Tuesday, November 10, 2009

Robert L. Miller Pleads Guilty to Fraud in Marc Dreier's Scam, And He Will Talk

Dreier

November 9, 2009, 2:04 pm
Former S.E.C. Lawyer Pleads Guilty in Dreier Case

Update | 4:00 p.m. A former lawyer with the enforcement division of the Securities and Exchange Commission pleaded guilty Monday to conspiring with Marc S. Dreier, a prominent Manhattan lawyer, to dupe hedge funds out of tens of millions of dollars.

The lawyer, Robert L. Miller, 52, of Englewood, N.J., entered the plea to conspiracy and securities fraud charges in a cooperation deal with prosecutors in Federal District Court in Manhattan. His sentencing was scheduled for Feb. 5, The Associated Press reports.

Mr. Miller admitted to conspiring with Mr. Dreier in November 2008 as Mr. Dreier sought to sell more than $44 million in fictitious securities to hedge funds. Mr. Dreier was convicted and sentenced to 20 years for defrauding hedge funds and other investors of $700 million.

Mr. Miller was a lawyer in the S.E.C.’s enforcement division from about 1983 through 1986. Since then, he has worked as an analyst and money manager at various firms in the securities industry, according to court papers.

A charging document filed with the court said Mr. Miller and Mr. Dreier managed an investment fund together at various times from 1999 to 2008.

Prosecutors said Mr. Dreier last year contacted Mr. Miller and offered to pay him $100,000 to impersonate a representative of a Canadian pension plan during a phone call with a New York hedge fund.

Prosecutors said Mr. Miller received the call on a cellphone that Mr. Dreier gave him with a Canadian area code and phone number. The government said Mr. Dreier wired $100,000 into Mr. Miller’s bank account shortly after Mr. Miller impersonated the Canadian pension fund representative, discussing the guarantee that the pension plan had supposedly issued for the $44.7 million note.

It said Mr. Miller also in two separate phone calls impersonated a representative of an Icelandic hedge fund that was supposedly selling a financial note.

Prosecutors said Mr. Miller falsely answered questions from a hedge fund about the structure of the fund, its reasons for selling the note and the documents underlying the transaction.

“I knew what I was doing was wrong and I deeply regret what I did,” Mr. Miller said as he entered the plea before a magistrate judge, The A.P. reports. After his plea, he was released on $100,000 bail.

NY Lawyer Admits Helping Disgraced Marc Dreier in Fraud
By Mark Hamblett, New York Law Journal

A lawyer pleaded guilty Monday to impersonating representatives of both a hedge fund and a pension fund in order to assist disgraced ex-attorney Marc S. Dreier (pictured going to Court below)in selling a phony promissory note.


Marc S. Dreier, a prominent lawyer, center, arrived on Monday at a Manhattan court where he was sentenced in a scheme that cost investors more than $400 million.

The surprise plea and the lawyer's agreement to cooperate with prosecutors raised the possibility there might be more arrests in the investigation of Dreier, the former sole equity partner of 250-lawyer Dreier LLP who is serving a 20-year sentence for peddling hundreds of millions of dollars in bogus notes to investors.

Robert L. Miller, a former enforcement lawyer with the U.S. Securities and Exchange Commission, said he helped Dreier pitch a $44.7 million note to two investment funds.

"In summary, I agreed with Marc Dreier that I would make misrepresentations to two hedge funds to induce them to buy notes," Miller on Monday told Southern District of New York Magistrate Judge Ronald L. Ellis. "I knew that what I was doing was wrong and I deeply regret what I did."

Miller, 52, said he was paid $100,000 for phone sessions in which he impersonated a representative of a Canadian pension fund and then a hedge fund based in Iceland. He said that on both occasions he was heavily coached by Dreier on what to say.

Miller pleaded guilty to conspiracy to commit securities fraud and securities fraud pursuant to a plea agreement and is cooperating with Assistant U.S. Attorney Jonathan R. Streeter in the hopes of getting a break when he is sentenced by Judge Kimba Wood.

In November 2008, when the authorities were closing in on Dreier, Miller offered to sell a New York-based hedge fund a $44.7 million note ostensibly issued by a Canadian company, guaranteed by the Ontario Teachers' Pension Fund and held by the Icelandic hedge fund.

