Securities Law

Former Dewey CFO will pay over $95K to resolve SEC lawsuit over misleading financial statements

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The chief financial officer for failed law firm Dewey & LeBoeuf will pay more than $95,000 to resolve a civil lawsuit filed by the U.S. Securities and Exchange Commission alleging that he falsified financial statements to raise money for the firm.

U.S. District Judge Valerie E. Caproni of the Southern District of New York approved the deal with former Dewey CFO Joel Sanders on Monday, Reuters reports.

Law360 had a report on the settlement before it won court approval.

The settlement also incorporated a prior injunction banning Sanders from becoming an officer or a director of any public company.

The SEC’s 2014 enforcement action had claimed that Sanders schemed to falsify Dewey’s financial statements to meet lender covenants, according to a 2018 press release announcing a judgment against him. The suit also alleged that Sanders incorporated the false statements in a $150 million bond offering by Dewey.

Other Dewey leaders sued by the SEC included former executive director Stephen DiCarmine, who paid $35,000 in a settlement, and former chairman Steven Davis, who paid $130,000, according to Reuters. Neither admitted the allegations.

Sanders was convicted in a separate criminal case in 2017 for misleading lenders and bond buyers about Dewey’s finances. Sanders was ordered to perform community service and pay a $1 million fine in the criminal case. He was jailed when he missed a payment but was released when his then-law firm, Greenspoon Marder, paid the entire amount.

DiCarmine was acquitted in the criminal case, while Davis reached a deferred prosecution agreement.

According to Law360, the civil suit was paused while Sanders appealed his criminal conviction. He gave up appeals in March after an intermediate appeals court said evidence against him was “overwhelming,” citing emails in which Sanders joked about deceiving auditors, according to Law360.

If Sanders had succeeded in getting his conviction overturned, the injunction barring him from serving in a public company would have been vacated.

Sanders was disbarred in 2017.

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