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High-Profile Attorney Dreier Indicted

January 29, 2009 7:57 PM

ABC News' Richard Esposito and Lindsay Goldwert report: High-profile New York lawyer Marc Dreier was indicted Thursday by a federal grand jury on charges related to allegedly scamming investors by pawning off worthless debt instruments as real.

Dreier, 58, was indicted in Manhattan on charges of securities fraud that allegedly cost investors more than $400 million in losses, prosecutors said.

The indictment charges that from 2004 through December 2008, Dreier conspired to sell fake notes supposedly issued by a New York real estate developer and by a Canadian pension plan.  It seeks forfeiture of the proceeds of the fraud, as well as property, including real estate, a yacht and art works.

Dreier was the founder and managing partner of the Dreier LLP law firm. He has been jailed since his Dec. 7 arrest.

If convicted, Dreier faces up to 20 years in prison as well as stiff fines. But he has been unable to meet bail conditions that include $20 million and four co-signers.

Here is how he allegedly worked one substantial portion of his conspiracy fraud scheme to defraud, according to the multiple count indictment on securities fraud and wire fraud charges: The Harvard-educated Dreier lived life in the fast lane, fueling his expensive tastes allegedly, in part, with the proceeds from his scheme, and hobnobbing with millionaires.

Dreier and his co-conspirators allegedly falsely represented to hedge funds that they had the right to sell securities in the form of one- and two-year promissory notes issued by a real estate developer in New York that paid attractive interest rates of 8 and 12 percent. The proceeds, the investors were allegedly told, would be used to fund developments in the United States and abroad, the indictment states.

To convince investors the notes were real, Dreier presented them with financial statements that he claimed were audited by an accountant.  (The government charges that these documents were faked.) When hedge fund managers sought to perform due diligence by meeting executives at the developer, Dreier allegedly hired impersonators to pose as representatives of the developer, including its CEO. When he could, it seems he convinced investors to conduct their investigation of the offering by telephone.

In another part of the scheme, Dreier allegedly offered investors false pension notes issued by a pension plan in Canada.

In at least one instance, Dreier allegedly managed to gain access to the developer's office and use it as the location for an investor meeting with his impersonator. He allegedly managed the same sleight of hand in the pension scheme. With the proceeds of his schemes, Dreier paid interest and principal to early investors, the government alleges.

And after satisfying that Ponzi scheme element of his alleged fraud, he funded luxuries, including "numerous homes, a yacht, several vehicles and expensive art work," the indictment states.

Those homes are in resorts, including East Hampton, Long Island and Anguilla in the West Indies. The cars included top of the line Mercedes and at least one Aston Martin. The yacht was serviced by a tender and there was a fleet of "wave runner" personal watercraft for the enjoyment of Dreier and his guests.

Among his most famous clients is former NFL star Michael Strahan with whom he hosted a celebrity charity golf tournament as well as former publishing powerhouse Judith Regan who hired his firm to sue News Corp. over the axeing of O.J. Simpson's book "If I Did It."  The firm later sued her, claiming she stiffed them on fees. 

Dreier's taste in art was expansive. His collections included lithographs and etchings by Jasper Johns and David Hockney, and works by Picasso and other artists, including Robert Indiana and Roy Lichtenstein, Jim Dine and Andy Warhol. More than 150 artworks are listed in the indictment as part of the government's catalogue of the cash, securities, real estate and other holdings it believed to be proceeds of the conspiracy, and would demand Dreier forfeit.

Dreier was indicted on charges "stemming from an alleged fraud against various investment funds and misappropriation of law firm client funds," acting U.S. attorney for the Southern District of New York Lev Dassin said in a statement.

"The indictment was not unexpected and there were no surprises," Dreier's attorney Gerald Shargel told Reuters News.

January 29, 2009 | Permalink | User Comments (9)

Iraq Bans Blackwater Security Firm from Providing Protection to U.S. Diplomats

January 29, 2009 2:09 PM

ABC News' Jennifer Duck Reports: Iraq is banning security company Blackwater Worldwide from providing protection to U.S. diplomats because of "improper conduct and excessive use of force."

The company's reputation is highly damaged from an incident in 2007 when Blackwater guards opened fire on civilians in Baghdad killing 17 people.

Acting State Department Spokesman Robert Wood told reporters he didn't know who will step in to protect the diplomats now that Blackwater is barred.

"Contingency plans are obviously being looked at," Wood said noting the Iraq Ministry of Interior informed the embassy in Baghdad on January 23 that Blackwater's application for an operating license was not going to be approved.

