Prosecutors have a great deal to say about the four indictments of leaders at the now-bankrupt law firm Dewey & LeBoeuf LLP – Steven Davis, Stephen DiCarmine, and Joel Sanders, the former chairman, executive director, and chief financial officer at the firm, and Zachary Warren, a former client relations manager at the firm.
“Fraud is not an acceptable accounting practice,” said Manhattan District Attorney, Cyrus R. Vance, Jr. “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 and left creditors holding the bag on hundreds of millions of dollars owed to them. Those at the top of the firm directed employees to hide the firm’s true financial condition from creditors, investors, auditors, and even partners of the firm, until the scheme unraveled and resulted in the largest law firm bankruptcy in history. Seven of the firm’s employees have already pled guilty to crimes related to their roles in the scheme. My Office’s Major Economic Crimes Bureau will continue to work with our law enforcement partners to prosecute accounting fraud and other economic crimes – regardless of the target company’s size or status.”
FBI Assistant Director in Charge George Venizelos said, “As alleged, rather than speaking openly with creditors about mounting debt and shrinking revenue, the defendants deliberately manipulated the firm’s financial statements. In the height of the crisis, the defendants used every trick in the book in an elaborate attempt to cover-up the increasingly dire situation. But as bad went to worse, the defendants doubled down, and continued to exaggerate, manipulate, and downright lie in a vain attempt to right a sinking ship. It is incumbent on people and the institutions where they work to do the right thing, to follow the law, and not just when the FBI is watching.”
SEC Division of Enforcement Director Andrew J. Ceresney said, “Investors were led to believe they were purchasing bonds issued by a prestigious law firm that had weathered the financial crisis and was poised for growth. Dewey & LeBoeuf’s senior-most finance personnel used a grab bag of accounting gimmicks to create that illusion, and top executives green-lighted the decision to sell $150 million in bonds to investors as a desperate grasp for cash on the basis of blatantly falsified financial results.”
More to follow….
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