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By Amarendra Bhushan for CEOWORLD Magazine Updated:May 12, 2009

New York lawyer Marc Dreier pleaded guilty to charges of defrauding hedge funds of about $700 million, according to the U.S. Attorney for the Southern District of New York.

The Harvard-educated Marc Dreier, once head of 250-member law firm Dreier LLP, pleaded guilty to conspiracy to commit securities and wire fraud, securities fraud, wire fraud and money laundering.

He faces maximum prison time of 145 years, and must forfeit “…proceeds of the fraud offenses and property derived there from, including real estate, a yacht, and a number of works of art” according to an indictment filed against him in March.

Over the objection of prosecutors, U.S. District Judge Jed S. Rakoff permitted Marc Dreier to remain free on bail until his July 13 sentencing even though he faces a lengthy prison term by any measurement standard.

It was a steep fall for a lawyer who headed his own firm, Dreier LLP, with 250 attorneys and a roster of clients that included celebrities, including retired football star Michael Strahan and former News Corp. publishing executive Judith Regan.

Dreier was released on an unsecured $10 million personal recognizance bond in February. He has been confined to his Manhattan apartment 24 hours a day and subject to electronic monitoring. Armed guards are stationed inside his Upper East Side apartment, as a condition of his bail, to ensure he doesn’t flee.

Prosecutors had alleged Dreier sold about $700 million in fake promissory notes and misappropriated client funds from his law firm. The out-of-pocket loss to investors and clients when the fraud was discovered in December was more than $400 million, the government claimed. The overall scheme allegedly ran from 2004 to 2008.

The government claimed Dreier used money obtained from the scheme to support a lavish lifestyle, including purchasing numerous homes, a yacht, luxury vehicles, expensive art work and funding the operations of his law firm. Prosecutors are seeking that he forfeit $700 million, including many of those assets.

Prosecutors had alleged Dreier sold fake promissory notes to at least 13 different funds and at least four different people.

Dreier told potential investors that he had the authority to sell promissory notes issued by real-estate development company Solow Realty & Development Co. in New York beginning in 2004 and promissory notes issued by Canadian pension plan Ontario Teachers’ Pension Plan beginning in 2008, the government claimed.

During Monday’s hearing, Assistant U.S. Attorney Jonathan Streeter said Dreier held parties in which he invited celebrities and he attempted to pitch the notes to individuals. Dreier also approached lawyers he knew in New York to ask them to solicit their clients to buy the notes, Streeter said.

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