Dreier, Jailed Lawyer, Indicted in $400 Million Fraud Scheme

Dreier, Jailed Lawyer, Indicted in $400 Million Fraud Scheme - 1/30/2009

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Dreier, Jailed Lawyer, Indicted in $400 Million Fraud Scheme
David Glovin and Bob Van Voris

Bloomberg. January 30, 2009
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EXCERPT: Marc Dreier, the New York law firm founder accused of cheating hedge funds and other investors of more than $400 million, was indicted by a federal grand jury. The indictment, made public yesterday in federal court in Manhattan, follows Dreier’s Dec. 7 arrest on charges that he persuaded two hedge funds to give him more than $100 million by falsely claiming he was selling at a discount notes issued by Sheldon Solow, a New York developer. Prosecutors later said investors’ losses exceeded $400 million, a figure repeated in the indictment. “Dreier conspired to engage in securities and wire fraud,” Acting U.S. Attorney Lev Dassin in New York said in a statement announcing the seven-count indictment. The indictment expands the number of charges against Dreier, says his scheme began in 2004, and identifies new crimes he allegedly committed. Among them were the embezzlement of client funds and the sale of fake promissory notes purportedly issued by a Canadian pension plan. “The indictment is not a surprise,” Dreier’s lawyer, Gerald Shargel, said in an interview. […] The indictment reiterates allegations that Dreier gave the purchasers of his notes false financial statements. He also arranged meetings for investors with people who impersonated officials from purported issuers of the notes, according to the indictment. A former broker, Kosta Kovachev, was charged last month with helping Dreier defraud investors by pretending to be a controller of a real estate firm. Michael Gross, a spokesman for Solow Realty, didn’t immediately return a voice-mail message seeking comment yesterday. Dreier said in court papers on Jan. 15 that he lost part of the funds that prosecutors say he stole in failed investments and used the rest to repay the hedge funds, cover his firm’s expenses and buy property.

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