December 8, 2008 1:20 PM
Bombshell: Feds Claim Dreier Falsified Docs in $100 Million Fraud, Admitted It on Tape
Posted by Zach Lowe
Turns out the trip to Toronto last week was only the latest brazen fraud Marc Dreier allegedly tried to pull off in order to obtain millions for his firm. A federal indictment released today (and available below) accuses Dreier of fabricating a $100 million scam starting in October in which he falsely told two area hedge funds that a New York real estate company was offering promissory notes for sale at discount prices. To get the hedge funds to bite, Dreier allegedly did the following: fabricated the promissory notes themselves; had someone else at his firm impersonate the CEO of the real estate company on a conference call with one hedge fund manager; and forged documents from an accounting firm showing the firm had audited the real estate developer.
The first hedge fund (based in Connecticut) agreed to buy one note worth $13.5 million; the second, based in New York City, purchased more than $100 million worth of notes. They wired the money directly to an account Dreier controlled. The latter hedge fund's $100 million payment came through on Nov. 7, the complaint says.
Dreier also allegedly lied to receptionists at the offices of both the real estate developer and the accounting firm to gain entry as part of the scam, the complaint says.
Even worse for Dreier, he reportedly confessed to the crimes in taped conversations with a government informant (an employee from the accounting firm from which Dreier sent forged documents) last month. Dreier told the informant he was "ashamed" and that it was "very serious what's happened here," the complaint says.
Given what's in this Wall Street Journal story today, it's clear that the real estate developer in question is Solow Realty, a former Dreier client. Investigators interviewed Solow officials (who may have tipped them off to the scheme), and they denied having any promissory note program, the complaint says. The accounting firm likewise denied doing any audit of Solow's finances.
The complaint charges Dreier with one count each of securities fraud and wire fraud.
There's even more trouble for Dreier, according to the WSJ and Bloomberg. The Securities and Exchange Commission has charged Dreier with fraud linked to the scheme, according to the Journal, and Bloomberg is reporting that Wachovia has filed suit against Dreier for allegedly defaulting on a $9 million loan from the bank
The Latest on Marc Dreier - 12/8/08 at 6:52 p.m.
Breaking: Dreier Indicted in Federal Court - 12/8/08 at 11:53 a.m.
Document: Dreier Charged for Impersonating In-House Lawyer - 12/5/08 at 6:34 p.m.
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