New York (HedgeCo.Net) – Marc Dreier was denied bail on Thursday after prosecutors estimated the New York attorney swindled more than $380 million out of investors in his elaborate scheme that targeted hedge funds.   

Alleging that Dreier fooled “the most sophisticated investors in the world,” prosecutor Jonathan Streeter convinced Judge Douglas Eaton that he may be a flight risk.  Streeter emphasized the fact that Dreier has extensive contacts around the world where the money may be hidden.  Dreier’s legal team had sought a $10 million bail package with house arrest.   

Streeter said the alleged fraud had been in the works since January 2006 and called Dreier a “Houdini of impersonation and false pretenses.”    

It was first estimated that Dreier duped about $113 million from investors by selling fake notes tied to a bogus real estate development company based in New York.  He then allegedly covered up the scheme by producing false documentation and financial statements.  While it was first believed that only a few prominent big-name hedge funds were targeted, new evidence supports the theory that Dreier may have targeted many more funds. 

His firm, Dreier LLP, also suddenly had millions missing from its client escrow accounts.  According to court papers, Dreier is the only one authorized to make transfers from these accounts.  Strangely enough, Dreier transferred $10 million to a personal account from the escrow account via telephone while being held in a Canadian jail last week for criminal impersonation charges.

Julie Scuderi
Senior Editor for HedgeCo.Net
Email: julie@hedgeco.net

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Independent – An unprecedented crackdown on speculators preying on falling share prices began on both sides of the Atlantic yesterday, as Gordon Brown promised to "clean up the financial system" after days of turmoil.

The Financial Services Authority (FSA) banned "short selling" of bank shares from midnight last night, after warnings that the practice helped fuel market turmoil that forced the dramatic £12.2bn takeover of HBOS by Lloyds TSB. This came as the New York Attorney announced his office had launched an investigation into illegal manipulation to profit from short selling. The move is to uncover whether speculators have spread misleading information or acted in concert to purposely drive down share prices.

Wealthy hedge fund traders, heavy users of the shorting strategy, have sparked fury after making millions from the collapse in value of UK banking stocks.

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