The collapse of Dewey & LeBoeuf, once one of the biggest U.S. law firms, was due not to fraud by top executives but defections by its highest-earning partners, defense lawyers told jurors on Tuesday at the close of a criminal trial in New York.
Former Chairman Steven Davis, who helped build Dewey into a 1,000-lawyer firm before it went bankrupt in 2012 under a crushing debt burden, had no reason to believe the firm’s books was false in any way, lawyer Elkan Abramowitz said in state court.
“Let me be as clear as I can: Dewey & LeBoeuf’s bankruptcy did not occur because of any alleged criminal conduct committed by Steven Davis,” Abramowitz said.
Along with former executive director Stephen DiCarmine and former chief financial officer Joel Sanders, Davis faces dozens of counts including grand larceny, fraud and falsifying records.
The most serious charge carries up to 25 years in prison.
Over nearly four months of testimony, the office of Manhattan District Attorney Cyrus Vance has argued the three men directed subordinates to conceal the firm’s teetering finances from lenders like Bank of America Corp and Citigroup Inc through false accounting adjustments from 2008 to 2012. Dewey’s bankruptcy was the largest in history for a U.S. law firm.
But Abramowitz laid the blame at the feet of a handful of partners who fled the firm out of “greed and anger” as the financial crisis took its toll on revenue. As more lawyers abandoned the firm, taking clients with them, Dewey was left unable to climb out of the hole.
Austin Campriello, DiCarmine’s lawyer, began his summation later on Tuesday and also blamed Dewey’s collapse on the “treacherous” abandonment by high-earning partners, saying they “ripped the heart out of the firm.”
Throughout the trial, Abramowitz and Campriello have emphasized the lack of evidence against their clients. The star prosecution witness, former finance director Frank Canellas, conceded he did not recall discussing any false accounting changes with Davis, Abramowitz said on Tuesday.
“Woulda, coulda, shoulda is fine for cocktail party conversation,” Abramowitz said. “In this courtroom and in any courtroom, the proof must be beyond a reasonable doubt.”
Canellas pleaded guilty and agreed to cooperate with authorities.
Closing arguments, including prosecutors’ summation, will likely take the week, with jury deliberations starting next week.
The case is People v. Davis et al, New York state Supreme Court, New York County, No. 773/2014.
Editing by Grant McCool and Cynthia Osterman
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