Marc Dreier, managing partner and founder of the 250-lawyer New York firm Dreier LLP, was charged by federal prosecutors with cheating hedge funds out of more than $100 million.
Dreier, who has represented publishing executive Judith Regan and U.S. radio broadcaster Clear Channel Communications Inc., was ordered detained by a magistrate judge in Manhattan federal court, where he faces securities and wire fraud charges. The judge will hold a bail hearing on Dec. 11.
“This is a very complex matter, and the facts are beyond the reach of a sound bite,” defense attorney Gerald Shargel said after the hearing. Dreier didn’t enter a formal plea to the charges yesterday. “He’s had a tough several days.”
The charges against Dreier, 58, a graduate of Harvard Law School and Yale College, came on the same day he was sued by Wachovia Corp. for defaulting on $12.6 million in loans. The U.S. says he lied to three unnamed hedge funds when he claimed to represent a New York real estate developer purportedly seeking to sell notes to investors. Dreier told the funds they could buy the notes at a deep discount from the developer and the original note purchasers, prosecutors said in a complaint.
One fund wired about $100 million to Dreier’s account in October after receiving phony financial documents written by the attorney, prosecutors said. Another fund allegedly wired about $13.5 million. The funds were based in New York, Toronto, and Greenwich, prosecutors said.
“The developer did not issue any of the notes,” according to the complaint. Dreier “has never been responsible for managing or selling notes on the behalf of the developer.”
Dreier faces a maximum 10 years in prison on the most serious charge.
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