (law), and he worked at Merck before joining Ropes.

UPDATE (10:15 AM): Here is a statement from Ropes & Gray:

We are deeply disappointed to learn about this situation, which suggests an extreme breach of this person’s duty of trust to our clients and to the firm. We cannot comment in detail on an ongoing investigation but we are moving quickly to protect our clients and are cooperating fully with authorities.

UPDATE (12:15 PM): U.S. Attorney Preet Bharara (S.D.N.Y.) is giving a press conference discussing the charges. One of the other individuals charged, Michael Kimelman, once worked as an associate at Sullivan & Cromwell.

UPDATE (4:30 PM): We’ve honored Artie Cutillo, Michael Kimelman, and a third lawyer, Jason Goldfarb, as our Lawyers of the Day.

Art Cutillo’s Ropes bio and Mike Kimelman’s LinkedIn profile, after the jump.

Seven Arrested In Insider Trading Case [Dealbreaker]

A couple of weeks ago, I asked if the mainstream media was aware of the existence of Biglaw lawyers. They’re still not, but the New York Attorney General is. Dealbook reports:

Attorney General Andrew M. Cuomo fired another shot at Bank of America on Tuesday, asking the bank to allow its lawyers to be questioned.

In a letter to the bank’s outside counsel, Lewis J. Liman of Cleary, Gottlieb, Steen & Hamilton, Mr. Cuomo wrote that “attorney-client privilege is hindering this office’s ability to make fair and fully informed decisions as to what charges, if any, to bring and whether individual Bank of America officers should be charged.”

What, does Andrew Cuomo want BOA to waive privilege to help him out? I’m not sure that this is how to run a prosecutor’s office, but it seems like a pretty effective way to run for Governor through the headlines.

Cuomo Takes Aim at Bank of America’s Lawyers [Dealbook]

Earlier: The Mainstream Media Is Aware That Law Firms Exist, Right?

You know you want to know….

Hazard a guess. Then click on the link below.

Bernie Madoff’s Greatest Scam Of All [Dealbreaker]

Earlier: What Kind Of Package Is A Bernie Madoff Package?

Or maybe good news? It seems they’ll get to enjoy Labor Day weekend before any trouble hits.

Read more and discuss over at Dealbreaker.

Federal Prosecutors May Let Andy And Mark Madoff Enjoy Labor Day Weekend
[Dealbreaker]

Frank DiPascali, the former CFO — chief fraudulent officer? — for Ponzi schemer extraordinaire Bernard Madoff, pleaded guilty today to a variety of charges, including securities fraud, falsifying records, and international money laundering.

Read more and comment over at Going Concern.

Guilty Madoff CFO Update [Going Concern]

A certain big-time lawyer turned big-time fraudster — Marc Dreier, aka “Mini-Madoff” — will probably spend the rest of his life behind bars. He must miss his days of house arrest, when he got to hole up in 34C — not just a great bra size, but also a great apartment — at One Beacon Court.

That apartment is no longer his. The New York Law Journal reports:

The luxury midtown Manhattan apartment of disgraced attorney Marc S. Dreier was sold at auction for $8.2 million, about $2 million less than the $10.43 million he paid in 2007.

The sale of the condominium at 151 E. 58th St. came just one week after Southern District Judge Jed S. Rakoff sentenced Mr. Dreier to 20 years in prison for orchestrating a multi-year Ponzi scheme that fleeced more than $400 million from clients of Dreier LLP and investors to whom he sold bogus promissory notes.

Forty-six bidders registered for the auction held at Southern District Bankruptcy Court. In just five minutes, the price of Mr. Dreier’s 3,000-square-foot apartment in the Bloomberg Building at One Beacon Court rocketed to $8.15 million from an initial bid of $3 million.

Eight million isn’t chump change. But look at everything the buyer is getting!

