Dreier Denied Bail, Fraud Now Pegged At $380 Million

Dec 11 2008 | 1:54pm ET

The saga of indicted plaintiffs lawyer Marc Dreier continues to become more sordid, with prosecutors increasing their estimate of the size of his hedge fund fraud more than threefold.

At a bail hearing, federal prosecutors said Dreier, the founder of the eponymous New York law firm, defrauded hedge funds and investors of $380 million. Earlier estimates put the fraud at about $113 million. A federal magistrate judge ordered Dreier held in prison.

“The evidence does appear to show an enormous risk of flight,” U.S. Magistrate Judge Douglas Eaton said of Dreier, who was arrested in Toronto last week for impersonating a pension fund lawyer.

Dreier has not entered a plea on the securities and wire fraud charges. If convicted, he faces a much as 20 years in prison on each count.

Dreier is accused of selling phony discount notes that he claimed were issued by prominent New York developer Sheldon Solow. When he was arrested in Canada last week, he was allegedly pretending to be a lawyer for the Ontario Teachers Pension Plan, reportedly attempting to sell some $45 million in notes to a hedge fund. His alleged thespian turn took place during a meeting between the OTPP and Fortress Investment Group.

“He is the Houdini of impersonation and false documents,” Assistant U.S. Attorney Jonathan Streeter said of Dreier at today’s hearing. Prosectors charge that his Toronto impersonation was not a one-time event; he allegedly faked his way into Solow’s office in October, where he was observed holding an unauthorized meeting with three others.

Streeter said Dreier had a “whole box” of cellular phones in his office, which he used to perpetrate “an extraordinarily elaborate deception.” Dreier’s lawyer countered that his client had but two cell phones.

Separately, the Securities and Exchange Commission has brought civil charges against Dreier, accusing him of stealing $38 million from a client’s escrow account. The escrow funds belonged to the unsecured creditors of 360networks (USA), whose bankruptcy Dreier’s firm was handling. That alleged theft is not a part of the criminal case against Dreier.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...