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The Impersonator

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Dreier also had ties to a man named Armando Ruiz. “Ruiz had some celebrity relationships, and that’s how they became friends. Dreier wanted to meet celebrities,” says a longtime business associate of Dreier’s. “Every time Dreier had a party, this guy was the one that was putting everything together. He used to hang out with him at his home in the Hamptons all the time.” Ruiz, who did not respond to calls to his last known phone number, was once photographed at Dreier’s golf tournament, smiling alongside Michael Strahan.

A year after Dreier LLP was founded, Dreier was sanctioned by a judge, apparently for the first time in his career. He was cited for planting advertisements made to resemble legal notices in the Times and the Post, listing damaging information about a rival of Sheldon Solow’s. Dreier’s chief confederate in the matter was Kosta Kovachev. In one deposition, Dreier refused to answer his interlocutor’s questions 79 times and threatened to walk out of the room ten times. “I’m not going to sit here and have you waste my day by asking these questions,” he said, until he finally admitted he was working for Solow the whole time. “What I found most peculiar was, even after we had him sanctioned, he was just, ‘So what? Screw you,’ ” says Stanley Arkin, the attorney who exposed Dreier’s role in the smear job. “Some people think they can bull their way through anything.”

The phony note program started that same year, and Dreier was soon issuing more in bogus debt than he was earning in legal work. By December 2006, prosecutors say, one hedge fund alone had invested $60 million in the notes. According to bankruptcy-court records, Dreier LLP’s gross revenue for that year totaled $58 million. By 2008, prosecutors say, Dreier was on the hook for $180 million in phony notes, plus another $20 million in annual interest. That was almost double the firm’s annual revenue.

Dreier was on the hook for $180 million in phony notes—almost double the firm’s annual revenue.

Last fall, on one of the first Mondays in November, Dreier got a phone call from a man he’d never heard of named Tom Manisero, a lawyer who told Dreier that he represented Solow’s audit firm, Berdon LLP. With a Berdon executive sitting in on the call, Manisero told Dreier that someone from Berdon had discovered an audit report on Berdon letterhead that had apparently been used to market some Solow Realty notes to the Whippoorwill hedge fund. Dreier’s name had been mentioned; he was said to be the person marketing the notes. The audit report was, apparently, a forgery.

Dreier was evasive on the phone. “It clearly took him by surprise,” says someone familiar with the call. “He wasn’t angry. He was hemming and hawing a bit. He was trying to give some bullshit story that he was acting on his own, but that Solow was involved in some sort of litigation and they were trying to buy the debt of the person who was litigating.”

The truth is, Dreier already knew that his enterprise was starting to unravel. Investigators now believe that by September or October, Dreier had largely run through his cash and had to sell new phony notes just to pay his bills, all the way down to the firm’s car-service tab. In September, a representative from one hedge fund had contacted Dreier asking why the firm’s Solow notes weren’t being repaid on schedule. On October 17, Dreier had signed a credit agreement with Wachovia Bank for $14.5 million, pulling out $9 million right away. To bring in more money, he also allegedly sold phony notes to two hedge funds in October—Verition (owned by Amaranth’s founder, Nick Maounis), which paid him $13.5 million, and a firm the U.S. Attorney’s Office is not naming, which paid Dreier $100 million. People who knew Dreier well noticed a change in his demeanor. He was colder, more calculating, and “he seemed nervous,” says one source. “There was a manicness to him.”

The call from Tom Manisero appeared to shake Dreier further. Soon after, prosecutors say, he tried to move money into a personal account he used for his Caribbean properties. Dreier didn’t know that the authorities had already been alerted: Shortly after that first call, Manisero along with Solow’s attorneys at Shearman & Sterling had called the U.S. Attorney’s Office.

A few days later, Manisero’s phone rang. It was Dreier again.

“Tom,” he is said to have said, “I need to talk to you.”

“I’ve got an office full of people,” Manisero replied. “I need to call you back.”

What followed were at least a half-dozen phone calls over then next few weeks between Dreier and Manisero, most of them secretly recorded by the U.S. Attorney’s Office. Dreier assumed an accommodating posture, professing to be cooperative and willing to give Manisero whatever he wanted to assure him everything was all right. In one call, Dreier admitted the audit reports were fake, saying he was “ashamed” and that it was “very serious what happened here.” But he insisted it was only this one instance. He mentioned Kosta Kovachev by name, as well as Armando Ruiz.


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