Former Dewey Law Firm Leaders Ask Judge to Dismiss Criminal Case

By Bernard Vaughan | July 15, 2014

Former leaders of the defunct law firm Dewey & LeBoeuf have asked a New York state judge to dismiss criminal charges against them, saying they should not be made “scapegoats” for the firm’s downfall.

In court papers filed in Manhattan Supreme Court, former Dewey chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders said they lacked criminal intent and the necessary understanding of “complicated accounting rules and regulations” required to be guilty, according to the filing.

They also said they “fully intended” to make required payments on a $150 million bond offering in 2010 aimed at refinancing the firm’s debts. Prosecutors alleged that Dewey misled investors on the deal.

Dewey & LeBoeuf once had as many as 1,400 lawyers before going bankrupt in May 2012. Its collapse is the largest of a U.S. law firm, costing thousands of jobs and hundreds of millions of dollars of estimated losses for banks, lenders and investors.

Earlier this year, Manhattan District Attorney Cyrus Vance Jr. accused the former executives of using accounting gimmicks and fraud to cheat banks and investors in a failed attempt to keep the firm alive. They are charged with several dozen felonies each, including grand larceny, securities fraud and falsifying business records.

“The evidence will show that none of these three defendants had that understanding,” the filing said.

The former executives blamed the firm’s problems on factors including the “Great Recession,” the “voracious greed of some of the firm’s partners” and bad publicity.

Client relations manager Zachary Warren was also criminally charged with helping to start the fraud and cover up its early stages. He filed separate court papers last Friday seeking dismissal of his case. All four have pleaded not guilty.

Six other former Dewey employees, including Dewey’s controller and its former billing director, have pleaded guilty in connection with accounting fraud at the firm and agreed to cooperate with prosecutors.

“While some former employees of D&L have pleaded guilty to various crimes that they apparently believe that they committed at D&L, the court should not let the defendants in this case become scapegoats for things these defendants did not do or approve,” the joint filing said.

The Manhattan District Attorney’s office declined to comment. Lawyers for Sanders, Davis and Warren were not immediately available for comment last Friday. Austin Campriello, a lawyer for DiCarmine, said in an email, “Our papers speak for themselves.”

The case is New York v. Davis et al, New York State Supreme Court, New York County, No. 773/2014.

Reporting by Bernard Vaughan; Additional reporting by Karen Freifeld and Jonathan Stempel; Editing by Noeleen Walder and Cynthia Osterman

Related Articles:

Former Dewey Executives Use Indictment to Fend Off Aviva’s Lawsuit
Top Executives of Failed Dewey Law Firm Facing Fraud Charges
Guilty Pleas Unsealed in Dewey Law Firm Fraud
The Dewey Chronicles: Rise and Fall of a Legal Titan

 

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