Three top white-shoe lawyers conspired to hide their law firm’s snowballing financial problems from auditors and even their own partners as it headed toward collapse in the nation’s biggest law firm bankruptcy, prosecutors said Thursday.
The three top lawyers from the failed white-shoe firm of Dewey & LeBoeuf surrendered Thursday morning to face criminal charges over its epic collapse.
Ex-Chairman Steven Davis, former executive director Stephen DiCarmine and ex-CFO Joel Sanders were indicted on numerous counts of grand larceny, scheme to defraud, falsifying business records and conspiracy for lying to lenders and investors and stealing nearly $200 million dollars.
A fourth defendant Zachary Warren who was a client relations manager at the firm was also charged.
The senior managers brazenly falsified audits and records to make the firm appear financially healthy allowing them to dole out millions of dollars in salaries and bonuses from 2008 to 2011, prosecutors charge.
They even bragged about their success cooking the books to the tune of millions of dollars, according to court documents. “You always do in the last hours,” DiCarmine wrote in a Dec 29th 2008 email congratulating Sanders on finagling the firm’s revenue numbers. “Tell [your wife], stick with me! We’ll buy a ski house next. Just to keep the ship a float [sic]…”
“Fraud is not an acceptable accounting practice,” said Manhattan District Attorney Cy Vance at a press conference Thursday announcing the indictment. “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.”
DiCarmine — a cousin and character witness for murderous ex-mob boss Vincent “Vinny Gorgeous” Basciano — and Sanders were both sued last year in Manhattan Bankruptcy Court over the lavish pay packages they pocketed as their powerhouse firm headed into the tank.
Davis, who’s been under investigation by the DA’s Major Economic Crimes Division for nearly two years, avoided getting named in that suit by agreeing to fork over $511,000 to settle allegations he mismanaged the law firm, the largest in US history to go belly-up.
Dewey & LeBoeuf was formed in 2007 through the merger of the storied firm of Dewey Ballantine — founded by one-time New York Gov. Thomas E. Dewey — and LeBoeuf, Lamb, Greene & MacRae.
The merger made it one of the nation’s 20 largest firms, with more than 1,400 lawyers in 12 countries and $1 billion in annual revenue.
Billings plummeted when the economy melted down, and most of the 300 partners bailed out after Davis revealed in January 2012 that they would only share about $125 million in profits from the previous year. The firm filed for bankruptcy protection that May.
Seven of the firm’s employees have already pled guilty to crimes related to the scheme, prosecutors said.
DiCarmine, Sanders and Warren are expected to be arraigned Thursday afternoon. They face up to 25 years in state prison.
Austin Campriello, DiCarmine’s defense lawyer, insisted his client was innocent of the charges. Lawyers for Sanders and Davis declined to comment.