During a phone call with an unnamed New York hedge fund in November 2008, Miller pretended to represent the pension plan, but only after Dreier had given him an outline of the mythical transaction, a copy of the deal's documents, a fictitious e-mail address, the annual report of the pension plan and what prosecutors say were "detailed notes" of what he was supposed to say during the call.

Dreier wired $100,000 into a Miller bank account shortly thereafter.

On Nov. 26, 2008, when Dreier was told by the target hedge fund it was unlikely it would buy the note during the next few days, Dreier turned to another unnamed hedge fund as a backup target.

A representative at the second hedge fund called Dreier and asked to speak with someone with the Icelandic hedge fund that was supposedly selling the note.

Dreier called on Miller to impersonate a second time. He prepared Miller by having one of his assistants look up the weather in Reykjavik, Iceland, and by giving Miller a European cell phone on which to make the call.

Miller impersonated the representative of the Icelandic fund on Nov. 29 and Dec. 1, 2008.

Once the calls were made, the second target fund agreed to do the deal, but only if a representative of the Ontario pension plan appeared in person to sign documents.

Dreier flew to Toronto on Dec. 2, 2008, where he impersonated a lawyer for the pension plan and forged his signature. The move led to his arrest in Canada on a charge of criminal impersonation and his quick return to New York to face charges in the Southern District.

Miller declined to speak Monday after leaving the magistrate judge's court with his attorney, Jacob Laufer.

"He's made a mistake," Laufer said. "He's confronting the consequences of it. He's a decent man."

THIRD PERSON TO PLEAD

Miller, a resident of Englewood, N.J., was with the SEC between 1983 and 1986. According to the criminal information released Monday, he and Dreier managed an investment fund together from 1999 to 2008.

Dreier admitted on May 11, 2009, to selling more than $700 million in bogus real estate and pension plan notes to investors.

He pleaded to one count of conspiracy to commit securities fraud and wire fraud, one count of money laundering, one count of securities fraud and five counts of wire fraud. In addition to his prison sentence, Dreier has been disbarred.

Miller became the third person to plead in the Dreier case.

Like Miller, Dreier ally Kosta Kovachev did some impersonation as part of Dreier's scheme to defraud hedge funds of hundreds of millions of dollars.

Kovachev pleaded guilty Nov. 2 to conspiracy to commit securities fraud for pretending to be chief executive officer of Solow Realty & Development Co., once Dreier's biggest client, and the company whose identity he hijacked to sell fictitious notes to gullible hedge funds. Kovachev also posed as an accountant for the company on another occasion.

Laufer said Miller is unemployed. His name does not appear on the roster of the now-defunct Dreier LLP, which declared bankruptcy on Dec. 16, 2008, just weeks after Dreier surrendered to authorities.

Laufer declined to comment on what, if any, role Miller may have played at the firm.

Miller is scheduled to appear before Judge Wood on Feb. 5, 2010. No date has been set for sentencing.

Assistant U.S. Attorney Anna Arreola is also handling the prosecution.

July 14, 2009
Lawyer Gets 20 Years in $700 Million Fraud
By BENJAMIN WEISER, NY TIMES

Marc S. Dreier, once a high-flying New York lawyer who orchestrated an elaborate fraud scheme that bilked hedge funds and other investors of $700 million, was sentenced on Monday to 20 years in prison by a judge who rejected the government’s request for a much longer sentence.

Prosecutors had recommended a sentence of 145 years, just five years less than was successfully sought last month in the case of Bernard L. Madoff for his multibillion-dollar Ponzi scheme.

But the judge, Jed S. Rakoff of Federal District Court in Manhattan, distinguished Mr. Dreier’s case from Mr. Madoff’s, in which prosecutors have said there were thousands of victims and billions of dollars in losses.

By contrast, the judge referred to Mr. Dreier’s victims, including a small group of hedge funds and other investors — who lost about $400 million — as well as hundreds of employees who lost their jobs when his law firm collapsed.

“Mr. Dreier is not going to get much sympathy from this court,” Judge Rakoff said, “but he is not Mr. Madoff from any analysis, and that’s why I can’t understand why the government is asking for 145 years.”

In carrying out his scheme, Mr. Dreier sold fake promissory notes to the hedge funds and other investors. He created phony financial statements and accounting documents, and paid people to impersonate others to trick prospective investors into believing the notes were genuine.

Mr. Dreier’s case exploded into public view in December, when he was arrested in Toronto after trying to impersonate an employee of the Ontario Teachers’ Pension Plan in an attempt to sell a fake note for millions of dollars.

