Partner in N.Y. law firm charged with fraud
Marc Dreier has been arrested on charges of $100 million fraud against various hedge funds.
NEW YORK (CNN) -- The managing partner of a New York law firm has been arrested on charges stemming from an alleged $100 million fraud against various hedge funds, the U.S. attorney's office in New York said Monday.
Marc Dreier, 58, is accused of selling promissory notes that did not belong to him to three hedge funds, starting in October.
"Marc Dreier allegedly used his law license and his access to institutional investors to perpetrate a brazen fraud," said Acting United States Attorney Lev L. Dassin.
Dreier is the founder and managing partner of Dreier LLP, a law firm of more than 250 attorneys with its principal office in New York City and additional offices in Los Angeles and elsewhere in the country, federal officials said.
According to the U.S. attorney's office, Dreier told a Connecticut hedge fund in early October that a New York City real estate development company had a "note program" by which the developer sold promissory notes to investors. Dreier purportedly said some investors who had bought notes wanted to sell them because they needed money due to the current financial crisis. Authorities say Dreier also told the hedge fund that he represented the selling investors and the developer and that the Connecticut hedge fund could buy those notes at a significant discount.
Dreier sent the hedge fund purportedly audited financial statements, authorities say, and the hedge fund wired approximately $13.5 million in late October to an account controlled by Dreier to pay for a note with a face value of $25 million.
He also negotiated in October with a New York-based hedge fund that agreed to buy notes purportedly issued by the developer, the authorities said. That hedge fund ultimately wired about $100 million to the Dreier account, the U.S. attorney's office alleges in a seven-page complaint unsealed Monday.
During the course of the negotiations with the New York hedge fund, officials said, Dreier arranged a conference call with hedge fund personnel and an individual he said was the developer's chief executive officer. However, the developer's CEO told authorities he did not issue any of the notes, that his signature on certain of the purported promissory notes was a forgery and that he did not participate in a conference call with the New York hedge fund.
Police in Toronto, Canada, arrested Dreier on December 2 on suspicion that he impersonated a Canadian company employee in connection with the sale of notes with a face value of more than $40 million to a third hedge fund, the U.S. attorney's office said.
"Dreier was charged with one count of impersonation with intent," according to Toronto police spokesman Tony Vella.
U.S. officials arrested Dreier on Sunday night when his plane landed at LaGuardia Airport, the U.S. attorney's office said in a news release.
He is charged in federal court with one count of securities fraud and one count of wire fraud, and was appearing before a U.S. magistrate judge in the Southern District of New York on Monday.
The securities fraud count carries a maximum sentence of 20 years in prison and a fine of $5 million. The wire fraud count carries a maximum sentence of 20 years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greater. 
