The New York Law Journal by Mark Hamblett - April 28, 2009
Marc S. Dreier intends to plead guilty on May 11 to every count in the indictment charging him with stealing hundreds of millions of dollars from hedge funds and individuals, his attorney said yesterday. Defense attorney Gerald L. Shargel told Southern District Judge Jed S. Rakoff that his client will plead to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, five counts of wire fraud and one count of money laundering. Each count carries a potential sentence of 20 years in prison except for the conspiracy count, which carries a five-year term. Judge Rakoff denied without prejudice a motion by Mr. Shargel to dismiss the securities fraud count and a portion of the conspiracy count dealing with securities. Mr. Shargel said there was a legal argument to be made on whether the phony promissory notes sold by Mr. Dreier were, in fact, securities. Southern District Assistant U.S. Attorney Jonathan Streeter told the judge he had more than enough ammunition to show that they were in fact securities and that the list of people Mr. Dreier was trying to sell the notes to was far larger than indicated in the indictment and included unsophisticated investors. "The defendant actually held parties at which he pitched the notes," Mr. Streeter said, adding that he spoke to one investor who gave Mr. Dreier $1 million "and he didn't even actually understand who the issuer was."
Mr. Dreier, the founder and sole equity partner of the now defunct 250-attorney Dreier LLP, had been widely expected to plead guilty to some or all of the charges he faces in connection with a scheme in which he peddled more than $700 million in phony real estate and pension fund notes. To keep his scheme going, he paid back approximately $300 million to people who bought the bogus notes. He is charged with selling notes to at least 13 different funds and three individuals between 2004 and 2008, with the purchase price wired to an attorney trust fund maintained by his firm. Mr. Dreier was arrested on Dec. 7 upon his return from Toronto, where he had been taken into custody for pretending to be an executive with the Ontario Teachers Pension Fund who was pitching pension fund notes to a hedge fund. He has been free on bail but confined to his midtown apartment since Feb. 13. Mr. Dreier, who was present at yesterday's hearing, is effectively asking for the mercy of the court in deciding to plead guilty. Asked after the hearing why Mr. Dreier wanted to plead guilty instead of going to trial, Mr. Shargel said, "He wants to end it because he accepts responsibility for what he did." Mr. Shargel also said Mr. Dreier has accomplished much in his life, but he "simply went off the tracks . . . I'm sure no one will ever know why he did what he did."