KWCH.com – A prominent New York law firm is expected to seek bankruptcy protection.

That’s according to a receiver appointed to run the firm — which has been scandalized by charges that its founder was behind a massive fraud.

The receiver also predicted that the founder — Marc Dreier — will soon seek bankruptcy protection as well.

Dreier was jailed last week after being charged in a criminal complaint and by the Securities and Exchange Commission in the alleged sale of fraudulent promissory notes.

He’s accused of an elaborate charade aimed at convincing three hedge funds that the investments were real.

Prosecutors have estimated total loses could top $380 million.

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Tags: bankruptcy-code, chief-financial-officer, department-of-finance, longstanding-leader, new-marketplace, news-press, pitta, proceeds

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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Tags: brokerages, chief-executive, demaio, due-diligence-service, emerging-talent, gerald-shargel, gulf-stream, medal-of-honour, pitta, veteran

New York Daily News – Is Park Ave. lawyer Marc Dreier a Blood? Or maybe a Crip?

Federal prison officials are refusing to remove the accused hedge fund swindler from 24-hour lockdown until they determine whether he’s a gang member, attorney Gerald Shargel told a judge Thursday.

"How ludicrous is that?" Shargel told Magistrate Judge Douglas Eaton during a failed attempt to get the Yale grad and Harvard Law School alum released on $10 million bail.

Eaton agreed to look into Dreier’s conditions after Shargel said prison officials told him it will be another three weeks before they can remove Dreier from lockdown at theManhattan Correctional Center.

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Tags: assurances, east-hampton, harvard-law-school, invasion-of-privacy, june-14, management-company, massachusetts-prison, missing-man, pitta, redd, saylor, verbal-commitment, volatility