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Two New Defendants: A Judge-Elect and a High-Powered Lawyer

The case of New York lawyer Marc S. Dreier is a strange one. He was arrested in Canada on Friday, after uncharacteristically appearing disheveled and allegedly posing as a lawyer for the Ontario Teachers Pension Plan.

When he returned to New York, he was arrested and hit with a complaint charging him with defrauding hedge fund execs of more than $100 million. Essentially, the Government claims, he was just a grifter all along.

This afternoon, the Judge ordered Dreier detained pending trial as a flight risk. [More...]

Dreier, a graduate of Harvard Law School and Yale College, faces as long as 20 years on each count for securities and wire fraud in the New York case. He is sole equity partner of Dreier LLP, which has 250 attorneys in six U.S. offices. Firm attorneys said in court papers that he spent as much as $40 million on artwork hanging in the firm’s offices.

The Government today put the swindle amount at $380 million and said almost all is missing:

“He is the Houdini of impersonation and false documents,” Streeter said. “Mr. Dreier is in a desperate situation, and the only way out of the desperate situation is to flee.”

The criminal case is U.S. v. Dreier, 08-mag-2676, U.S. District Court, Southern District of New York (Manhattan). The law firm, Dreier, LLP, seems destined to close up shop.

Also in the news: Judge-Elect Norah Anderson in New York has been charged with making illegal campaign contributions to herself, just weeks before she was scheduled to take the bench. Also charged: her law firm boss, Seth Rubenstein.

It appears Rubenstein loaned money to Anderson which she then transferred to her campaign to pay expenses, asserting it was her money.

Toward the end of August, Ms. Anderson got just what she needed. Two payments totaling a quarter of a million dollars were deposited into her campaign account, and in disclosure reports filed with the state, Ms. Anderson, a lawyer, said she had made a loan and a donation to herself.

But the money did not come from her own funds, prosecutors said on Wednesday. The actual source, prosecutors said, was Seth Rubenstein, a lawyer who was Ms. Anderson’s boss, friend and campaign adviser.

Ms. Anderson and Mr. Rubenstein conspired to conceal the money trail, prosecutors said, to avoid exceeding the individual donor limit of $33,122.50. State law allowed Ms. Anderson to contribute as much of her own money to her campaign as she wished.

Her lawyer says she did nothing wrong. Both Anderson and Rubenstein have pleaded not guilty to the state court charges.

Ms. Anderson and Mr. Rubenstein were indicted in State Supreme Court in Manhattan on felony charges of filing false documents and falsifying business records. If convicted, each faces up to four years in prison. They also face misdemeanor counts of knowingly and willfully violating contribution limits, punishable by up to a year in jail.

I'm not sure how this paragraph in the Times article enhances the story:

Both were ushered into the courtroom in handcuffs. Ms. Anderson wore black stilettos, a dark blue pinstriped suit, a Burberry coat and a pearl necklace. Mr. Rubenstein wore his thinning gray hair pulled back in a ponytail and a dark suit with a red tie.

On a positive note: Both Dreier and Anderson have excellent counsel. Gerald Schargel is representing Dreier and Fred Hafetz is representing Anderson.

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  • Display: Sort:
    Dreier sounds like a character (5.00 / 1) (#4)
    by sarcastic unnamed one on Thu Dec 11, 2008 at 03:44:55 PM EST
    in a Grisham novel.

    Well, lest we forget, (none / 0) (#5)
    by scribe on Thu Dec 11, 2008 at 03:59:04 PM EST
    Dickens was a court reporter in the Chancery/Surrogate's court, wrote from life and gave us some of the most memorable characters in literary history.  

    Who's to say Grisham doesn't also write from life?

    Parent

    It is absurd (none / 0) (#1)
    by Steve M on Thu Dec 11, 2008 at 02:33:28 PM EST
    that this judge still wants to take the bench notwithstanding the charges.  No one can decide cases with any legitimacy from underneath this sort of cloud.

