MANHATTAN (CN) – Federal prosecutors on Thursday accused attorney Marc Dreier of running a $400 million securities and wire fraud scam from 2004 until he was arrested in December 2008, and embezzling clients’ money from the 250-attorney law office he founded and managed. The complaint includes a list of artwork, cars and properties Dreier allegedly bought with the loot.
Drier is accused of selling to hedge funds and investment funds “fictitious securities in the form of promissory notes” purportedly issued by a real estate developer in New York City.
He allegedly claimed the notes paid 8% to 12% interest for 1 to 2 years, but offered to extend the notes at the end of their term. He also claimed, falsely, that the noted were audited by a New York City accounting firm, the complaint states: “Dreier provided the funds with forged letters purportedly signed by a partner at the accounting firm stating that the accounting firm had audited the fake financial statements provided by Dreier.”
Dreier also arranged for his victims “to have meetings or telephone calls with individuals who falsely claimed to be, or impersonated, representatives of the developer or others,” the complaint states.
In 2008, he began selling phony promissory notes “purportedly issued by a pension plan located in Canada” that paid 10% interest, the complaint states.
Dreier claimed that the fake pension plan notes were guaranteed by another Canadian company, and then he switched the scam, and claimed that the Canadian company had issued the notes, and the pension plan guaranteed them, according to the complaint. He allegedly backed up those claims with impersonations too.
Dreier sold “hundreds of millions of dollars” of these phony notes, knowing that they were “entirely fictitious,” and that the alleged auditing statements were “fabricated and forged,” the complaint states.
Dreier used the money to live high on the hog and buy himself “numerous homes, a yacht, several vehicles [two Mercedeses, a BMW and an Aston Martin], and expensive art work [including one piece by Picasso, three by Matisse, 5 David Hockneys, 3 by Roy Lichtenstein, 9 Warhols, a Jasper Johns, a Rothko, one by Jim Dine, two by Wayne Thiebaud, and dozens of others],” prosecutors say.
(The bracketed material is taken from a list toward the end of the 26-page complaint.)
“In addition, during the course of the fraudulent scheme, in order to fund the scheme and further support his lavish lifestyle, Dreier misappropriated funds from clients of Dreier LLP, including, for example, money placed into an escrow account on behalf of a Dreier LLP client and money obtained in the settlement of a client lawsuit. When the fraud was publicly exposed in December 2008, the out-of-pocket loss sustained by the funds that purchased fictitious promissory notes from Dreier and by clients whose funds were misappropriated by Dreier exceeded $400 million.”