Prosecutors have also said that Mr. Dreier, 59, a graduate of Yale University and Harvard Law School, stole more than $46 million from his clients.

Mr. Dreier pleaded guilty in May to all eight charges in the indictment against him, which included conspiracy, securities and wire fraud and money laundering. When Judge Rakoff asked on Monday whether the government’s request for 145 years was serious, a federal prosecutor, Jonathan R. Streeter, replied, “We’re serious about asking for a sentence of life imprisonment.”

When the judge pressed him, Mr. Streeter said that any term of more than 30 years would accomplish that goal.

Mr. Streeter cited what he called “the unbelievable abuse of trust that occurred in this case.”

He also cited the judge’s own comments when Mr. Dreier pleaded guilty, that Mr. Dreier had “shown that he is to be ranked with those who have committed some of the most egregious frauds in history,” and that he had “disgraced the honorable profession of law.”

Mr. Streeter also reiterated the government’s position that Mr. Dreier had used the proceeds of his scheme to finance a lavish lifestyle. He owned a luxury apartment on the Upper East Side, properties in the Hamptons, a valuable art collection, expensive cars and an $18 million yacht, documents show.

Mr. Dreier’s lawyer, Gerald L. Shargel, had recommended a sentence of 10 to 12 ½ years. Of the government’s proposed punishment, he told the judge that the idea that there has to be “shock and awe of such epic proportions is not necessary.”

“It may be a fraud of epic proportions,” Mr. Shargel said. “I don’t minimize it in any way.” But he said that it was “not the worst” of human behavior.

Mr. Dreier, wearing a dark suit and showing no obvious emotion, rose at one point and offered an extensive apology to his family, his clients and the lawyers who worked for him. “I’m sorry, deeply sorry, for the harm and the sadness that I have caused to so many people,” he said.

He also cited a letter that he wrote to Judge Rakoff last week, and said that he hoped that the victims of his crimes would read it or “hear me now,” and feel his shame and get some satisfaction.

In the letter, he said that he began stealing in 2002, taking money from the settlement proceeds that were owed to a client.

He said that he had hoped to repay the money quickly. But instead, he wrote, he stepped into “a quicksand of spending,” and found himself “running a massive Ponzi scheme with no apparent way out.”

Prosecutors have said that Mr. Dreier earned about $400,000 a year before he began committing his crimes; Mr. Dreier, in his letter, said that colleagues and clients were doing “better financially and seemingly enjoying more status,” and that he felt “crushed by a sense of underachievement.”

In the classic form of a Ponzi scheme, Mr. Dreier used some of the proceeds of his sales of fake notes to pay earlier investors. The victims of his fraud suffered more than $400 million in actual losses, prosecutors have said.

“I can’t remember or imagine why I didn’t stop myself,” Mr. Dreier wrote. “It all seems so obviously deplorable now.

“I recall only that I was desperate for some measure of the success that I felt had eluded me,” he wrote, adding: “I lost my perspective and my moral grounding, and really, in a sense, I just lost my mind.”

Mr. Dreier was ordered to begin serving his sentence immediately.

Dreier criminal complaint

July 9, 2009
145-Year Term Suggested in Lawyer’s Fraud Case
By BENJAMIN WEISER, NY TIMES

Federal prosecutors recommended on Wednesday that a judge impose a 145-year sentence on Marc S. Dreier, the prominent New York lawyer who pleaded guilty to an elaborate scheme in which hedge funds and other investors, as well as clients, lost more than $400 million.

In a letter to the judge, Jed S. Rakoff of Federal District Court in Manhattan, the prosecutors cited statements that the judge had made when Mr. Dreier pleaded guilty in May: that he “has shown that he is to be ranked with those who have committed some of the most egregious frauds in history,” and that “he has disgraced the honorable profession of law.”

The requested sentence is just five years less than the term prosecutors successfully sought against Bernard L. Madoff for his multibillion-dollar Ponzi scheme; that sentence was cited by both sides.

Mr. Dreier, 59, a graduate of Yale University and Harvard Law School, sold more than $700 million worth of fake promissory notes to hedge funds and other investors, and stole more than $46 million from clients, the government has said. He is to be sentenced on Monday.

His lawyer, Gerald L. Shargel, offered a sharply differing view of what Mr. Dreier’s sentence should be, recommending a term of 10 to 12 1/2 years. “In seeking some measure of leniency,” Mr. Shargel wrote to the judge on Wednesday, “we appeal not to sympathy but to reason.”

