Former Dewey partner testifies she lost $621K in equity capital while two leaders earned millions
Retired Dewey & LeBoeuf partner Jane Boisseau offered insight into the financial problems of the collapsed law firm and its impact on her in testimony Thursday in the fraud trial of three former Dewey leaders.
Bouisseau, a former member of the executive committee, testified that firm chairman Steven Davis asked the committee to pay key partners for part of their 2008 earnings out of 2009 revenues, the New York Law Journal (sub. req.) and the Wall Street Journal (sub. req.) report. Compensation was deferred each successive year, creating a compensation “overhang” of $140 million in 2010, according to a memo provided to Boisseau by former chief financial officer Joel Sanders. The same year, Dewey raised $150 million in a private bond offering, the Wall Street Journal points out.
Davis, Sanders and former executive director Stephen DiCarmine are on trial for an alleged scheme to defraud lenders and bond buyers about the firm’s finances.
The problems had a direct impact on Boisseau. She testified that she asked Davis to return $621,000 in equity capital in a lump sum when she retired at the end of 2010, though the partner agreement allowed repayment over three years. Davis refused to pay the lump sum amount and advised Boisseau to borrow the money. Davis said the firm would repay the loan and the interest charges.
The firm never paid the bank, and Boisseau had to repay it herself. She took another hit when she learned that her 2010 income would be about $295,000, rather than a promised $1.35 million, because the firm had started counting the return of capital as capital income—even in her case, where the money came from a bank.
Manhattan Assistant District Attorney Peirce Moser noted that DiCarmine and Sanders didn’t suffer financially during that time period. They each earned more than $2 million per year between 2008 and 2011. The firm filed for bankruptcy in May 2012.
Related articles:
ABAJournal.com: “Defense in Dewey leaders’ trial blames disloyal partners who ‘picked up their marbles and ran’ ”
ABA Journal: “How Dewey management’s rosy picture masked an ugly truth”
