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    December 12th, 2008

    ♫ Hey honey-you’ve got lots of cash
    Bring us round a bottle
    And we’ll have some laughs
    Gin’s what I’m drinking
    I was raised on robbery…♫

    Written and performed by Joni Mitchell.

    The ABA  Journal website per Martha Neil reported on Dec. 11, 2008 that New York City attorney Marc Dreier has allegedly stolen $380 million dollars from hedge funds and investors (it looks like the amount in question keeps going up…).

    In an earlier article this week, (How Marc Dreier Allegedly Sold Worthless Forged Paper) Martha Neil stated:

    “Federal prosecutors and securities regulators contend that Dreier has stolen $113 million since October by falsely claiming that a real estate developer—apparently former client Solow Realty, in at least one attempted transaction, according to the New York Times—wanted to sell debt at a deep discount. Then he allegedly closed the fraudulent deals by charming his way into the offices and conference rooms of unwitting accounting, pension fund and real estate offices linked to the transactions by faked documents, recounts the newspaper’s DealBook blog.”

    There is a Canadian connection to this story:

    “People familiar with the matter say Mr. Dreier attempted to secure money from Fortress, a New York asset-management firm, by impersonating an Ontario Teachers’ Pension Plan attorney. When Fortress wanted to meet with Ontario Teachers’ representatives in person, Mr. Dreier flew to Canada, the people say, and posed as an in-house counsel for Ontario Teachers’ in a meeting with a Fortress executive.”

    Of course there is the usual hallmark of a fraud: he is reported to have had ‘a lavish lifestyle’ and spent substantial sums as well on his New York City-based firm’s Park Avenue headquarters.

    Now compare and contrast this to the sub-prime mortgage crises. Wikipedia states:

    “The New York State Comptroller’s Office has said that in 2006, Wall Street executives took home bonuses totaling $23.9 billion. “Wall Street traders were thinking of the bonus at the end of the year, not the long-term health of their firm. The whole system—from mortgage brokers to Wall Street risk managers—seemed tilted toward taking short-term risks while ignoring long-term obligations. The most damning evidence is that most of the people at the top of the banks didn’t really understand how those [investments] worked.”[38]

    In both the sub-prime crises and in the Dreier case, innocent people ended up losing money on worthless paper. Could it be that the major distinction is that certain people at the banks didn’t understand – or care – how their investments worked (willful blindness?) but Mr. Dreier did (intention?)

    Mr. Dreier has been charged with wire and security fraud and is facing civil litigation suits.

    One could speculate that perhaps Joni Mitchell’s lyrics were taken a little too much to heart?

    This entry was posted on Friday, December 12th, 2008 at 11:10 am and is filed under Firm Governance, Fraud and theft, Issues facing Law Firms, Trends. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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