Dewey executives innocent
of fraud in law firm's collapse, defense says
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[September 09, 2015]
By Joseph Ax
NEW YORK (Reuters) - 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.
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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."
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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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