    Someone else was handling those cases before she was elected, and they can continue keeping the bench warm for her in the event she is cleared of the charges.  But for now she sounds a little like Blagojevich, insisting he's still entitled to fill that Senate seat.

    The Dreier Case Is Strange (none / 0) (#2)
    by santarita on Thu Dec 11, 2008 at 02:40:55 PM EST
    What was he doing in Canada?  Was he running some kind of Ponzi scheme?  

    The judge in question was not just (none / 0) (#3)
    by scribe on Thu Dec 11, 2008 at 03:04:54 PM EST
    any judge-elect.  She would have become the Judge in the Surrogate's Court for New York County (i.e., Manhattan). She would have been supervising the allocation of cases involving widows, orphans, trusts and estates to court-appointed counsel and professionals. And approving or disapproving all the work on those cases.

    In other words, she could have steered great big gobs of money to her friends and contributors.  

    The money would have come in the form of "Commissions" and fees which the law provides for trustees, accountants, lawyers, guardians, and similar posts involved in the administration of trusts and estates.  

    "Commissions", BTW, are what the law calls the basis for the fees given to people like executors, guardians and the like.  Commissions are based upon the amount of money/property being dealt with, usually on a sliding percentage basis (like, picking numbers from a hat, 3 percent on the first half million, another 2 percent on the next half million, and 1/2 percent on the amount over and above that).  

    The amount of commissions has almost no relation to the amount of work done.  I once represented a trustee - a CPA - whose job entailed making sure the CDs (the required form of investment)that belonged to the orphaned kid whose property he was watching were rolled over every year, that the kid's taxes got done, and that any bills not covered by his Social Security survivors' benefits got paid.  That, and fending off the occasional telephone call from a grasping relative.  All told, he might have spent 10 or 20 hours a year on the job, total.  And every year he had to present the Court an accounting, for which he hired me.  

    The first year, being a CPA, he figured out what his normal bill would be - IIRC he was charging $200 to do state and federal tax returns - and presented it to the Court.  It was rejected:  "You're not charging enough.  Get a lawyer and have him explain commissions to him."

    When I told him that, instead of about $750 total he'd billed, he would be getting somewhere in the low five figures, I got a new best friend and very nice lunches on a regular basis thereafter.

    So, in other words, this judge-elect was about to get her hands on doling out one of the biggest piles of money, with the potential for enormous, Tweed-level graft, anywhere.  These charges have been circling for a while, now, and I'm not surprised Morgenthau brought the case.


    heh (none / 0) (#6)
    by andgarden on Thu Dec 11, 2008 at 04:10:08 PM EST
    Make that three defendants (none / 0) (#7)
    by scribe on Thu Dec 11, 2008 at 09:07:41 PM EST
    and a busy morning of arraignments before Magistrate Judge Eaton (he also had the Dreier arraignment).

    One of the people who really built the electronic trading system and market-making systems in place today was arrested and arraigned this morning.  And sued by the SEC.  Because, as he stated, his firm was and is a complete Ponzi scheme, with estimated losses of $50 Billion (with a "B").

    Bernard Madoff, founder and president of a New York firm that invested funds for wealthy individuals, hedge funds and other institutions, was charged with operating what he told employees was a long-running $50 billion Ponzi scheme in what may be one of the largest frauds in history.

    Madoff, 70, head of Bernard L. Madoff Investment Securities LLC, was arrested today at 8:30 a.m. by the FBI and appeared before U.S. Magistrate Judge Douglas Eaton in Manhattan federal court. Charged in a criminal complaint with a single count of securities fraud, he was released on $10 million bond guaranteed by his wife and secured by his apartment. Madoff, wearing a white-striped shirt, dark-colored pants and no tie, looked down as he left the courtroom with his wife, declining to comment.

    "It's all just one big lie," Madoff told his employees on Dec. 10, according to the government. The firm, Madoff allegedly said to them, is "basically, a giant Ponzi scheme."

    He, too, has excellent counsel:  Ira Sorkin, a former federal judge and all-around prominent attorney in NYC.