He emphasized the U.S. will comply with Iraqi law and not use Blackwater.  "We're going to comply with the Iraqi decision.  We have no choice but to do that.  So we're just right now trying to formulate how we're going to go forward."

Wood added, "We haven't made a decision on how we're going to move forward yet."

When asked who is protecting the diplomats today, Wood said, "I'll have to see who's actually on the ground doing it.  I'm just not sure at this point."

Wood said the State Department "will do everything necessary to make sure that our personnel are -- have the security that they need."

Two other contractors work in Iraq but Wood wouldn't confirm if one of the contractors would take over Blackwater's role.  "That's a possibility, but we haven't made a decision on how we're going to go," Wood said.

January 29, 2009 in Iraq | Permalink | User Comments (7)

17k More Troops To Get Orders To Afghanistan

January 27, 2009 4:04 PM

ABC's Luis E. Martinez reports:  When President Obama visits the Pentagon tomorrow he will be presented with plans that by week's end could see as many as 17,000 additional US troops receiving their deployment orders for Afghanistan.

Testifying on Capitol Hill today,  Defense Secretary Robert Gates told the Senate Armed Services Committee that there is little doubt that Aghanistan is the greatest military challenge for the US right now.  To that end he spoke of the well-known request from the top US commander in Afghanistan, Gen. David McKiernan, for additional brigades and for the first time he outlined an expedited timeline for their arrival which Obama will likely be presented with tomorrow.

Asked by Senator Carl Levin if a troop increase in Afghanistan was still dependent on the further drawdown of troop levels in Iraq, Gates replied, "Mr. Chairman, at this point, I think that we are actually in a position to address most of General McKiernan's requirements in the relatively near future."  He added that, "Should the president make the decision to -- the final decision to deploy additional brigades to Afghanistan, we could have two of those brigades there probably by late spring, and potentially a third by mid-summer. "

Gates' answer was a faster timeline for the arrival of the requested brigades than either he or Joint Chiefs Chairman Adm. Mike Mullen have outlined before.  Both have said in the past that the Pentagon could send two additional brigades to Afghanistan by the summer and that it would take time to send the a third brigade and the additional "enabler"  troops to support their effort.

Two Defense Officials say that Gates was referring to plans that will likely be presented to President Obama tomorrow during his meeting with the Joint Chiefs of Staff.  The plans will identify the three brigade combat units that will head to Afghanistan later this year and some of the enabler troops -- this could total around 17,000 troops.  Orders will go for the 2nd Marine Expeditionary Brigade to arrive in the spring, counting their self-contained support and aviation units, this combat brigade plus enablers could total about 10,000 in number.  In the late spring or early summer, an Army Stryker Brigade will flow into Afghanistan, that's about 4,000 troops.  A third Army Brigade Combat Team will flow into Afghanistan in the fall, that's an additional 3,500 troops.

Pentagon planners have estimated that meeting McKiernan's request will take 25,000 troops over the next 18 months.   It is possible that by Thursday, the Pentagon may have given orders to a significant portion of the requested troops to begin flowing into Afghanistan.    The first of the four additional brigades that Gen  McKiernan has requested, the 3rd Brigade, 10th Mountain Division has already begun flowing into Afghanistan.  This week's orders would be for the additional three brigades and enabler troops that would meet his request.

Gates said later in his testimony that he would be skeptical of further troop requests from McKiernan in Afghanistan noting how important it is to put an Afghan face on the conflict and learning from the Soviet Union's mistake in the 1980's when even 120,000 troops weren't enough to win there. He reaffirmed the US mission there will last many years.

"This is going to be a long slog, and frankly, my view is that we need to be very careful about the nature of the goals we set for ourselves in Afghanistan," Secretary Gates said. "Afghanistan is the fourth or fifth poorest country in the world, and if we set ourselves the objective of creating some sort of Central Asian Valhalla over there, we will lose because nobody in the world has that kind of time, patience or money, to be honest. Now, we can help the Afghans....But it seems to me that we need to keep our objectives realistic and limited in Afghanistan.  Otherwise, we will set ourselves up for failure."

Also, Gates says he doesn't envision any further significant troop flows into Iraq given the various drawdown schedules in place, namely the SOFA that requires all US troops out by the end of 2011.

 

January 27, 2009 | Permalink | User Comments (43)

Secretary Clinton Greets the Press

January 27, 2009 11:24 AM

ABC News' Martha Raddatz and Jennifer Duck report: Secretary of State Hillary Clinton walked through the press area in the State Deptartment Tuesday and said, "It's much bigger than the White House press area."  Then, the woman who seems far more comfortable with policy talk than small talk sat down at a small table with reporters and took questions for fifteen minutes.