The long (inter)national Marc Dreier nightmare is almost at an end. He’s been sentenced to 20 years for defrauding his clients and investors. The Wall Street Journal Law Blog reports:

Prosecutors had asked for a 145-year sentence, which harked back to the 150-year sentence U.S. District Judge Denny Chin readily handed down to Bernie Madoff, whose massive Ponzi scheme drained the bank accounts of countless investors. In both cases defense attorneys sought a fraction of that. Dreier’s attorney sought no more than 12-and-a-half years.

But Dreier drew U.S. District Judge Jed Rakoff, who has been highly critical of the length of sentences under the federal sentencing guidelines, particularly in white collar crime cases.

Bernie Madoff gets 150 years, but Dreier only gets 20? Justice may be blind, but she’s certainly not deaf.

Breaking: Marc Dreier Sentenced to 20 Years in Prison [WSJ Law Blog]

Earlier: Is Marc Dreier Almost As Bad as Bernie Madoff?

Sir Allen Stanford, financier / accused fraudster, has some issues with the conditions of his pretrial confinement.

Read more and comment over at our sister site, Dealbreaker.

Sir Stanford Takes Issue With Conditions Behind Bars [Dealbreaker]

The federal government seems to think so, based on the sentence they’re seeking. We’re kind of proud that one of our own, a lawyer, can rank up there with one of the greatest swindlers of all time.

And what does Marc Dreier think he deserves? No more than 12 1/2 years, according to his sentencing memo. More details, including excerpts from Dreier’s seemingly heartfelt letter to Judge Rakoff, over at the WSJ Law Blog.

U.S. Seeks 145-Year Sentence for Lawyer in Fraud Case [City Room]
Sentencing Looming, Dreier Asks For No More than 12 1/2 Years [WSJ Law Blog]

Find out over at our sister site, Dealbreaker, which has the latest news.

Dreier Sheets [Dealbreaker]

Earlier: Prior ATL coverage of Marc Dreier

“I invested with Bernie Madoff. I knew Bernie Madoff. Bernie Madoff robbed me blind. Marc Dreier, you’re no Bernie Madoff.”

But Dreier is getting a little closer to attaining the Master’s stature, if government allegations are accurate. From the WSJ Law Blog:

New York lawyer Marc Dreier allegedly defrauded investors out of approximately $700 million, a far higher figure than previously had surfaced in the criminal case, according to an amended indictment unveiled Tuesday.

The attorney was indicted in January on conspiracy and fraud charges for allegedlly selling fictitious promissory notes to hedge funds.

Previously, prosecutors had claimed Dreier sold almost $400 million in fictitious notes. Now, according to the latest indictment, the attorney stands accused of peddl[ing] almost $700 million in notes to 13 different hedge funds and three individuals, whose names were not identified in the filing.

Good for Dreier. Why should guys like Madoff and Robert Allen Stanford have all the fun? A haul of $750 million begins to approach respectability among Wall Street fraudsters.

With New Indictment, Government Cranks up the Heat on Marc Dreier [WSJ Law Blog]

Earlier: Prior ATL coverage of Marc Dreier

The T.V. people are saying that there may be a plea deal in the works for Bernie Madoff:

Prosecutors have filed a motion indicating a Bernard Madoff plea deal is in the works, according to the Associated Press.

I hope the deal includes an opportunity for all the people he swindled to slap him in the face. If you charge people for it you could probably get enough for the next bank bailout.

Prosecutors indicate Madoff plea deal in works [MSNBC]

Debevoise & Plimpton released its 2008 profit numbers today. AmLaw Daily reports that while overall revenue was up in 2008, profits per partner were down:

Debevoise & Plimpton said Monday that its 2008 gross revenue climbed 7.2 percent, while profits per partner fell nearly 3 percent.

Revenue at the New York-based firm grew to $760.8 million on the heels of significant litigation and white-collar investigation work for the likes of Siemens AG. But in a sign that the firm is not immune from the financial crisis, profits per partner dropped to $2.23 million.

