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Opening statements are expected to begin on Tuesday in Manhattan
state court in the criminal case against former Dewey & LeBoeuf
chairman Steven Davis, 62; ex-executive director Stephen
DiCarmine, 58; and ex-chief financial official Joel Sanders, 57.
The men face grand larceny, falsifying business records and
other charges. They have pleaded not guilty.
Dewey, which once had more than 1,400 lawyers, could not cut
costs quickly enough to combat a plunge in revenue and mounting
debt following the financial crisis. Many of its problems arose
from big pay packages guaranteed to dozens of partners, who
often did not produce enough revenue to justify them, spurring
resentment and eventually mass defections.
Prosecutors from the Manhattan District Attorney's office say
the defendants overstated revenue and created fraudulent
accounting entries to hide the true financial condition of the
firm, which filed for bankruptcy in 2012.
The trio are accused of stealing nearly $200 million from 13
insurance companies and two banks, HSBC Holdings Plc and Bank of
America Corp.
Defense attorneys have argued their clients fully intended for
Dewey to pay back the money, and say the criminal investigation
was set into play by disaffected partners seeking to make them
the scapegoats for the firm's problems. They say partner
defections and the recession led to Dewey's collapse.
The trial, the result of a nearly two-year investigation, is one
of the most significant white-collar cases brought by Manhattan
District Attorney Cyrus Vance since he took office in 2010.
The outcome could factor into his legacy, particularly following
the recent mistrial of the man accused of kidnapping and
murdering 6-year-old Etan Patz and the mixed verdict in the
trial of Sergey Aleynikov, the ex-Goldman Sachs programmer
convicted of stealing some of the bank's trading code.
Prosecutors have said the trial could last up to six months. The
top count against all three defendants carries a minimum
sentence of one to three years in prison.
Seven people in Dewey's accounting department have already
pleaded guilty in connection with the alleged fraud.
The case is People v. Davis et al, Manhattan Supreme Court No.
773/2014.
(Reporting by Christine Simmons. Editing by Noeleen Walder,
Alexia Garamfalvi and Andre Grenon)
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