Appeals Court Nixes Investor Suit Over Dechert Opinion Letter re $50M Dreier Loan Deal
An investment group that had sought damages from Dechert concerning a fraudulent $50 million loan promoted by the former managing partner of Dreier is out of luck.
Reversing a trial court’s denial of a motion to dismiss the Fortress Investment Group suit against Dechert, a New York appeals court today said the case could not proceed, Reuters reports.
Dechert, which provided an opinion letter concerning the $50 million loan transaction, had no reason to question the validity of the signatures on loan documents for borrower Solow Realty: They were provided by Marc Dreier, who was in fact the legal counsel for Solow, the Appellate Division, First Department, explained in its written opinion.
The appeals court also pointed out that Dechert had expressly stated in its opinion letter that it “assumed the genuineness of all signatures and the authenticity of the documents,” which were reviewed by legal counsel for Fortress.
However, Solow Realty knew nothing about the $50 million loan from Fortress, and the signatures of its principals were forged by Dreier, the opinion says.
Dreier, 61, has been disbarred and is serving a 20-year prison term for a $400 million fraud. It involved a number of schemes in which sophisticated investors were persuaded to lend large amounts of money based on forged documents and misrepresentations. His law firm filed for bankruptcy at the end of 2008.
Bloomberg and the Wall Street Journal Law Blog also have stories.
Related coverage:
ABAJournal.com (Dec. 2009): “Hedge Fund Sues Dechert, Claims $125M Loss in Dreier Ponzi Scheme”
ABAJournal.com (July 2010): “Suit Says Law Firm ‘Opinion Mill’ Aided Attorney Marc Dreier’s $700M Fraud”
ABAJournal.com (May 2011): “$6.3M Settlement Wired to Marc Dreier Is Toast, Bankruptcy Judge Tells Ex-Lawyer’s Ex-Client”
ABAJournal.com (Sept. 2009): “Attorney Marc Dreier Says Midlife Crisis, Sense of Failure Drove Massive Fraud”
