Fortress Investment's Dreier debacle, whose fault?

The Marc Dreier fraud played second fiddle to the Bernard Madoff fraud. But in some ways, it was just as remarkable. How a mid-tier lawyer could dupe so many for so long is a wonder. Turns out that even the Fortress Investment Group--which one would expect to be quite savvy in this area--was snagged in the fraud, for which Dreier will serve 20 years. Fortress has just sued a law firm named Dechert for faulty due diligence work related to $50 promissory notes Dreier was selling. Fortress eventually bought in, and ended up losing big.

All told, its Dreier-related losses amount to $125 million. If the firm did a lousy due diligence job, that's inexcusable, but when Fortress said it wanted a due diligence effort from a major law firm, Dreier himself suggested Dechert. That's a huge red flag, right? Stay tuned. 

For more:
- here's an article from The Am Law Daily

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