Hedge fund ‘Houdini’ jailed

NEW YORK (AP) | A prominent attorney who fancied himself as a jet-setter was jailed without bail Thursday after a federal prosecutor - branding him a “Houdini” who might escape the country — said losses from his purported hedge fund fraud have surpassed $380 million.

U.S. Magistrate Judge Douglas Eaton said Marc Dreier posed an “extraordinary risk of flight” in a case that “seems to have some extraordinary behavior.”

The judge sided with prosecutor Jonathan Streeter, who said Mr. Dreier was “in a desperate situation and the only way out of the desperate situation is to flee.”

“His life has completely unraveled,” the prosecutor said, adding that the possibility of life in prison had to be crushing for “an extremely rich man who flew private jets and met rich and famous people.”

The firm has represented celebrities including retired football star Michael Strahan and former News Corp. publishing executive Judith Regan.

Mr. Dreier also is charged in Toronto with impersonation in connection with the attempted sale of $45 million of notes to a hedge fund.

In court papers, Mr. Dreier’s LLP Partner Joel Chernov said $27 million appears to be missing from the firm’s escrow accounts.

Mr. Streeter said the fraud has been going on since at least 2006, and Mr. Dreier duped “some of the most sophisticated investors in the world” through the use of fake Web sites, e-mail accounts and a box of cell phones with which to juggle his disguises.

“This is a man who was the Houdini of impersonations, of false pretenses,” he said.

Mr. Streeter said investigators had now identified more than $380 million lost in the fraud. “There’s a large amount of money completely unaccounted for,” said the prosecutor.