The hit to PPP at Debevoise is not as steep as some other NYC based firms. One of the reason for that might be that Debevoise has been aggressively moving towards white collar defense. Former U.S. attorney Mary Jo White has been building that practice since she came to the firm, and AmLaw points out that big name hires have bolstered the practice:

In February, Debevoise hired former U.S. attorney general Michael Mukasey, who was widely expected to return to Patterson Belknap Webb & Tyler.

Mukasey followed the September 2007 hiring of former UK attorney general Lord Goldsmith QC. The firm boosted its European litigation practice in September 2008 by hiring Bird & Bird partner Sophie Lamb. This month, the firm announced the formation of an international corporate investigations and defense practice in recognition of its growing presence in the field.

The positive news didn’t trickle down to associates come bonus time. But so far, the firm is on that list of firms that include Cravath, Cleary, Weil, and a host of others that have not conducted massive layoffs, and not frozen associate salaries.

But does the firm have another Siemens lined up to weather the 2009 storm like it did in 2008?

Debevoise Revenue Up 7 Percent as Per Partner Profits Fall 3 percent [AmLaw Daily]

Earlier: Musical Chairs: Michael Mukasey to Debevoise
Debevoise’s Santa: Siemens? (Alas, the case is winding down.)
Associate Bonus Watch: Debevoise Announces Bonuses at 6:54 p.m. (Did they think nobody would notice?)

Quips a tipster: “Dreier gets $20 million bond — but he didn’t steal enough to pay. This guy is no Madoff.”

Dreier Gets $20 Million Bond [Bloomberg]
Dreier to Remain in Jail [Am Law Daily]
Judge Says No to Bail Request; Dreier to Stay Behind Bars [WSJ Law Blog]

Earlier: Prior ATL coverage of Marc Dreier

Finally, the moment you’ve all been waiting for: time to announce Above the Law’s top two stories for 2008, on the gossip front. We’ve also been recapping the top stories on the business side of the fence, but stories about the business of law are available from many other outlets. Juicy law firm gossip is harder to come by.

Our two leading gossip stories were broken here at ATL. They were subsequently picked up by mainstream media outlets, but we covered them first.

Read about the two stories, after the jump.

More bad news for Marc Dreier, the formerly high-flying, Maxim model-dating litigator. From Bloomberg News:

Marc Dreier, the jailed New York law firm founder, must remain in prison while he fights charges that he swindled hedge funds, a federal judge ruled after a prosecutor accused the lawyer of stealing $380 million.

“The evidence does appear to show an enormous risk of flight,” U.S. Magistrate Judge Douglas Eaton said at a bail hearing today in Manhattan federal court for Dreier, namesake of the New York law firm Dreier LLP.

Dreier, 58, was arrested on Dec. 7 on U.S. charges that he persuaded two unidentified hedge funds to give him more than $100 million by claiming, falsely, that he was selling at a discount notes issued by New York developer Sheldon Solow. He was arrested after returning to New York from Toronto, where he had been briefly jailed for impersonating a lawyer at the Ontario Teachers Pension Plan.

More links and discussion, after the jump.

Apologies, readers. Although we broke the story of high-profile lawyer Marc Dreier’s arrest in Canada, we’ve fallen behind in covering the latest developments in the Dreier saga (of which there have been many). Fortunately, our friends over at Am Law Daily and the WSJ Law Blog have been following the story quite closely.

We’ve collected some links at the end of this post. The highlights:

• A summary of recent developments, from the WSJ Law Blog: “Dreier appeared to get hit from all sides: a criminal charge in New York stemming from an alleged $100 million fraud against various hedge funds; an SEC suit alleging Dreier had been marketing and selling fake promissory notes to investors; and a suit by Wachovia Bank against Dreier, Dreier LLP (and a handful of others), alleging that a credit revolver and term loan extended to the firm are in default, as of November 1, upon which the bank is owed some $12.7 million.”