Mr. Shargel said such a sentence would be “both rational and proportionate.” He said his client was “profoundly remorseful” and had cooperated extensively with investigators as they tried to track down the millions lost.

Mr. Shargel briefly cited the Madoff sentence, saying that the facts of that case were unique and that the sentence was “far out of line” and “likewise unique and unsuitable for comparison.”

The government’s papers, submitted by the office of Lev L. Dassin, the acting United States attorney in Manhattan, said a big sentence was appropriate, and cited Mr. Madoff’s sentence and other substantial if lesser terms meted out in large fraud cases.

Mr. Dassin’s office emphasized that Mr. Dreier had orchestrated his fraud “while holding himself out as a legitimate and prominent lawyer.” The office said thousands of lawyers in New York and elsewhere were “surrounded by the wealth and lifestyles of the clients they serve.”

“Imposing a long term of imprisonment in this case,” the prosecutors said, “will serve to deter other lawyers who are tempted to steal, cheat or otherwise dishonor their profession to achieve personal wealth.”

In his own letter to the judge, Mr. Dreier acknowledged that his crimes were “inexcusable” and said he deserved “a significant prison sentence.”

“I have already been disgraced beyond anything I could ever have imagined,” he wrote, adding that despite any good he had accomplished, he would “always be remembered as a thief.”

“I have lost all my friends,” he said. “I have lost my law firm, my law license and all that I ever owned. I have seen my family suffer the unimaginable. I have lost my past and my future. I have lost everything a man can lose. And now I will lose my freedom as well, and rightly so.”

Prosecutors said in their letter that Mr. Dreier had been earning about $400,000 a year before committing his crimes, and that he told court investigators he had been “dissatisfied” with his life and envious of others “who had achieved greater success.”

The government has said he used much of his money to maintain a lavish lifestyle. He had a luxury apartment on the Upper East Side, beachfront properties in the Hamptons, expensive cars, an $18 million yacht and a valuable art collection, with some works bought for more than $6 million.

uly 8, 2009, 1:34 pm
U.S. Seeks 145-Year Sentence for Lawyer in Fraud Case
By Benjamin Weiser

Updated, 2:05 p.m. | The government has recommended that a federal judge in Manhattan impose a 145-year sentence on Marc S. Dreier, the prominent New York lawyer who has pleaded guilty to a fraud scheme that bilked hedge funds and other investors out of at least $400 million.



In a submission on Wednesday to the judge, Jed S. Rakoff of Federal District Court,(pictured at right) federal prosecutors quoted statements by the judge himself at Mr. Dreier’s guilty plea in May, that the lawyer “has shown that he is to be ranked with those who have committed some of the most egregious frauds in history” and that “he has disgraced the honorable profession of law.”

The sentence request is just five years less than prosecutors sought — and a judge imposed — on Bernard L. Madoff, who pleaded guilty to orchestrating the largest Ponzi scheme in history.

Mr. Dreier, 59, is to be sentenced on Monday.

In their recommendation, prosecutors said that in the alternative, Judge Rakoff should impose “a term of years that would assure that Dreier will remain in prison for life and forcefully promote general deterrence.”

The document, submitted by Lev S. Dassin, the acting United States attorney for the Southern District of New York, cited Mr. Dreier’s fraudulent conduct but also noted that “he did this all while holding himself out as a legitimate and prominent lawyer.”

“This conduct, and the resulting harm, is especially deserving of a lengthy prison sentence,” prosecutors said.

Mr. Dreier’s lawyer, Gerard L. Shargel, offered a sharply differing view of the sentence his client should receive, recommending to the judge on Wednesday that Mr. Dreier receive a term of 10 to 12½ years.

Mr. Dreier, in a personal letter to the judge that runs four pages (see below), acknowledged that his crimes were “inexcusable” and that he expected and deserved “a significant prison sentence.”

“I have already been disgraced beyond anything I could ever have imagined,” Mr. Dreier wrote, adding that despite any good he had accomplished in his life, he would “always be remembered as a thief.”

“I have lost all my friends,” he wrote. “I have lost my law firm, my law license and all that I ever owned. I have seen my family suffer the unimaginable. I have lost my past and my future. I have lost everything a man can lose. And now I will lose my freedom as well, and rightly so.”

Personal Letter From Marc S. Dreier to Federal Judge Jed S. Rakoff

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