Manhattan District Attorney Cyrus R. Vance, Jr., announced the indictments of bankrupt law firm Dewey & LeBoeuf’s Steven Davis (chairman), Stephen Dicarmine (executive director), Joel Sanders (CFO) and Zachary Warren (client relations manager). The indictment alleges that the defendants defrauded and stole from the firm’s lenders, investors and others. This case is the result of a nearly two-year investigation by the DA’s Major Economic Crimes Bureau and the FBI. The SEC conducted its own parallel investigation, and also is bringing charges.
Davis, Dicarmine and Sanders are charged with grand larceny in the first degree, scheme to defraud in the first degree, martin act securities fraud, falsifying business records in the first degree and conspiracy in the fifth degree. Warren is charged in two indictments with scheme to defraud in the first degree, falsifying business records in the first degree and conspiracy in the fifth degree.
“Fraud is not an acceptable accounting practice,” Vance said. “The defendants are accused of concocting and overseeing a massive effort to cook the books at Dewey & LeBoeuf. Their wrongdoing contributed to the collapse of a prestigious international law firm, which forced thousands of people out of jobs and left creditors holding the bag on hundreds of millions of dollars owed to them. Those at the top of the firm directed employees to hide the firm’s true financial condition from creditors, investors, auditors, and even partners of the firm, until the scheme unraveled and resulted in the largest law firm bankruptcy in history. Seven of the firm’s employees have already pled guilty to crimes related to their roles in the scheme. My Office’s Major Economic Crimes Bureau will continue to work with our law enforcement partners to prosecute accounting fraud and other economic crimes — regardless of the target company’s size or status.”
FBI assistant director in charge George Venizelos said: “As alleged, rather than speaking openly with creditors about mounting debt and shrinking revenue, the defendants deliberately manipulated the firm’s financial statements. In the height of the crisis, the defendants used every trick in the book in an elaborate attempt to cover-up the increasingly dire situation. But as bad went to worse, the defendants doubled down, and continued to exaggerate, manipulate, and downright lie in a vain attempt to right a sinking ship. It is incumbent on people and the institutions where they work to do the right thing, to follow the law, and not just when the FBI is watching.”
To read the Manhattan District Attorney’s news release, click here.
Previously on monitordaily: U.S. Bank Urges Judge to Overrule Dewey Preference Objection, July 1, 2013