Clinton said that there has been "a great exhalation of breath around the world" since President Barack Obama has become president. She added that this was clear from her conversations with foreign leaders.

The secretary said after a followup that this was not necessarily a "repudiation" of prior policies, but an "excitement" that there is a new direction. Although she did say "there is a lot of damage to repair." 

As for the situation in Israel and Gaza, Clinton said that today's action by Hamas and the attack on the IDF means that the ceasefire "has receded somewhat."  She was highly critical of Hamas, and very supportive of Israel.

On Iran, she said there was "a clear opportunity" for the Iranians to engage meaningfully. She said Ambassador Susan Rice's comments Monday were a restatement of the Obama policy.

As for the missile strikes on Pakistan, Clinton would not confirm the strikes, but did say that in a call to Afghan President Hamid Karzai and Pakistani President Zardari she "personally expressed concern about civilian casualties."

And her first trip abroad?

"We'll let you know as soon as we get it organized.  I'm looking forward to it," Clinton said with a smile.

January 27, 2009 | Permalink | User Comments (15)

Mitchell to Middle East

January 26, 2009 7:08 PM

ABC News' Kirit Radia reports:

President Obama is wasting no time jumping into the messy business of brokering Middle East peace. On Monday he sent his new envoy, former Sen. George Mitchell, on his first official trip to the region.

"He's going out to listen," said State Department spokesman Robert Wood. "He wants to hear what the leaders have to say.  And he's going to report back to the secretary and the president on his trip and we'll begin to continue formulating policy from there."

When announcing the appointment of his envoys at the State Dept last Thursday, Obama said he would be sending Mitchell to the region "as soon as possible to help the parties ensure that the cease-fire that has been achieved is made durable and sustainable."

Mitchell's itinerary reflects his broad mandate to bring peace to the Holy Land.

Stops in Jerusalem, Ramallah, and Cairo will aim to revive badly damaged peace talks between Israelis and Palestinians and seek to ensure a fragile ceasefire in Gaza holds. A possible stop in Turkey will try to jumpstart Turkish mediated peace talks with Syria. A visit to Saudi Arabia is a nod to the Saudi-backed Arab Peace Initiative, which Obama said Thursday "contains constructive elements that could help advance these efforts." Mitchell will also make stops in Europe to make sure allies are all on board.

Spokesman Wood elaborated, "Special Envoy Mitchell will work to consolidate the cease-fire in Gaza, establish an effective and credible anti-smuggling and interdiction regime to prevent the rearming of Hamas, facilitate the reopening of border crossings, and develop an effective response to the immediate humanitarian needs of the Palestinians in Gaza and eventual reconstruction, and reinvigorate the peace process."

Mitchell is no stranger to the Middle East peace process. He authored a 2001 report calling on Israel to halt construction of new settlements and urging Palestinians to abandon terror tactics.

The former Senator from Maine also helped mediate a peace in Northern Ireland. He referenced his success there as an example for the Middle East when he was appointed last week, affirming, "there is no such thing as a conflict that can't be ended. Conflicts are created, conducted and sustained by human beings; they can be ended by human beings."

January 26, 2009 | Permalink | User Comments (0)

Clinton Appoints New Climate Envoy

January 26, 2009 2:34 PM

ABC News' Jennifer Duck reports: Secretary of State Hillary Clinton announced Todd Stern as the special envoy for climate change.  Clinton called the issue a "complex, urgent and global threat."

"From rapidly rising temperatures to melting Arctic icecaps, from lower crop yields to dying forests, from unforgiving hurricanes to unrelenting droughts, we have no shortage of evidence that our world is facing a climate crisis," Clinton said pointing to the environmental, economic, energy and national security issues that envelop climate change.

After endorsing President Obama's morning announcement on fuel efficiency, Clinton explained, "If we are smart and bold, we can turn the climate crisis into an economic opportunity that creates jobs, generates growth, enhances our competitive edge and ensures greater prosperity in the 21st century."

The new envoy is no stranger to the topic or the Secretary.  He served for eight years in the Clinton administration focusing on climate issues and was the chief U.S. negotiator at the Kyoto Protocol negotiations.

Stern took the lectern after Clinton saying, "Our scientists are telling us emphatically that the rate at which we're warming the planet is unsustainable, and will cause vast and potentially catastrophic damage to our environment, our economy and our national security.  And so the challenge before us is great, but so is the opportunity."

