Guilty Pleas Unsealed in Dewey Law Firm Fraud

By | March 31, 2014

A New York judge on March 28 unsealed the records of six former Dewey & LeBoeuf employees who pleaded guilty in connection with accounting fraud at the law firm.

The records offer a fresh peek into the government’s case against top executives at the defunct elite international law firm and how key witnesses might testify against them.

The employees, who range from Dewey’s controller to its billing director, agreed to cooperate with prosecutors who have targeted the firm’s top management.

Dewey’s former chairman, Steven Davis, 60, Executive Director Stephen DiCarmine, 57, and Chief Financial Officer Joel Sanders, 55, were charged March 6 with taking part in a scheme to cheat banks and investors as they struggled unsuccessfully to keep the law firm alive.

Dewey & LeBoeuf collapsed in 2012, the largest U.S. law firm to file for bankruptcy. If convicted of the top counts against them, the executives each face up to 25 years behind bars.

Prosecutors have accused the executives of using accounting fraud so that Dewey & LeBoeuf could get and keep more than $200 million in financing.

The firm’s lenders included JPMorgan Chase & Co, Citigroup Inc’s private banking unit, Bank of America Corp and HSBC Holdings Plc. Dewey & LeBoeuf also had a $150 million bond offering in 2010.

The court records offer detailed admissions of wrongdoing but hazy accounts of the direct evidence prosecutors have against the three executives and Zachary Warren, 29, a lower-level employee also charged in the case.

Thomas Mullikin, 53, the controller, said he had only infrequent contact with Sanders, “even less” frequent with DiCarmine, and no contact with Davis.

“I never met the firm’s chairman,” Mullikin said in his formal admission to wrongdoing.

The controller pleaded guilty to a felony charge known as scheme to defraud. If he cooperates, prosecutors said they would recommend a jail sentence of five months.

The other staffers who pleaded guilty include Budget Director Ilya Alter, 38, Revenue Support Director Dianne Cascino 55, Accounting Manager Jyhjing “Victoria” Harrington, 42, Partner Relations Specialist David Rodriguez, 39, and Billing Director Lourdes Rodriguez, 43.

Their crimes range from falsifying business records to misdemeanor and felony counts of scheme to defraud.

Prosecutors said in the agreements they would recommend no jail time for the five, if they meet certain conditions.

Dewey’s ex-Finance Director Francis Canella also pleaded guilty in the case. His record was unsealed on Thursday. Prosecutors will recommend a sentence of two to six years in prison, if he cooperates, according to his agreement.

Lawyers for the top executives, who have pleaded not guilty, said the witnesses had not provided direct evidence against their clients.

Still, the admissions contained comments that prosecutors may use in an effort to implicate Sanders.

“I was instructed by Joel Sanders to create invoices, knowing that they would not be sent to clients,” Lourdes Rodriguez said in her statement.

The former billing manager said she understood the invoices were “to hit certain numbers” that were required by the firm’s loan agreements with banks. A lawyer for Warren could not immediately be reached.

The case is New York v Davis et al, New York State Supreme Court, New York County.

(Reporting by Karen Freifeld; Editing by Andrew Hay and Dan Grebler)

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