Four indicted in U.S. for fraud in Dewey & LeBoeuf collapse

Thu Mar 6, 2014 6:54pm EST
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By Karen Freifeld and Jonathan Stempel

NEW YORK (Reuters) - Less than a month after writing that he did not want to "cook the books anymore," but facing a deadline to show lenders that Dewey & LeBoeuf had enough cash, the law firm's top finance executive emailed a colleague that he "came up with a big one," according to investigators.

"You always do in the last hours," the law firm's executive director Stephen DiCarmine replied to the December 29, 2008 email from chief financial officer Joel Sanders, according to investigators. "That's why we get the extra 10 or 20% bonus."

The communications and other evidence are the basis of criminal and civil charges announced in New York on Thursday in which the law firm's former leaders are accused of accounting gimmicks and fraud to cheat banks and investors in a failed attempt to keep their prestigious law firm alive.

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.

The 106-count indictment from Manhattan District Attorney Cyrus Vance Jr. charges former Dewey & LeBoeuf chairman Steven Davis, 60, DiCarmine, 57, and Sanders, 55, with several dozen felonies each, including grand larceny, securities fraud and falsifying business records.

Former client relations manager Zachary Warren, 29, was also criminally charged with helping to start the fraud and cover up its early stages.

All four men pleaded not guilty on Thursday in Manhattan criminal court, which they entered in handcuffs. Davis was carrying a paperback book while DiCarmine and Sanders, who live in Florida, appeared to have suntans.

Davis lives in London, England, and agreed to travel restrictions. Bail was set on Thursday at $2 million for Davis, DiCarmine and Sanders, and $200,000 for Warren.   Continued...

A sign marking the Dewey & LeBoeuf LLP headquarters on 6th avenue in New York is seen in this file photo taken May 29, 2012. REUTERS/Shannon Stapleton/Files