"The time for denial, delay and dispute is over," he added.  "The time for the United States to take up its rightful place at the negotiating table is here."

Stern explained the need for global cooperation. "Eighty percent of greenhouse gas emissions are produced outside the United States, and a rapidly growing percentage is produced in emerging market countries," he said.

January 26, 2009 | Permalink | User Comments (24)

Obama's Indonesian Dazzles at State Dept.

January 22, 2009 6:13 PM

ABC News' Kirit Radia Reports: As President Obama worked the rope-line at the State Department Thursday, a State Department staffer named Charles Silver, knowing the President once lived in Indonesia, shouted out, "good afternoon" in the local language.

Obama responded back in what Silver later told ABC News was "very good" Bahasa Indonesian.  The two then chatted briefly about the neighborhood Obama once lived in.

When the staffer asked if Obama had lived in the Jakarta neighborhood where embassy staffers live, Obama replied that was for rich people, and he lived in another neighborhood with a similar name, one that Silver said is where the "real people" live.

Silver told ABC News that he has been stationed in Indonesia off and on since 1969. He's currently working in the State Department's Office of Inspector General.

As far back as March 2007, Obama pointed to his years in Indonesia as helping to prepare him for the presidency.

"If I go to Jakarta and address the largest Muslim country on earth, I can say, 'Apa kabar,' -- you know, 'How are you doing?' -- and they can recognize that I understand their common humanity," Obama told the National Jewish Democratic Council during a Washington, D.C. forum.

"That is a strength," he continued, "and it allows me to say things to them that other presidents might not be able to say. And that's part of what's promising, I think, about this presidency."

ABC News' Teddy Davis contributed to this report.

January 22, 2009 | Permalink | User Comments (96)

Obama and Clinton Announce Envoys to Middle East and South Asia

January 22, 2009 6:10 PM

ABC News' Kirit Radia Reports: President Obama made his first trip to the State Department today, only his second day in office, to showcase what he said was his commitment to renewing American diplomacy.

Obama spoke before a crowd of distinguished guests as well as staffers from each bureau and office of the State Department.

"My appearance today, as has been noted, underscores my commitment to the importance of diplomacy and renewing American leadership," President Obama said. "And it gives me an opportunity to thank you for the services that you perform every single day."

As Secretary of State Hillary Clinton had noted earlier in the day, Obama emphasized that he and Clinton were on the same page, again aiming to dispel the notion of any lingering divisions between the two from last year's primary.

He also spoke about the executive orders he signed today.

"This morning, I signed three executive orders. First, I can say without exception or equivocation that the United States will not torture," Obama said, receiving loud applause from the crowd.

"The world needs to understand that America will be unyielding in its defense of its security and relentless in its pursuit of those who would carry out terrorism or threaten the United States," he added. "And that's why, in this twilight struggle, we need a durable framework. The orders that I signed today should send an unmistakable signal that our actions in defense of liberty will be just as our cause and that we, the people, will uphold our fundamental values as vigilantly as we protect our security. Once again, America's moral example must be the bedrock and the beacon of our global leadership."

Obama and his new top diplomat Clinton also unveiled what Vice President Joe Biden today called their "two new powerful weapons" -- former senator George Mitchell and former Ambassador Richard Holbrooke.

Mitchell will take on the daunting task of shepherding the limping Middle East peace process. Holbrooke will take on the heavy portfolio of envoy to Afghanistan and Pakistan. One might wonder who has the tougher road ahead, but both men are experienced negotiators. Mitchell helped broker peace in Northern Ireland and Holbrooke mediated the Dayton Accords that ended violence in Bosnia.

Obama said he would send Mitchell to the Middle East as soon as possible, but later State Department officials could not say when that might happen. The President outlined a position similar to that of the Bush administration, but his position appeared to be more balanced than that of his predecessor and offered additional acknowledgement of Palestinian concerns.

Obama said his team will take an integrated approach to dealing with Afghanistan and Pakistan and boost aid for the two countries, as well as resources for Americans working there. He pledged to pursue elements of terror in Afghanistan and across the border.

Asked after his remarks when or if he would appoint an envoy to Iran, Obama said, "We are not having a press conference now, but we will have a comprehensive policy for Iran that we will announce in due course."

In addition to top representatives from each State Department bureau, several foreign policy bigwigs were present for Obama's visit.

John Negroponte, who just two days ago served as deputy secretary, was made to wait for two hours before the President and new secretary arrived. Other faces in the crowd included Bill Cohen, Vernon Jordan, Strobe Talbott, Martin Indyk and Maine Sen. Susan Collins, who introduced Obama's pick for U.S. ambassador to the United Nations Susan Rice at her confirmation hearing last week.

