How Attorney Marc Dreier Allegedly Sold Worthless Forged Paper for $113M
Posted Dec 9, 2008 3:20 PM CDT
By Martha Neil
In an era of high-tech fraud, the founder of the Dreier law firm is accused of doing it the old-fashioned way. Using little more than his position and skills as a prominent and seasoned attorney, Marc Dreier allegedly tricked sophisticated investors into paying more than $100 million for worthless forged debt instruments supported by faked financial documents.
Federal prosecutors and securities regulators contend that Dreier has stolen $113 million since October by falsely claiming that a real estate developer—apparently former client Solow Realty, in at least one attempted transaction, according to the New York Times—wanted to sell debt at a deep discount. Then he allegedly closed the fraudulent deals by charming his way into the offices and conference rooms of unwitting accounting, pension fund and real estate offices linked to the transactions by faked documents, recounts the newspaper's DealBook blog.
The $113 million, which was deposited into an account in the law firm's name, according to the Wall Street Journal, reportedly hasn't yet been recovered.
Meanwhile, Dreier allegedly was trying to get another $33 million when he was arrested last week in Toronto at the office of a pension fund there and charged with criminal impersonation, according to DealBook.
He has since been charged with wire and securities fraud by federal prosecutors in New York and is also facing separate civil litigation by the Securities and Exchange Commission and Wachovia Corp., as discussed in an earlier ABAJournal.com post.
In October, Dreier allegedly held an unauthorized meeting in a conference room at Solow's offices in New York after telling the receptionist there that he had an appointment to meet with the real estate developer's chief executive, the Wall Street Journal reports.
A similar episode allegedly followed in Toronto last week, according to police in Canada, the WSJ article recounts: "People familiar with the matter say Mr. Dreier attempted to secure money from Fortress, a New York asset-management firm, by impersonating an Ontario Teachers' Pension Plan attorney. When Fortress wanted to meet with Ontario Teachers' representatives in person, Mr. Dreier flew to Canada, the people say, and posed as an in-house counsel for Ontario Teachers' in a meeting with a Fortress executive."
The WSJ provides a link to the criminal complaint (PDF) in the case.
A graduate of Yale College and Harvard Law School, Dreier, 58, formerly headed the litigation department in Fulbright & Jaworski's office in New York before forming Dreier in 1996, reports the New York Law Journal in an article reprinted by New York Lawyer (reg. req.). Previously, he was as partner of Rosenman & Colin, which is now part of Katten Muchin.
The only equity partner of the not-quite 250-attorney Dreier firm, from which lawyers are now reportedly jumping ship after it was locked down by federal agents, he lived a lavish lifestyle and spent substantial sums as well on his New York City-based firm's Park Avenue headquarters. An unnamed Dreier attorney said he spent a fortune on the firm's multistory offices at Park Avenue and 60th Street, where "everything is top notch," the legal publication writes.
Now, at least for the moment, he may have nothing: The SEC is seeking to freeze both his personal assets and those of his rapidly disintegrating law firm, DealBook notes.
Jailed pending a hearing later this week, Dreier could be sentenced to as much as 20 years on each of the two counts if he is convicted of both securities fraud and wire fraud, explains a U.S. Attorney's Office press release from the Southern District of New York to which the WSJ also provides a link. Additionally, he could be fined a substantial amount on each count.