Two Guilty Pleas In Dreier Hedge Fund Fraud Case

Nov 11 2009 | 10:29am ET

Four months after disgraced lawyer Marc Dreier was sentenced to 20 years in prison for defrauding hedge funds of more than $400 million, two of his accomplices have also pleaded guilty.

Both of the guilty pleas involve impersonation, which was something of Dreier’s modus operandi: He was arrested in Toronto last year after allegedly pretending to be a lawyer for a pension fund at a meeting with Fortress Investment Group.

On Monday, Robert Miller admitted his role in the Dreier case, pleading guilty to securities fraud and conspiracy. Miller—a lawyer who worked at the Securities and Exchange Commission’s enforcement division in the mid-1980s—twice helped out Dreier, prosecutors say, with whom he managed an investment fund for nearly a decade.

According to the government, Dreier asked Miller to impersonate a representative of a Canadian hedge fund last year, offering him $100,000 for his trouble. Miller did so, reassuring a hedge fund about the guarantee the pension had supposedly issued on the $44.7 million note. He also played the part of an Icelandic hedge fund representative that was supposedly selling a note, with Dreier going so far as to have an assistant check the weather in Reykjavik to help prepare Miller.

Miller is cooperating with authorities and will be sentenced on Feb. 5.

Last week, it was Kosta Kovachev’s turn. The former broker pleaded guilty to wire fraud and conspiracy, admitting that he impersonated employees of the New York developer that Dreier claimed he was selling promissory notes for.

Kovachev put on his acting shoes at least twice, according to prosecutors, once playing the role of an employee of Solow Realty & Development’s finance department to field questions from a hedge fund that owned $115 million in Dreier’s phony notes. The second time, also last October, Kovachev pretended to be Solow’s CEO.

Kovachev will be sentenced in March; he faces up to 20 years in prison. He has also agreed to forfeit the $215,000 Dreier allegedly paid him.

His lawyer said his client was just “a minor player,” but U.S. Attorney Preet Bharara said his “play-acting caused millions of dollars of real losses to real victims.”


In Depth

U.S. Treasury Moves on Reinsurance Loophole

Apr 24 2015 | 5:11pm ET

The U.S. Treasury Department has released proposed rules aimed at limiting the ability...

Lifestyle

Artivest Announces Funding Round Led by KKR & Co.

May 4 2015 | 9:56am ET

Artivest, a startup that provides individual investors with access to private equity...

Guest Contributor

Starting a ‘40 Act Fund Family? Don’t Forget Your Board

Apr 30 2015 | 7:18am ET

The convergence of the hedge fund and mutual fund worlds continues unabated, as...

 

Editor's Note