Friday, April 10, 2009

Answer: For Dreier, it was easier than one might imagine.

Bernie Madoff may have made a fair number of headlines - justifiably so given his reputation for running the largest Ponzi scheme in the history of humanity. However, according to Megan McArdle, Marc Dreier has Madoff beat on sheer audacity:
But Dreier is more like the classic con man of legend, stage and screen: an amoral, audacious rapscallion who pulls off a massive fraud mostly because no one can believe anyone would do anything so crazy:

According to prosecutors, for more than four years Dreier sold hundreds of millions of dollars' worth of bogus debt obligations to nearly 40 investment funds run by 13 of the nation's most sophisticated asset managers, including the likes of Fortress Investment Group, Elliott Associates, and hedge funds later acquired by Perella Weinberg Partners and Blackstone Group. Throughout its existence the scheme could have collapsed at any instant, if just one of dozens of duped hedge fund officials had ever run into real estate developer Sheldon Solow - the head of the duped company supposedly issuing most of the notes - at a cocktail party.

As Dreier dug himself ever deeper into criminality and debt, he resorted to ever more desperate measures to postpone the day of reckoning. He and his accomplices talked their way past receptionists of companies they weren't affiliated with; plopped themselves down in empty conference rooms; and then hosted meetings at which they pretended to be people they weren't. The scam succeeded for as long as it did because none of his victims could conceive that anyone of Dreier's stature would act with such monumental recklessness, selfishness, and self-destructiveness.

Almost as an afterthought, Dreier is alleged to have filched about $40 million from his clients' escrow accounts - including $10 million that he stole after his arrest before authorities could get a receiver appointed to seize control of his law firm and ambulance it into bankruptcy. To the 260 innocent attorneys who toiled for him at Dreier LLP's tony offices in Manhattan, Albany, N.Y., Los Angeles, Pittsburgh, Santa Monica, and Stamford, Conn., Dreier bequeathed unpaid salary checks, unreimbursed expenses, lapsed malpractice and health insurance policies, potential civil liability, and untold damage to reputations. An attorney's stock in trade is sound judgment and wise counsel. "To have hitched one's star to a thief," as a lawyer for one of Dreier's former partners puts it, is a stain that won't easily wash out. Most of Dreier's betrayed former colleagues did not return calls or e-mails, and all but one of those who did asked not to be identified.
The entire article on Marc Dreier makes for an interesting read. McArdle asks a question at the end of her post:
How did he look himself in the mirror in the morning?
For Dreier, it was easier than one might imagine. That answer is based on the assumption that Dreier is some sort of psychopath, which could well be the case. I'll refrain from making a diagnosis for reasons I think are obvious, but I will note that some of his behaviors and mannerisms as described in the article on Dreier are pretty consistent with those exhibited by psychopaths, including the tendency to be very self-absorbed, emotionally absent, predatory, and requiring a near constant stream of novel stimulation; to that add an apparent inability to form and maintain long-term business or personal relationships, an apparent inability to work well with others or to respect an organizational structure, a great deal of "job hopping", and an inclination toward brazenly manipulating others and one might at least admit that some serious red flags were being raised for anyone who could see them. If he is what I suspect he might be, I seriously doubt he ever has or currently feels any remorse for what he's done, nor does he have the capacity to empathize with his fellow human beings.

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