High-profile New York lawyer Marc Dreier pleaded guilty on Monday to criminal charges of running an investment fraud in the hundreds of millions of dollars involving fake promissory notes.

The Harvard-educated Dreier, once head of 250-member law firm Dreier LLP on New York's exclusive Park Avenue, was arrested last December on charges of swindling hedge funds and investment funds in a four-year long scheme, which unraveled in the financial crisis.

Dreier, who turns 59 on Tuesday, said in Manhattan federal court before U.S. District Judge Jed Rakoff he was guilty of securities fraud, conspiracy, wire fraud and money laundering. Each of the most serious counts carries a maximum prison term of 20 years.

I understand that everything I was doing was illegal, Dreier said in court, reading a prepared statement covering each charge.

The indictment against Dreier in March indicated investors were owed about $400 million after the lawyer purported to sell promissory notes on behalf of a New York developer and a pension fund in Canada.

The judge was hearing arguments over whether Dreier, who had lived a lavish lifestyle owning several homes, boats and a valuable art collection, could be released back into house arrest pending sentencing.

U.S. prosecutors are seeking about $700 million in forfeiture from Dreier, whose large losses still pale next to those of financier Bernard Madoff.

The case is US v Dreier 09-00085 U.S. District Court for the Southern District of New York (Manhattan)

(Reporting by Grant McCool; Editing by Andre Grenon )