Reports from Reuters said Kosta Kovachev was arrested on Monday (December 22nd) in New York.
He is accused of aiding Mr Dreier by posing as the chief executive officer and controller of a New York-based real estate developer that supposedly issued the promissory notes Mr Dreier allegedly sold.
Mr Kovachev is said to have masqueraded as an executive in a number of conference calls and at face-to-face meetings with potential investors. Prosecutors also say he actively contacted hedge fund managers to offer them the promissory notes.
He now faces a charge of conspiracy to commit wire fraud. If found guilty, Mr Kovachev faces a maximum of five years in prison plus fines.
Mr Dreier, meanwhile, was charged on December 8th with running an elaborate scheme to sell the faked notes using bogus financial statements, audit opinions and a cast of accomplices posing as legitimate advisors.
Potential losses from the alleged scheme are put at $380 million.