Dreier Swindle Now $380 Million: Perella Weinberg Duped


As the world digests the Bernie Madoff Ponzi news, the investigation into the other recent big-name con continues. Investigators now conclude that Marc Dreier, the New York lawyer busted for criminal impersonation in Toronto two weeks ago, stole more than $380 million.

Among other victims: Perella Weinberg, which bought $45 million of bogus promissory notes.  Nick Maounis, the former proprietor of Amaranth, who now (of course) runs a new hedge fund, was in talks with Dreier, but according to a PR rep, the transaction was never consummated. Dreier LLP’s escrow accounts are missing $35 million, and $30-$40 million of art has disappeared from the firm’s walls. 

(On the latter, it will be interesting to see whether Dreier stole the art himself or whether some enterprising art thief took advantage of the chaos to to grab some Picassos.)

Dreier was living the high life, but expenses don’t explain the need to steal $380 million. Perhaps he levered up and got walloped by the crash?  Tidbits from the NYT:

The lifestyle:

Mr. Dreier’s lifestyle includes a waterfront home in the Hamptons, a Manhattan triplex and a place on Ocean Avenue in Santa Monica, Calif. He kept a Mercedes 500 in New York, an Aston Martin in California, and a 121-foot blue and white Heesen motor yacht with a Jacuzzi and a crew of 10 docked in Manhattan or St. Maarten. Associates said the boat, the Seascape, was the site of late-night parties at which Mr. Dreier, who is divorced, was often joined by an attractive young crowd.

The art disappearance mystery:

The law offices themselves at 499 Park Avenue were like modern art galleries. In court papers filed this week, the comptroller for the law firm reported that $30 million to $40 million of the firm’s assets had been spent on art. Among Mr. Dreier’s holdings were works by Picasso and a Warhol depiction of Jacqueline Kennedy Onassis. In recent days, someone not affiliated with the firm removed several pieces of artwork from the walls and carted them away, a person at the firm said. It was not clear what became of the art.

The original impersonation-swindle at Solow Realty, whose promissory notes he claimed to be selling.  This is not the one that got him busted in Toronto, but it started the investigation:

Marc S. Dreier knew the 45th-floor conference room of Solow Realty well. He had been in it many times as a trusted lawyer for the company’s founder.

So nothing seemed amiss when he showed up one afternoon in October and told a receptionist he had a meeting with her boss, people associated with Solow say.

Mr. Dreier was elegantly dressed, as always, the people said. He had three people with him. The receptionist ushered the group past her desk. They were sitting there, visible inside the glass-walled room, a few minutes later when the boss, Steven M. Cherniak, happened to walk by.

Mr. Cherniak would later tell people at the company how surprised he had been to see Mr. Dreier. He had not scheduled any meeting with him, and he had no idea what Mr. Dreier was up to.

But people there gave little thought to Mr. Dreier’s odd visit until November, when the company’s founder, Sheldon H. Solow, received a disturbing call. The caller wanted to let Mr. Solow know that Mr. Dreier had offered him the chance to buy promissory notes that had been issued by the company, people associated with the firm said.

They were fake notes, and shortly thereafter, lawyers for Solow Realty — different lawyers — were in touch with federal authorities, reporting their suspicions that Mr. Dreier might be engaged in financial fraud…

And even being jailed in Toronto didn’t stop Dreier’s frantic money-manipulations. So much for that single phone call:

Being jailed in Toronto did not curb Mr. Dreier’s interest in moving money, and he feverishly worked the phones, according to court papers. At this point, the law firm’s comptroller refused his requests to move millions of dollars. He did agree, though, to Mr. Dreier’s request to be connected to the bank that handled the law firm’s accounts, an assistant United States attorney, Jonathan R. Streeter, said in a bail hearing on Thursday. “He successfully got $10 million transferred out of an escrow account into a personal account that he controlled,” Mr. Streeter said.

Dreier’s firm, meanwhile, continues to disintegrate. As is usually the case in these frauds, he had an unusual amount of control over the books.  He stopped paying the premium on the firm’s malpractice insurance months ago, leaving his $250 million lawyers exposed. The firm won’t be able to meet its $2.6 million payroll on Monday.

Read full update in the New York Times >

See Also:
Dreier Nailed By Feds In $113 Million Loan Scam
The Biggest Losers: 20 Global Moguls Crushed In The Crash