Conn. broker who admitted helping corrupt NY lawyer commit fraud gets nearly 4 years in prison

Prison for Conn. broker who aided crooked NY att’y

NEW YORK — A former securities broker who admitted helping a prominent lawyer dupe hedge funds into making tens of millions of dollars in bogus investments was sentenced Wednesday to nearly four years in prison.

Kosta Kovachev, 58, was sentenced to three years and 10 months by U.S. District Judge Naomi Reice Buchwald, who said the prison term should serve “as a warning to those tempted to commit crimes like this — don’t do it.”

The judge also ordered $215,000 in restitution be paid by Kovachev, who had avoided a trial by pleading guilty to conspiracy to commit securities fraud. The restitution represents the amount of money Kovachev received in return for helping with the fraud.

Kovachev, of Trumbull, Conn., told the judge he had been unemployed when he thought he found work with a prominent and respected lawyer, Marc Dreier. Dreier operated a Manhattan law firm with nearly 250 attorneys and a roster of clients that included retired New York Giants football star Michael Strahan and former News Corp. publishing executive Judith Regan.

Kovachev said he and Dreier posed as representatives of a real estate developer — even using the developer’s Manhattan offices — to sell more than $100 million in phony promissory notes to hedge funds in 2006 and 2007.

Dreier, who has apologized for the “harm and sadness” he caused, is serving a 20-year prison sentence after pleading guilty to federal charges. Prosecutors called him “the Houdini of impersonation and false documents.”

The judge rejected a request by Kovachev’s lawyer, Paul Madden, that he not be sentenced to prison. She said Kovachev, who attended Harvard University, carried out his crime despite many advantages in life that do not exist for others who commit crime. She said Kovachev had chosen to “participate in this crime and to utilize his education to pull it off.”

Madden argued that his client was a victim of Dreier’s charismatic personality.

“He’s broke, humiliated,” Madden said. “He’s suffered quite a bit.”

The judge said she had intended to sentence Kovachev to another five months in prison but was moved by an eloquent statement by his friend John Masi Jr., who said Kovachev did numerous charitable works and spoke to his six children for more than an hour nearly every day.

“I couldn’t ask for a better friend than this man,” Masi said.

On his own behalf, Kovachev said what he did was wrong, “ethically, culturally and spiritually.”