Holbrooke was seen talking to Richard Boucher, who handled South Asia under former Secretary of State Condoleezza Rice, and Mitchell was seen talking to Jeffery Feltman, who is serving as acting assistant secretary of state for near eastern affairs and was previously ambassador to Lebanon.

Before the public event, Obama and Clinton conferred with top advisors over lunch. Holbrooke and Mitchell attended, as did chief of staff Rahm Emanuel, national security advisor Jim Jones, Jones' deputy Tom Donilon, undersecretary of State for political affairs Bill Burns, Biden, Boucher, and Clinton's new chief of staff Cheryl Mills. Clinton's two deputies Jim Steinberg and Jacob Lew, who had their confirmation hearings this morning, were called into the lunch towards the end.

Other notable names were nowhere to be found. There was no sign of Susan Rice, nor of expected assistant secretary for East Asian and Pacific Affairs Wendy Sherman or former Secretary of State Madeline Albright. Also no sign of Bill or Chelsea Clinton.

January 22, 2009 | Permalink | User Comments (0)

Clinton Arrives at State, Eager to Show No Tension with Obama

January 22, 2009 11:58 AM

ABC News' Martha Raddatz and Kirit Radia Report: Newly-minted Secretary of State Hillary Clinton was warmly greeted by employees at a ceremony at the State Department this morning.

Employees packed the building's lobby and overflowed into adjacent corridors, all craning their necks for a glimpse of America's new top diplomat as she entered for the first time. Those late to arrive were out of luck as it was soon impossible to move. The building's security team attempted to clear people out of certain spaces for fear of a security risk, but in many cases there was simply nowhere for them to go.

The event was similar to now former Secretary of State Condoleezza Rice's warm departure last Friday, though Clinton's reception was more enthusiastic (lots of cheering and applause) and much more crowded.

Clinton said the new Obama administration will place diplomacy and development at the forefront of its foreign policy.

"I believe with all my heart this is a new era for America," Clinton said. "We will make clear as we go forward that diplomacy and development are essential tools in achieving the long-term objectives of the United States."

In both a sign of that commitment to diplomacy and to dispel the notion of any lingering tension between Clinton and President Obama from last year's heated primary, Obama and Vice President Joe Biden will come to the State Department this afternoon to meet with Clinton and deliver remarks to employees.

Clinton said they want to send an "unequivocal message" that "this is a team, and you are the members of that team.  There isn't anything that I can get done from the seventh floor or the president can get done from the Oval Office unless we make clear we are all on the American team.  We are not any longer going to tolerate the kind of divisiveness that has paralyzed and undermine our ability to get things done for America."

"The president will be here on his second day in office to let all of you know and all of who are serving on our behalf around the world how seriously committed he is to working with us," she added.

Secy Clinton will visit USAID tomorrow to thank and greet employees there. "They will be our partners," she said today.

Clinton also gave a nod to what has been known (both endearingly and perhaps not so) as "the building" -- diplomats who have been disgruntled in recent years for feeling they had been marginalized.

"I want you to think outside the proverbial box.  I want you to give me the best advice you can.  I want you to understand there is nothing that I welcome more than a good debate and the kind of dialogue that will make us better," she said.

Those remarks brought big cheers from the assembled crowd.

January 22, 2009 | Permalink | User Comments (26)

Obama Learns the Ropes, or At Least the Doors

January 21, 2009 3:52 PM

ABC News' Ann Compton Reports: The usually efficient Obama press team was quick to release landmark photographs of #44 during his first historic moments in the Oval Office, but most of them are new to the West Wing, and perhaps the warren of white painted doors got them a bit confused.

The picture released as "President Obama prepares to walk into the Oval Office" shows the leader of the Free World poised outside the broad automated sliding door to -- horrors! -- the press area! Note the tell-tale brass protective strips on either side where cameramen and photographers clamor through with their gear.

But the second shot, actually shows Obama entering the correct door.

He is shown at his Oval Office desk, getting his first day briefing from Chief of Staff Rahm Emanuel, who worked in the West Wing for years during the Clinton administration.

There was one other glitch as well. One of the first press releases proudly reveals the President spent ten minutes alone in the office when he first arrived, to read the private message traditionally left by the departing President.  The release notes the missive "was in an envelope marked "To: #44, From: #43"."

But a photograph released by former President Bush shows a post-in note on the envelop reading simply, "44."   

But these are small hiccups as the new crew learns its way around. 

January 21, 2009 | Permalink | User Comments (19)