On July 2, 2013, Federal Judge Jed Rakoff upheld a decision to allow a hedge fund to take possession of 15 artworks from accused Ponzi schemer Marc Dreier.
A Harvard and Yale-educated lawyer (now disbarred), Dreier, dubbed the "Mini-Madoff," is serving 20 years in federal prison for a 2009 investment fraud conviction. His eight-count indictment included five counts of wire fraud in a scheme to sell $700 million in fictitious promissory notes.
The current court decision involved his pledge of 15 artworks worth about $33 million to a hedge fund as security to make a deal go through.
Part of Dreier's personal art collection, containing works by the likes of Andy Warhol, Mark Rothko and Roy Lichtenstein, was collateral for $100 million in phony notes that he helped the hedge fund acquire.
A group of other institutional victims of Dreier's crimes had opposed the hedge fund's settlement proposal in written statements to the court last year, but the federal judge upheld the decision in the hedge fund's favor.
More than 200 of Dreier's creditors have filed a total of more than $450 million in claims.
From Hamptons beach homes to Warhol prints, much of Dreier's real estate and other assets were liquidated to satisfy some creditors. Other works from his art collection were auctioned off in 2011.
"Fraud is the dysentery of crime: even after the infection is contained, the unpleasant after-effects linger interminably. Thus it is that even after a confidence man has been convicted, the victims of his fraud are often reduced to fighting among themselves over what assets remain," wrote Judge Jed Rakoff in his ruling on July 3, 2013.