“With Its Heart Still Beating”

The Journal has an excellent front-page “leder” today on the other rich-dude fraud of the moment: Marc Dreier, who owned a top law firm but was caught selling fake securities.

The story’s rich reporting gives us a clear idea of “why?” It’s a picture of excess and appetites of a man who couldn’t support them even with the money his prominent law firm brought in.

First, in case you’ve missed it, here’s how Dreier was arrested—and remember, this is one of the most prominent lawyers in the country:

Then around the start of this month, Mr. Dreier was attempting to sell some notes to Fortress Investment Group LLC, according to people familiar with the matter. Fortress asked for certain guarantees from a pension plan Mr. Dreier represented as being involved in the deal, and wanted to meet in person with a manager from the plan, Ontario Teachers’ Pension Plan.

As the people familiar with the events tell it, Mr. Dreier set up a meeting in Toronto with Ontario Teachers on an unrelated matter; stayed on in its offices afterward; then intercepted a Fortress executive when he arrived and took him to a conference room. They say Mr. Dreier posed as a lawyer who actually works for the pension plan, Michael Padfield, and signed documents as him.

But the Fortress executive began asking questions about Mr. Padfield. Mr. Dreier’s alleged ruse came undone. An Ontario Teachers employee notified the police, and Mr. Dreier was arrested.

His expenses were over-the-top and the paper reports that some of his colleagues inquired about how he supported them:

Celebrating the growth, Mr. Dreier threw parties that got increasingly lavish. In 2007, he hosted a charity golf tournament with former New York Giants defensive end Michael Strahan. Diana Ross sang at the pre-party, and actor William Shatner was M.C. At this year’s event, held in June, the headliner was pop singer Alicia Keys.

And the story has great personal anecdotes, as well:

At a Christmas party last year at the Waldorf Astoria, he ascended a platform and danced wildly to the party anthem “Shout,” as employees surrounded him waving their arms. He donned a Viking helmet at a party at the Hiro Ballroom in New York this year.

We like to tweak the press for tossing off unnecessary food detail in stories, but here’s one that works. Your nominee for Food Detail of the Year:

Mr. Dreier “liked exotic things,” she adds, especially live California scorpion fish, a bulbous-headed, venomous species. He would eat one “on a stick, with its heart still beating,” she says.

And the WSJ raises the interesting question of whether Dreier perpetrated the scam as a mean of “temporary financing”, and supports it with this:

As far back as early 2006, Mr. Dreier sold $100 million in purported Solow Realty notes to another New York asset manager — GSO Capital Partners LP, now owned by Blackstone Group LP — according to a person familiar with the transaction. This person says the debt was repaid with interest, and Blackstone has no exposure.

It’s worth reading the whole thing.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.