Trials & Litigation

Judge throws out toughest criminal charges against former Dewey leaders as prosecutors' case shrinks

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A judge has thrown out the most serious charges—the only ones calling for mandatory prison time—against two former leaders of Dewey & LeBoeuf, after two others in the firm have already received deferred prosecution agreements to have their own charges dropped.

Continuing to whittle at what was a broad-ranging indictment with more than 100 criminal counts against four lawyers with the defunct Dewey & LeBeouf, which went bankrupt in 2012, a Manhattan judge has thrown out the grand larceny counts against the two remaining defendants, the New York Law Journal reports, leaving the possibility of no prison time for anyone allegedly involved.

Acting state Supreme Court Justice Robert Stolz said from the bench today in a ruling on motions in a retrial of the two lawyers—Stephen DiCarmine and Joel Sanders—that there is insufficient evidence to prove the two former law firm executives had larcenous intent when they obtained money from investors and from lines of credit. He noted that prosecutors had been unable to persuade a jury of that intent in what became a mistrial in October.

The newspaper characterized the ruling as “another narrowing of the Manhattan District Attorney’s now-slim case against Dewey & LeBoeuf executives.”

In a ruling during the mistrial last year, many lower-level charges against four defendants were dismissed. The case of one defendant, Zachary Warren, who was the firm’s client relations manager before going to law school, had been severed from the trial of the law firm leaders. But the dismissal of certain counts applied to him, too. Last week Warren, who went on to attend Georgetown University Law Center, is believed to be clerking at the 6th U.S. Circuit Court of Appeals in Cincinnati and set for a job at Williams & Connolly in Washington, D.C., next fall, signed a deferred prosecution agreement. The charges will be dropped, and he will not be prohibited from practicing law.

Last month, former Dewey chairman Steven Davis received a five-year deferred prosecution agreement that can lead to all charges being dropped, but prohibits him from practicing law in New York.

An Am Law Daily story last month noted that attorney Austin Campriello, who represents DiCarmine, wrote in a brief filed last month that when co-defendant Sanders, the firm’s chief financial officer, said in an email to executive director DiCarmine that the firm had a $20 million cash shortfall, the latter replied “We ain’t getting out of this hole in 2010.”

Campriello wrote in the brief that focusing on the shortfall leads to a “fundamental misunderstanding of the economics of large law firms.” He explained: “Because they typically take in a disproportionate amount of their revenue in the fourth quarter of the year, many thriving law firms use lines of credit in an effort to maintain cash flow for the first three quarters of the year.”

The remaining counts against DiCarmine and Sanders concern a scheme to defraud, securities fraud and conspiracy. All of them carry the possibility of jail time, but unlike with the larceny charges, it is not mandatory.

“Now the judge has dismissed the heart of the People’s case,” Campriello told reporters outside the courtroom, saying he hopes prosecutors reassess the case as was done with Davis and Warren. “We want the same. We want a deferred prosecution agreement.”

Andrew Frisch, Sanders’ lawyer, said: “We’re heading in the right direction” as the number of charges diminishes.

A spokeswoman for the district attorney declined comment today, the New York Law Journal reports.

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