Another Day, Another Scam Revealed

Yet another scam – this time one conducted by a well-known lawyer – is wreaking havoc. Marc Dreier has been arrested, accused of a financial fraud, this one has about $380 million going missing. The victims include hedge funds.

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.

Since that opening tip, federal authorities have been tracking what they describe as a brazen swindle of some of New York’s savviest investors by one of New York’s more accomplished lawyers. Mr. Dreier has been charged with multiple frauds in the United States and a related crime in Canada, and is being held without bail in Manhattan.

In court last week, prosecutors said their count so far put the money missing at $380 million, most of it lost by hedge funds and other investors who had bought promissory notes that were flat-out fictions.

And I decided to check the FEC again. Guess what? Dreier appears to have given money – not a huge amount – to the Democratic Senatorial Coordinating Committee as well as to Bill Richardson’s campaign.

This kind of corruption and fraud is what is causing additional major damage to an already weak economy. With the arrests of Dreier and Madoff one has to wonder how much of this iceberg of crookedness has been exposed yet. As to the so-called “sophisticated” investors and hedge funds who have been burned by scams like this, one has to wonder how sophisticated they actually were.

This story is already up over at Memeorandum, although I picked it up during my morning reading rounds.