International Law

Marc S. Dreier Arrested for Fraud

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From the SEC Press Release:

On December 8, 2008, the Securities and Exchange Commission filed a civil injunctive action in United States District Court for the Southern District of New York alleging that New York attorney Marc S. Dreier engaged in an elaborate scheme, that violated the antifraud provisions of the federal securities laws and raised at least $113 million from the sale of bogus promissory notes.

According to the SEC's complaint, Dreier is the founder and managing partner of Dreier LLP, a 250-attorney law firm headquartered in Manhattan.

Along with its complaint seeking a permanent injunction, disgorgement of Dreier's ill-gotten gains, and civil monetary penalties, the Commission filed an application for an emergency court order to freeze Drier's assets and appoint a temporary receiver.

The SEC's complaint, filed in federal court in Manhattan alleges that since at least October 2008, Dreier has been marketing fake promissory notes, including bogus notes of a New York-based real estate development company, to hedge funds and other private investment funds, and has closed at least three sales.

According to the complaint, Dreier created an elaborate charade designed to convince purchasers that the notes were genuine.

He allegedly distributed phony financial statements and audit opinion letters of a reputable accounting firm, and recruited confederates to play the parts of representatives of legitimate companies involved in the transactions, even creating dummy email addresses and telephone numbers.

According to the Commission's complaint, Dreier directed that two purchasers of the bogus notes wire payment to what appeared to be his law firm's escrow account.

At least one note purchaser discovered the fraud and demanded, and received, the return of its investment.

Approximately $100 million in known proceeds from the sale of the bogus notes remains unaccounted for.

Full post as published by Misleading Advertising Law on December 08, 2008 (boomark / email).