New York law firm head Marc Dreier was tossed in jail in Toronto earlier this week for impersonating an officer of Ontario Teachers Pension Plan in connection with a loan-deal from Fortress. He has since been released on bail.
Connecting dots, it appears Dreier may have been trying to bail himself out of financial trouble. $38 million from his firm’s escrow accounts is apparently missing, and he already has IRS liens on two of his properties.
WSJ: The head of prominent New York law firm Dreier LLP was arrested Tuesday in Toronto for allegedly impersonating another individual.
The alleged offence took place during a supposed business meeting between the Ontario Teachers’ Pension Plan and Fortress Investment Group LLC.
Constable Tony Vella with the Toronto Police Department said Marc Dreier, 58 years old, was arrested for “personation with intent,” which involves “fraudulently impersonating any person, living or dead, with intent to obtain any property or interest in any property.” The offence, he said, carries a maximum 10-year prison term.
Mr. Dreier will plead not guilty, according to his attorney, Edward Greenspan. “The event is relatively minor,” he said. “No money passed. Nothing actually occurred except an allegation of impersonation.” He declined to elaborate, citing a court order.
According to people familiar with the situation, Mr. Dreier was impersonating an officer of Ontario Teachers’ to complete a business transaction involving Fortress, a New York-based private investment firm.
Pretended to be senior lawyer from Ontario Teachers. From Am Law Daily:
The arrest came after Dreier allegedly entered a meeting involving Ontario Teachers and a subsidiary of Fortress Investment Group as Michael Padfield, senior legal counsel for investments at Ontario Teachers, according to spokespeople for the companies and a document obtained by The Am Law Daily.
A Fortress employee at the meeting “observed suspicious behaviour by an individual and immediately alerted Ontario Teachers staff,” company spokeswoman Lilly Donohue says.
After learning about the fraudulent behaviour, staff at Ontario Teachers, which is busy with the BCE Inc. privatization, called police, the pension fund said in a statement.
“No Teachers’ staff member was involved in the fraudulent behaviour,” the statement said. “We have reviewed our security procedures in relation to this situation and we believe that no Teachers’ funds are involved.”
Why Dreier was in Toronto is unclear, and his lawyer wouldn’t say. He did not represent Fortress, a person familiar with the matter says. Dreier allegedly impersonated Padfield to obtain money, the legal document says.
Dreier now out on bail:
Dreier was released on $100,000 Canadian cash bail ($78,700 U.S.). He had no comment as he rushed out of court, unshaven and disheveled, Friday afternoon. At one point, he stuck his hand out in front of a television camera as reporters surrounded him.
Dreier’s firm appears to be disintegrating after the news:
WSJ: [In] the wake of Dreier’s arrest, the firm rests in precarious shape, with lawyers already leaving. On Friday, Paul Traub, the co-chair of the firm’s bankruptcy department, sent a letter to clients announcing he and a group of other bankruptcy lawyers had resigned from the firm but would continue to practice together under a different name, Traub, Bonacquist & Fox LLP. “In light of recent developments, of which we were unaware until yesterday, we have resigned from Dreier LLP, effective immediately,” the letter states.
Dreier LLP is a bit of an odd duck in the world of law firms. Marc Dreier himself owns all of the equity in the firm, with other partners paid salaries that are tied in part to the amount of business they generate, according to lawyers who have worked at the firm.
Christmas canceled at Dreier LLP:
New York Post: Dreier’s brush with the wrong side of the law apparently put the kibosh on his company’s Christmas party, which was supposed to be held last night at The Waldorf-Astoria hotel.
Brass at the 250-lawyer firm, Dreier LLP, booked the hotel’s pricey Starlight roof for their Yuletide Celebration, but a Post reporter found the hall on the 18th floor completely empty last night, with chairs stacked against the wall.
Over the years, Dreier – who set up The Michael Strahan Foundation to help disadvantaged kids – has been hit with hundreds of thousands of dollars in judgments and tax liens.
They include a $622,000 IRS judgment on an East 58th Street apartment that he owned, and a $98,000 federal tax lien on a Southampton property, according to public records.
When The Post called the law firm’s spokeswoman, Amy Greenfield, for comment, a man who identified himself as her husband refused to put her on the phone.
“She is perfectly aware of what the situation is and she doesn’t want to talk to anyone,” he said.
A doorman at Dreier’s plush East 58th Street high-rise building – which is not the property involved in the IRS judgment – said the lawyer hadn’t been there all week.
It’s a sad turn of events for the prominent lawyer, who sponsors an annual star-studded gold tournament with Strahan that raises hundreds of thousands for kids’ charities.
Alicia Keyes sang at the 2008 tournament, and Jon Bon Jovi and Diana Ross performed in prior years.
$38 million missing from Dreier LLP’s escrow accounts.
Above The Law: Speaking of Marc Dreier’s property, we mentioned that he has “a fabulous Manhattan apartment rumoured to rent for $50,000 a month.” A source tells us that Dreier owns this apartment (which would rent for $50,000), as well as at least five other homes, including places in Santa Monica and the Hamptons. We also hear that Marc Dreier is the owner, in part or in full, of a yacht and a plane.
As for what’s next in his case, a bail hearing is taking place this morning in Canada, after which Marc Dreier is expected to be released.
Meanwhile, trouble may be brewing for Marc Dreier back in the United States. As we mentioned yesterday (see the 1:40 AM update), significant sums are missing from firm escrow accounts. We initially mentioned $38 million; another source suggests the number may be lower, but is at least $20 million.
The Dreier partners (excluding Marc Dreier obviously) have retained criminal and civil counsel to investigate these matters. They have also alerted the U.S. Attorney’s Office of possible offenses related to the escrow fund shortfalls.