Case

HK – A related company of Dreier LLP forms Madoff Advisory Group!

In 1 on December 28, 2008 at 7:43 pm
 

Dreier LLP Company Information on Jigsaw

Headquarter 499 Park Ave
New York, 10022-1240
www.dreierllp.com
Country USA
Phone Number +1.212.328.6100
Industry Business Services
Employees 25 – 100
Revenue $1 – 10M
Ownership Privately Held
 
 
 
Chutzpah Spree by Accused Lawyer Nets $380 Million: Ann Woolner

Commentary by Ann Woolner

Dec. 26 (Bloomberg) — When Manhattan lawyer Marc Dreier needed to apply a patina of reality to allegedly bogus promissory notes he was pitching to hedge funds, he used Mission Impossible- type tricks.

As the U.S. Attorneys Office in Manhattan tells it, he would lie his way into an accounting firm’s or real estate developer’s offices as if he had business there.

He then would use their conference rooms for meetings with hedge-fund officials to make it seem the accountants or developers were in on the deal, according to the feds.

Appropriating the accounting firm’s letterhead, he fabricated financial statements and forged audit letters, prosecutors and the Securities and Exchange Commission allege. He would arrange conference calls between hedge-fund representatives and someone pretending to be the chief executive of Solow Realty, the developer and former Dreier client whose fake notes the feds say Dreier was trying to sell.

That someone was former broker Kosta Kovachev, who posed as Solow’s controller or chief executive, prosecutors in New York alleged this week in charging Kovachev.

If the ruse needed a new telephone number or e-mail address, no problem.

“Mr. Dreier is the Houdini of impersonation and false documents,” Assistant U.S. Attorney Jonathan Streeter told a magistrate judge in Manhattan last week. “He has been fooling some of the most sophisticated institutional investors in the world.”

He isn’t the only one. Dreier’s alleged scams, which investigators put at $380 million and counting, are peanuts compared with Bernard Madoff’s admitted $50 billion Ponzi scheme.

If it weren’t for the shadow cast by Madoff’s gigantic con, the story of Marc Dreier’s chutzpah would be provoking the sort of dumbstruck amazement that Madoff’s tale now elicits.

Reputation as Cover

For a while Madoff used as cover for his misdeeds his reputation as a solid, honest Wall Streeter. Dreier, whom acquaintances describe as an abrasive sort of fellow, instead relied on outrageous deceptions, as described by federal authorities.

Perhaps his nerviest was the final one. Fortress Investment Group, a New York-based asset management firm Dreier was courting, wanted to meet with the Ontario Teachers’ Pension Plan, which Dreier had said wanted to unload some notes at a deep discount, according to the Toronto Globe and Mail.

Fortress wanted assurances the fund would guarantee its assets, so Dreier arranged a face-to-face meeting in the fund’s offices, supposedly between Fortress and a pension executive, the newspaper reported.

Exchanging Cards

The only trouble was that the pension fund had no idea Dreier had cooked up this deal. So Dreier arranged to meet in Toronto with Michael Padfield, a senior lawyer to the pension plan, on an unrelated deal. This gave Dreier entry into the fund’s offices, where Padfield exchanged business cards with Dreier.

The meeting lasted only about 15 minutes, as Padfield wasn’t interested in the deal Dreier was proposing. So when Dreier asked if he could wait in the fund’s office for his plane to be ready for the trip back, Padfield agreed.

About an hour after that, Fortress executive Howard Steinberg showed up at the fund’s offices, where Dreier intercepted him, brought him into a conference room and pretended to be Padfield, according to authorities and news accounts. They say he gave Steinberg the business card Padfield had given him and signed papers in Padfield’s name.

He was offering to sell Solow Realty notes with a $44.7 million face value for $33 million.

Who Was That Man?

And he might have pulled it off if Steinberg hadn’t found the lawyer’s behavior odd. After Dreier, posing as Padfield, left the meeting, Steinberg asked the pension fund’s receptionist whether the man he’d been with was Padfield. The answer was no, the Toronto newspaper reported.

Dreier was arrested by local police on a charge of impersonation, spent three days in jail, posted a $100,000 bail and flew to New York on Dec. 7, where he was arrested at LaGuardia Airport.

This time it was U.S. authorities who collared him, as they had been watching him since they were tipped off by Solow and the accountant whose name Dreier allegedly forged.

In fact, the episode in Toronto unfolded not long after that accountant confronted Dreier in a telephone conversation. Dreier didn’t deny his deception. He said he was “ashamed” of his “very serious” misdeeds.

Recorded Conversation

The accountant was recording the conversation for the U.S. attorney’s office in Manhattan. Publicly, Dreier has neither admitted nor denied guilt.

However outlandish, his schemes fooled at least two hedge funds. One fund wired $100 million to buy the fake notes. Another sent $13.5 million.

It wasn’t just outsiders Dreier targeted, according to authorities. He was also draining clients’ escrow funds, according to statements lawyers within his firm gave to the SEC.

Any lawyer knows that client escrow funds are not to be touched, not to be used by the law firm or its lawyers except for the client’s purposes. Dipping into that money is grounds for disbarment and lawsuits.

At the 250-lawyer Dreier firm, only Marc Dreier could move funds into and out of client escrow accounts. In fact, any disbursement from just about any of the firm’s bank accounts had to be approved by Dreier, according to the firm’s controller, John Provenzano, and one of its partners, Joel Chernov.

Missing Funds

Early this month, the firm discovered that some $27 million was missing from client accounts. The employee who oversaw the escrow accounts told Chernov she had moved $37.5 million out of a single client’s fund from a $38 million deposit. Uh-oh.

So when Dreier called after his arrest in Toronto and asked Provenzano to wire him $8 million, Provenzano refused.

Dreier called the next day and asked for $10 million to be wired to one of his personal accounts. Provenzano again said no.

“He asked me to connect him to someone at the firm’s bank, and I did so, and I heard him instruct the bank employee to make the transfer,” Provenzano says in a statement to prosecutors.

In the Madoff case, investigators are now digging through years of documents to figure out how Madoff did what he did.

Madoff may have pulled off the biggest, longest running scam. But if the allegations against Dreier prove true, he may get the award for the most audacious.

(Ann Woolner is a Bloomberg news columnist. The opinions expressed are her own.)

To contact the writer of this column: Ann Woolner in Atlanta at awoolner@bloomberg.net.

Last Updated: December 26, 2008 00:03 EST

 

WSJ Video: The Fall of Marc Dreier

December 18, 2008 at 11:56 pm

The WSJ’s Nathan Koppel discusses the surreal fall of Marc Dreier, a major litigator now in jail and accused of fraud, selling bogus paper,and impersonation to the tune of $380 million.

 
 

Posted via email from Case Investigation

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