Posts Tagged ‘Marc Dreier’

Dreier LLP scandal

From bad to worse: “According to a declaration by the firm’s Controller John Provenzano, millions of dollars owed to clients appeared to be missing from the firm’s accounts.” (Dan Slater, WSJ law blog; American Lawyer; earlier).

In general clients who suffer by a law firm’s defalcations, and cannot be made whole by suits against the law firm, are at risk of losing all or most of the money they’d entrusted; however, New York, where the Dreier firm is headquartered, at last report afforded broader provisions for clients than did most states. I took note four years ago of the not-especially-generous state of lawyerdom’s collective “client security” funds.

P.S. More on client security funds in comments. Larry Ribstein has thoughts on the Dreier firm’s unusual organizational structure. As for all the “dating Maxim models” stuff about the extravagance of Dreier’s personal life, that is pure tabloid-style sensationalism and will under no account be exploited in this space.

Arrest of NYC litigator Marc Dreier (bumped and updated)

[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.]