LawFuel.com – American Lawyer Newswire Service
PREET BHARARA, the United States Attorney for the
Southern District of New York, announced today that ROBERT
MILLER, formerly an attorney in the Enforcement Division of the
Securities and Exchange Commission (“SEC”), pleaded guilty to one
count of conspiracy and one count of securities fraud stemming
from his participation with MARC DREIER in the attempted sale of
a $44.7 million fictitious promissory note to two hedge funds.
According to the criminal Information filed today
against MILLER, other publicly filed documents, and statements
made during MILLER’s plea proceeding:
From 2002 through 2008, MARC DREIER, the founder and
managing partner of the law firm Dreier LLP, sold hundreds of
millions worth of fictitious promissory notes to various hedge
funds and individuals. As part of that scheme, in November 2008,
DREIER offered to sell a New York-based hedge fund a promissory
note with a face value of $44.7 million. DREIER falsely claimed
that the promissory note was held by a hedge fund located in
Iceland, was guaranteed by a pension plan located in Canada, and
was issued by a company in Canada. At about that same time, as
part of his effort to sell the note, DREIER contacted MILLER and
asked him to impersonate a representative of the Canadian pension
plan during a telephone call with the New York hedge fund.
DREIER offered to pay MILLER $100,000, gave him an outline of the
proposed transaction, a copy of the deal documents, the name of
the person MILLER was to impersonate, a fictitious email address
where that person could be contacted, an annual report of the
Canadian issuer, and detailed notes of what MILLER was to say
during the call.
The following day, at DREIER’s offices, MILLER received
a call from representatives of the hedge fund on a cell phone
DREIER gave him with a Canadian area code and phone number.
During that call, MILLER impersonated a representative of the
Canadian pension plan and discussed the guarantee that the
pension plan had supposedly issued for the $44.7 million note.
Shortly thereafter, DREIER wired $100,000 into MILLER’s bank
On November 26, 2008, a representative of the hedge
fund told DREIER that the fund was unlikely to complete the deal
over the next several days. On that same day, DREIER contacted a
second New York hedge and offered to sell it the same fictitious
$44.7 million note. When a representative of the second hedge
fund asked to speak with someone from the Icelandic hedge fund
supposedly selling the note, DREIER again contacted MILLER and
asked him to impersonate a representative of that Icelandic fund.
DREIER prepared MILLER for the call, had one of his assistants
look up the weather in Reykjavik, Iceland, and gave MILLER a
European cell phone on which to make the call.
On November 29, and December 1, 2008, at DREIER’s
offices, MILLER impersonated a representative of the Icelandic
fund during two phone calls. MILLER falsely answered questions
about the structure of the fund, its reasons for selling the
note, and the documents underlying the transaction. After those
calls, a representative of the second hedge fund told DREIER that
to complete the transaction, a representative of the Canadian
pension plan would need to sign documents authorizing the sale
during a face-to-face meeting. On December 2, 2008, DREIER
traveled to Toronto, Canada, impersonated a representative of the
Canadian pension plan in a meeting with a representative of the
second hedge fund, and forged the signature of a representative
of the Pension Plan.
MILLER pleaded guilty today before United States
Magistrate Judge RONALD L. ELLIS to one count of conspiracy and
one count of securities fraud. His case is assigned to United
States District Judge KIMBA M. WOOD, who has scheduled MILLER’s
sentencing for February 5, 2010.
MILLER, 52, of Englewood, New Jersey, faces a maximum
sentence of 5 years in prison on the conspiracy charge and a
maximum sentence of 20 years in prison on the securities fraud
charge. The conspiracy charge carries a maximum fine of $250,000
or twice the gross gain or loss from the offense, while the
securities fraud charge carries a maximum fine of $5 million or
twice the gross gain or loss from the offense. MILLER agreed as
part of his plea to forfeit the $100,000 he received from DREIER
as payment for his fraudulent activities.
Following a guilty plea, DREIER was sentenced in July
to 20 years in prison by Judge JED S. RAKOFF, and ordered to pay
$389,144,929.95 in restitution and to forfeit $746,460,000 in
proceeds of his offense. Another individual, KOSTA KOVACHEV,
pleaded guilty before Judge NAOMI REICE BUCHWALD on November 2,
2009, to conspiring with DREIER.
United States Attorney BHARARA stated: “Robert Miller
was one of the cast of characters who played a part in Marc
Dreier’s fraud. Today, he has accepted responsibility for his
Mr. BHARARA praised the work of the Criminal
Investigators of the United States Attorney’s Office and thanked
the SEC for its assistance in the case.
Assistant United States Attorneys JONATHAN R. STREETER
and ANNA ARREOLA are in charge of the prosecution.