  

• The latest news, from Am Law Daily: “[I]t appears very likely that client funds are indeed missing, according to a sworn statement (PDF) that Dreier partner Joel Chernov gave the SEC…. In the statement, Chernov said Dreier spoke to him and fellow Dreier partner Steven Gursky from a Toronto jail after his arrest there for impersonating a lawyer in an attempt to scam an investment group into wiring him more than $30 million. In those conversations, Chernov told the SEC, Dreier admitted improperly using client funds. Dreier also said that he could have refilled the escrow accounts if only he could return to New York. How? Apparently by selling part of an art collection valued at between $30 and $40 million, according to a separate statement (PDF) from John Provenzano, the firm’s Controller.”

  “In his statement, Provenzano claimed Dreier called him twice from the Toronto jail asking him in separate requests to wire $8 million and $10 million from the firm’s escrow accounts into Dreier’s personal accounts. Provenzano (wisely) refused. He also told Dreier the firm owed clients $38 million in connection with its representation of 360Networks. That’s when Dreier mentioned the money he could make selling his art.”

  Fine art — no surprises there. As noted, Marc Dreier has a taste for the finer things in life (like luxury real estate).

  And that’s not all. A source tells us that Dreier is something of a playboy, with a pattern and practice of dating Maxim models (yes, plural). And “not ‘Maxim-quality’ models,” emphasized our source, “but actual Maxim models.”

  If Marc Dreier ends up in prison, at least he’ll have nice memories to keep him warm at night.

  Filings Describe “Devastating Effect” on Dreier LLP [WSJ Law Blog]
  Client Funds Missing, Details on Dreier’s Art Collection, Attorneys Fleeing [Am Law Daily]
  Dreier Faces More Allegations [Wall Street Journal (subscription)]
  The Death of the Dreier Model [Am Law Daily]

Prominent New York litigator Marc Dreier — founder and managing partner of Dreier LLP, former head of litigation for Fulbright & Jaworski (NY), and former litigation partner at Rosenman & Colin — was arrested in Toronto on Tuesday. The arrest was carried out by Canadian law enforcement.

The alleged offense appears to be financial in nature, with sources mentioning money laundering and misuse of escrow funds as possible charges. The Ontario Teachers Pension Fund and Fortress Investment Group may be involved in some capacity.

The effect of Dreier’s arrest on the firm that bears his name is unclear, but certainly not good. Sources report that some firm escrow accounts have been frozen by law enforcement authorities. Emergency partnership meetings were held Wednesday and today. (This may explain why Marc Dreier and a firm spokesperson did not immediately return our calls seeking comment.)

Marc Dreier lives well, with a fabulous Manhattan apartment rumored to rent for $50,000 a month, plus a place out in the Hamptons. “He lives the life of Greek billionaire tycoon, but he doesn’t make that much money,” says a former employee.

Dreier may not be a Greek billionaire tycoon, but Dreier LLP has been quite successful. According to its firm profile, since its founding in 1996, Dreier has grown to include more than 250 attorneys in six cities. The firm has had a number of high-profile clients, including billionaire developer Sheldon Solow and controversial book publisher Judith Regan (whom the firm later sued, claiming she skipped out on legal fees).

The firm’s holiday party was scheduled to take place tonight at the Waldorf. Not surprisingly, the festivities have been canceled. On one social networking site, a former Dreier employee wrote: “[xxxx] is wondering how he could work for two law firms (Milberg Weiss and Dreier) where both firms’ lead partners were arrested…. Sad commentary on life.”

Update (1:40 AM): Some addenda and corrections:

1. Escrow accounts haven’t been frozen; they’re just short some cash — a lot of cash. One number being bandied about: $38 million.

2. The firm may not be able to make its next payroll, on December 15. There is only $300,000 in the payroll account, and the next payroll is for $2.6 million.

3. Fortress Investment Group is not involved.

4. The holiday party was canceled by an email sent out at around 5 p.m.

Further Update (6:35 PM): Actually, we were right the first time. Fortress Credit Corp., the entity involved in this matter, is a subsidiary of Fortress Investment Group, according to Am Law Daily.

We’ll keep you posted. If you have info to share, feel free to email us. Thanks.