Legal News

Indictment: Marc Dreier Used Fraud Proceeds to Support Lavish Lifestyle

By Jennifer Forsyth

After his law firm fell to pieces in the midst of his alleged $400 million fraud, New York plaintiffs lawyers Marc Dreier has now been indicted by a federal grand jury. The charges are securities and wire fraud along with the conspiracy to commit those frauds. (Here’s the news release from the U.S. Attorney’s office, Southern District of New York.)

Dreier, who still sits in a New York jail, is accused of falsely representing to hedge funds that he had the authority to sell promissory notes by a New York development company (which has been independently identified as Solow Realty) that would be used to finance real estate deals in the US and abroad. The notes, which the indictment says turned out to be false, had interest rates that ranged from 8% to 12% and had terms of one or two years. To convince the funds that the notes were legitimate, the indictment says Dreier supplied the funds with fake financial statements. In another component of the alleged scheme, Dreier impersonated a lawyer representing a Canadian pension plan and represented to a hedge fund that he was the lawyer.

The indictment (found here) states: In order to carry out these impersonations as part of the fraudulent scheme, Dreier obtained numerous cellphones, designated phone lines at Dreier LLP, and set up various fake email addresses. Dreier told the purchasers of the fictitious notes to contact the issuers or holders of the notes at those phone numbers and fake email addresses.

”It was not unexpected. There are no surprises,” said Gerald L. Shargel, Dreier’s lawyer told reporter Chad Bray in this WSJ.com story. ”As I’ve said before we’re looking for a fair and appropriate resolution of the matter.”

The indictment said the alleged scheme was carried out to support his lavish lifestyle. (Some glimpses of the Harvard Law School grad’s lifestyle was laid out in this WSJ story.)

The forfeiture allegation included with the indictment gives us another opportunity to enviously peruse some of the possessions (detailed previously on this blog here), including his 2005 Heesen yacht sitting at Pier 66 in Fort Lauderdale, that his alleged fraud allowed him to acquire.

Full post as published by Law Blog - WSJ.com on January 29, 2009 (boomark / email).