Legal News

With New Indictment, Government Cranks up the Heat on Marc Dreier

By Nathan Koppel

New York lawyer Marc Dreier allegedly defrauded investors out of approximately $700 million, a far higher figure than previously had surfaced in the criminal case, according to an amended indictment unveiled Tuesday.

The attorney was indicted in January on conspiracy and fraud charges for allegedlly selling fictitious promissory notes to hedge funds.

Previously, prosecutors had claimed Dreier sold almost $400 million in fictitious notes. Now, according to the latest indictment, the attorney stands accused of peddled almost $700 million in notes to 13 different hedge funds and three individuals, whose names were not identified in the filing.

Prosecutors are demanding that Dreier forfeit approximately $700 million, including all of his interest in a yacht, luxury cars, and more than 200 works of art by such masters as Andy Warhol, Jasper Johns, Roy Lichtenstein and Henri Matisse.

Gerald Shargel, Dreier’s lawyer, did not return a call for comment.

Dreier was also hit with a new count Tuesday of money laundering. From 2004 to 2008, prosecutors allege, he deposited funds from his note sales into accounts held by his former law firm, Dreier LLP.

Separately, Dreier on Monday filed a motion to dismiss the securities-fraud charge on the alleged grounds that promissory notes do not count as "securities" under U.S. Supreme Court precedent. The government has not yet responded to the motion to dismiss.

Full post as published by Law Blog - WSJ.com on March 17, 2009 (boomark / email).