Lawyer gets 20 years in $700 million fraud

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.