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Disgraced Lawyer Dreier Pleads Guilty To Fraud Charges

By Chad Bray, Of DOW JONES NEWSWIRES

NEW YORK -(Dow Jones)- Disgraced lawyer Marc Dreier pleaded guilty Monday to fraud and other charges in an alleged scheme to sell $700 million in fictitious promissory notes and misuse client funds.

Dreier, 58 years old, pleaded guilty to conspiracy, securities fraud, money laundering and five counts of wire fraud at a hearing before U.S. District Judge Jed Rakoff in Manhattan.

"From in or about 2004 to in or about 2008, I engaged in a scheme to sell fictitious promissory notes," Dreier said.

He faces up to 20 years on each count of the most serious charges of securities fraud, wire fraud and money laundering. Prosecutors have indicated he should face a life sentence under federal sentencing guidelines.

Sentencing is set for July 13.

Prosecutors had alleged Dreier sold about $700 million in fake promissory notes and misappropriated client funds from his law firm. The out-of-pocket loss to investors and clients when the fraud was discovered in December was more than $400 million, the government claimed. The overall scheme allegedly ran from 2004 to 2008.

The government claimed Dreier used money obtained from the scheme to support a lavish lifestyle, including purchasing numerous homes, a yacht, luxury vehicles, expensive art work and funding the operations of his law firm. Prosecutors are seeking that he forfeit $700 million, including many of those assets.

Prosecutors had alleged Dreier sold fake promissory notes to at least 13 different funds and at least four different people.

Dreier told potential investors that he had the authority to sell promissory notes issued by real-estate development company Solow Realty & Development Co. in New York beginning in 2004 and promissory notes issued by Canadian pension plan Ontario Teachers' Pension Plan beginning in 2008, the government claimed.

During Monday's hearing, Assistant U.S. Attorney Jonathan Streeter said Dreier held parties in which he invited celebrities and he attempted to pitch the notes to individuals. Dreier also approached lawyers he knew in New York to ask them to solicit their clients to buy the notes, Streeter said.

Dreier also is facing civil charges by the U.S. Securities and Exchange Commission, filed in December, and his assets have been frozen. His law firm, Dreier LLP, filed for bankruptcy protection on Dec. 16.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com

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  05-11-091835ET
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