A court-appointed receiver sought bankruptcy protection Tuesday for a prominent Manhattan law firm embroiled in accusations of massive fraud, claiming the firm is in disarray and suggesting its founder may have doctored records after his arrest.
Court papers filed by the receiver, Mark Pomerantz, said Dreier LLP has been hit with an onslaught of lawyer resignations, threats of lawsuits and demands for payment since Marc Dreier was charged last week with tricking hedge funds into making bogus investments.
The fallout from the scandal has been compounded by "the very real possibility that the Dreier entities' books, records and accounts may have been manipulated by Mr. Dreier prior to (and even after) his arrest," wrote the receiver, Mark Pomerantz.
Pomerantz had notified a federal judge last week that he planned to seek bankruptcy protection for the firm, adding that he believed Dreier himself would file a personal petition for bankruptcy later. Dreier's attorney, Gerald Shargel, said Tuesday that his client had decided against doing so, but he declined to elaborate.
Dreier LLP, a mid-size firm, has represented celebrities including retired football star Michael Strahan and former News Corp. publishing executive Judith Regan.
The 58-year-old defendant was jailed last week without bail after being charged in a criminal complaint. He was also charged by the SEC in the alleged sale of fraudulent promissory notes in a New York City real estate development company.
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