Marc Dreier, co-founder of New York law firm Dreier, has been released on bail after having been arrested in Toronto on charges of impersonating an official from the Ontario Teachers’ Pension Plan, which makes direct and indirect real estate and private equity investments.
The few details to have emerged from the case indicate an attempt to defraud Fortress Investment Group, the publicly listed alternative investment group.
Dreier was arrested on Tuesday and released on bail on Friday. His lawyer said Dreier is being accused of a “relatively minor offence”.
Dreier had been in talks with a division of Fortress about a $50 million investment in an unnamed company, according to a report in Canada’s Globe and Mail, which cited an anonymous investment professional close to the matter.
According to this source, Dreier had assured Fortress – which manages two listed real estate vehicles, known as Castles, as well as various private equity funds – that Ontario Teachers’ would guarantee the company’s assets and the safety of the investment. Fortress then sought more concrete evidence of this guarantee.
Dreier then allegedly arranged for a Fortress official, Howard Steinberg, to visit the Toronto headquarters of Ontario Teachers’ and meet with the pension’s in-house counsel, Michael Padfield.
According to the report, Dreier himself arrived Tuesday afternoon at the Ontario Teachers headquarters for a separate meeting to pitch the pension on a deal. It reportedly lasted no longer than 25 minutes and concluded with the pension declining Dreier’s opportunity.
Following that meeting, Dreier reportedly asked pension personnel if he could use a pension headquarters conference room while he waited for his private jet to be prepared for its flight back to New York. He subsequently “paced in the lobby for about an hour”, until Steinberg arrived. At that point Dreier reportedly introduced himself as Padfield and presented a business card with Padfield’s name on it.
The two men met in the Ontario Teachers’ conference room and Dreier presented to Steinberg what he claimed to be evidence of the pension’s investment guarantee. A subsequent Fortress statement confirmed that a Fortress employee “observed suspicious behaviour by an individual” at the pension headquarters, and immediately notified pension officials.
The Globe and Mail reported that Steinberg became suspicious during the meeting and Dreier exited the Ontario Teachers building. Steinberg walked into the lobby and asked the receptionist: “Was that Michael Padfield?” She said it was not. Ontario Teachers’ staff notified the police and Dreier was arrested the same afternoon.
“On Tuesday afternoon, we learned of fraudulent behaviour by an individual visiting our premises. We immediately alerted the police,” the pension said in a statement. “An individual was arrested by the police and has been charged. No Teachers’ Pension fund staff member was involved in the fraudulent behaviour. We’ve reviewed our security procedures in relation to this situation and we believe that no Teachers’ Pension funds are involved.”
The staff at Dreier, which has some 250 lawyers, are reportedly in emergency meetings. The firm has a corporate and securities practice, as well as a restructuring practice. A blog, Above the Law, described Dreier as the “sole equity partner” of the firm.
In 2000, OTPP purchased the real estate operating company, Cadillac Fairview. The company evaluates real estate investments on behalf of OTPP and manages a C$16 billion portfolio of around 83 properties, including the Toronto Eaton Centre, Sherway Gardens, and Toronto-Dominion Centre.