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 The jury sent a note to the court saying for the third time it was
deadlocked on the major counts against former Dewey Chairman Steven
Davis, Executive Director Stephen DiCarmine and Chief Financial
Officer Joel Sanders, including grand larceny, scheme to defraud and
violating New York's securities law, the Martin Act.
The three defendants were accused of using illegal accounting
adjustments to mask the firm's teetering finances between 2008 and
2012 and convince lenders and investors, including Bank of America
Corp <BAC.N> and HSBC Holdings Plc <HSBA.L> that the law firm was
still healthy.
The case was one of the most significant white-collar prosecutions
brought by Manhattan District Attorney Cyrus Vance since he took
office in 2010. Vance now faces a difficult decision about whether
to retry the case.
After the jury indicated on Monday afternoon it was "hopelessly"
deadlocked, Acting Supreme Court Justice Robert Stolz asked if
further instruction on the law would help. He declared a mistrial
after the jury said no.
 “You have played your part in one of the central institutions of
democracy," the judge said to the jury as he dismissed them. "This
is no small thing.”
Jurors issued partial verdicts in the case last week and the week
before that, acquitting all three defendants on several lesser
counts of falsifying business records.
Testimony carried on for four months, while the 22 days of jury
deliberations are believed to be the longest in New York history,
according to court spokesman David Bookstaver, though he noted there
were no official records.
In a statement issued on Monday afternoon, Vance's office said it
was reviewing the case, including the possibility of a retrial. "We
continue to believe in the strength of the evidence and that the
defendants’ actions broke State law,” the statement said.
According to two jurors who spoke to reporters, the jury was divided
in different ways on the counts and the three defendants, and there
were no isolated holdouts.
Juror Edith Hines, a retired state worker, said most of the jury
favored acquittal on a bulk of the counts. She said she and some
other jurors had been in favor of acquittal from the beginning, but
that they “couldn’t budge” the others. Hines hugged Davis on her way
out of the courtroom.
The defendants smiled wearily after the mistrial was announced. This
was an "absolutely inappropriate criminal case," Davis' lawyer,
Elkan Abramowitz, said. The defendants are moving to dismiss the
case, with a hearing set for Nov. 16.
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Another juror, Skylar Schur, who declined to say which side she
favored, said there was "absolute confusion" among the jurors. She
said that on one day there was a heated argument, though she did not
go into details. “Some were looking for that smoking gun,” she said.
Dewey & LeBoeuf once had as many as 1,400 lawyers, before going
bankrupt in May 2012. Its collapse is the largest of a law firm in
U.S. history.
The prosecution’s case hinged on internal emails and the testimony
of seven cooperating witnesses, including former firm Finance
Director Frank Canellas, who told jurors he provided Davis and
Sanders with a list of accounting tricks to help conceal the firm’s
financial woes.
But the defense poked holes in Canellas' credibility, depicting him
as a workplace bully who frequently lied.
Even if the accounting practices were illegal, the defense argued,
the prosecution failed to show the three executives had criminal
intent. They also said the firm’s accounting was not the reason for
its ultimate collapse, citing the departure of certain key partners
as the true cause.
Davis, DiCarmine and Sanders still face related civil charges
brought by the U.S. Securities and Exchange Commission. They will
likely have a harder time defending their case against the SEC,
which faces a lower burden of proof.
Criminal charges against Zachary Warren, a 30-year-old former
client-relations manager implicated in the scheme, remain pending in
a separate case.
The case is People v. Davis et al, Manhattan Supreme Court No.
773/2014.
(Reporting by Brendan Pierson; Additional reporting by David Ingram;
Editing by Meredith Mazzilli)
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