Dreier Law Firm Could Collapse Following Founder’s Arrest
Posted Dec 8, 2008 7:19 AM CDT
By Debra Cassens Weiss
The Dreier law firm is in turmoil after the arrest of its founder last week and reports of a separate federal investigation into firm finances.
Several nonequity partners told the Wall Street Journal they believe the 238-lawyer firm could collapse, spurred by the legal troubles and the departure of several groups of lawyers leaving for new opportunities. Marc Dreier, the firm’s founder and only equity partner, has been charged with criminal impersonation by Canadian authorities. Dreier, released Friday on $100,000 bail, is accused of impersonating an in-house lawyer with the Ontario Teachers' Pension Plan, the New York Law Journal reports.
Anonymous sources told the Wall Street Journal that Dreier allegedly impersonated the in-house lawyer, Michael Padfield, in an attempt to secure tens of millions of dollars from the New York-based Fortress Investment Group. He is accused of doing so after Fortress balked at closing the deal without meeting pension plan managers in person.
One litigation partner told the Wall Street Journal that he spent Saturday packing boxes in preparation to leave the firm. He said federal agents were in the firm’s Manhattan headquarters the same day. "Bank accounts have been frozen; they're shutting our BlackBerrys down on Monday," he said.
Among those leaving the firm are groups of bankruptcy, matrimonial and patent lawyers.
Several partners said federal authorities are reviewing the firm’s business dealings and money is missing from client escrow accounts, according to the Wall Street Journal. Wilson Sonsini Goodrich & Rosati has been retained by a large group of partners and associates to examine firm finances and escrow accounts, the New York Law Journal says.
Lawyers who did not identify themselves told the New York Times that the federal probe involves possible fraudulent business transactions involving tens of millions of dollars.
According to the Times account, representatives of Solow Realty have told prosecutors that Dreier may have been involved in selling financial instruments to hedge funds and other investors that were purportedly from the realty company.
Dreier also had several tax liens and judgments against him, including one for $600,000, the Times story says.