01 Jul 2015

Last days of Dewey described in fraud trial

A witness in the financial fraud trial of three former Dewey & LeBoeuf executives has described how a partner exodus took place in spring 2012 as news of an expected criminal investigation hit the practice.

Dewey filed for bankruptcy in April 2012. The prosecutors claim - in their case against former chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders - that the defendants knew long before the collapse of the practice that it could not meet its debts.

End of merger talks

But, giving evidence yesterday in the Manhattan Criminal Court, Richard Shutran - who joined the executive committee in March 2012 - suggested that the departure of large numbers of partners as news spread of the expected criminal investigation by the New York County District Attorney were the real triggers of the end game. These developments put an end to negotiations with the banks and with discussions with potential merger partners.

Accounting fraud

The prosecutors argue that, knowing that the 1,000-lawyer firm could not meet its debts, the three men on trial lied in discussions with lenders and engaged in accounting fraud. Source: ABA