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

GSAM's Papagiannis: Liquid Alternatives For The Long Run

Apr 21 2017 | 8:44pm ET

Interest in liquid alternatives cooled a bit last year amid a broad shift in investor...

Lifestyle

Aston Martin Returns To Debt Market As DB11 Drives Turnaround

Mar 31 2017 | 5:21pm ET

James Bond’s preferred carmaker is returning to the public debt markets for the...

Guest Contributor

Debunking Conventional Investment Wisdom (Part II)

Apr 17 2017 | 5:56pm ET

The alternative investment industry is currently replete with buzzwords around data...

 

From the current issue of