Arrest of NYC litigator Marc Dreier (bumped and updated)

by Walter Olson on December 8, 2008

[Originally published in the early hours of Dec. 7. Bumped Monday afternoon to reflect new developments and reader interest; updated Tuesday morning.]

News accounts are still piecing together the strange story of high-powered New York litigator Marc Dreier and his arrest by Canadian officials on charges of “impersonation”. Allegedly, Dreier posed as an official of the Ontario Teachers’ Pension Plan to support his pretense that he had a guarantee for a $50 million investment he was seeking from a hedge fund. (Sinclair Stewart, Paul Waldie and Timothy Appleby, “From $50-million deal to $100,000 bail – in a N.Y. minute”, Toronto Globe and Mail, Dec. 6). The blog Above the Law broke the story and has been on top of later developments (Dec. 4, more posts). Dreier LLP, a 250-person law firm that is said to have been owned outright by Dreier rather than run as a partnership, was “one of several firms that hired refugees from Milberg Weiss after that firm was indicted”. (Nate Raymond, “Arrest of Dreier Founder Clouds Firm’s Future”, American Lawyer, Dec. 5; NYLJ, Dec. 8; NYT, Dec. 5).

More: Huge developments on Monday:

Marc Dreier, the owner of a prominent New York law firm who was arrested last week, was hit Monday with criminal charges and civil complaints alleging he defrauded investors of about $100 million by selling them phony financial instruments.

Federal prosecutors on Monday unsealed charges of one count each of securities and wire fraud, describing a bizarre scheme to bilk hedge funds. [U.S. Complaint at ClusterStock] The Securities and Exchange Commission filed a civil suit making largely the same allegations against the 58-year-old Mr. Dreier….

The criminal and civil complaints released Monday offer the following account of events: Mr. Dreier fabricated promissory notes by an unnamed New York real-estate developer — identified as Solow Realty by a person with knowledge of the situation — and sold them to hedge funds, when in fact such notes were never issued. He fabricated supporting financial statements, and letters from an accounting firm using the firm’s logo, that purported to audit the statements. The SEC complaint says $113 million in phony notes was deposited to an account in the name of the law firm.

Scott Greenfield has more on reports circulating of missing escrow accounts and is stunned at the magnitude of the allegations: if true, “the firm is now at the epicenter of perhaps the greatest instance of lawyer dishonesty ever.” [Updated Tuesday morning to replace breaking-news WSJ account with paper's most recent version; see comments section regarding an apparent inaccuracy in earlier version.]

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{ 9 comments }

1 Ed 12.07.08 at 12:29 am

The usual sociopath in a $3000 silk suit. No different from many other hustler trial lawyers.

2 PhilG 12.07.08 at 4:03 am

It sounds like he was running a “con” which could have been straight out of the movie, “The Sting”.

3 thufir_hawat 12.08.08 at 11:11 am

This is very close to the swindle Clay Davis ran on Stringer Bell in season three of The Wire.

Clay had Stringer meet the “commissioner” who, if paid, would expedite important building permits and federal grants, in the lobby of the federal building (outside the metal detectors). It took attorney Maury Levy about a minute to see through it and confirm Stringer had been “rainmade” (cash transactions, one-time meetings in the lobby instead of the office, admonitions to wait and be patient, etc.)

Stringer’s plans to kill Levy were stopped short by Avon; hopefully Dreier will be less lucky when it comes to the investigation by the State Bar and the Mounties.

4 Eric Turkewitz 12.08.08 at 4:04 pm

Why is this identified as a “plaintiff’s” firm? According to the firm’s website:

The firm’s principal practice areas are commercial litigation, real estate, bankruptcy and corporate reorganization, employment law, corporate and securities, entertainment, sports law, intellectual property, including patent, trademark and copyright law, matrimonial law and tax.

5 Walter Olson 12.08.08 at 4:07 pm

I wondered about that too. The earlier reports in other publications over the weekend didn’t give the firm the “plaintiff’s” label.

6 Bill Stade 12.08.08 at 8:21 pm

I hope that Dreier LLP does not go under. It’s nice to keep all these guys in one place so we can watch them.

7 Michelle 12.09.08 at 3:24 am

What do you mean ‘these guys?’ Do you know who else, if anyone, was involved? Have any other attorneys been implicated?

8 Eric Turkewitz 12.09.08 at 10:49 am

The reference to this being a plaintiff’s practice is now gone from the WSJ article. Most likely explanation, I guess, is that it was a mistake made in rushing to get something online.

9 Kyle Dreier 12.30.08 at 9:42 am

Well, all I can say is if he is found guilty, which doesn’t sound like a long shot, then punish him to the extent of the law. I’m tired of seeing slick scandals with little consequence. I am saddened that the Dreier name is now tarnished. I don’t know that I have any blood in the Marc Dreier line but don’t like the association now … as seen here: http://mrcritical.com/shame-to-the-dreier-name/
I feel sad for the people that are and will be effected by the waves/ripples … his victims, his employees, his family …
-Kyle Dreier

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