- Three found not guilty of false-records charges still in limbo
- Judge tells panel members to keep trying to reach verdicts
Three former senior executives at the failed law firm Dewey & LeBoeuf LLP are still waiting to discover their fate after a jury acquitted them of charges they falsified business records, while not reaching a verdict on more serious counts of fraud, larceny and conspiracy.
The jury went home for the night Wednesday and will resume deliberations Thursday morning on the remaining charges. New York State Supreme Court Justice Robert Stolz told jurors to keep trying to reach a decision on the other counts against former chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders following the partial verdict.
Manhattan District Attorney Cyrus Vance Jr. accused the three men of cutting costs by mischaracterizing payments to lawyers, double-booking income, delaying expenses and asking clients to backdate checks. They face as long as 25 years in prison if convicted of the most serious charge of grand larceny, while the other felony counts carry sentences of no more than four years.
The partial verdict came after a 3 1/2-month trial that featured testimony from more than 40 prosecution witnesses, including a former finance director who testified after pleading guilty, and none for the defense.
The limited verdict may be seen as a win for now for the executives , said Richard Strassberg, a partner at Goodwin Procter LLP.
“From the fact that the government has put on four months of trial and it
looks like the jury can’t decide if the government has proven its case -- it’s
not a total victory but it can be viewed as a substantial victory for the
defense,” Strassberg said.
The partial verdict underscores the difficulty prosecutors face as they seek to hold individuals accountable for corporate crimes. The Dewey case, while tried by the Manhattan district attorney, involves the type of fraud often pursued by the federal government. Prosecutors can retry the remaining charges if the jury can’t reach a verdict or drop the case, said Mark Stein, a partner at Simpson Thacher & Bartlett.
“The prosecutors could decide it’s not worth a retrial, but that’s unlikely because the DA’s office won’t want to waive the white flag in a high profile case like this,” Stein said.
The three men are also accused by prosecutors of stealing more than $200 million from insurers and financial firms by basing a $150 million bond deal sold to the public in 2010 on inflated revenue and hidden expenses. That deal is the subject of a separate suit by the U.S. Securities and Exchange Commission.
Dewey was 28th on the American Lawyer magazine’s list of largest law firms before it collapsed and filed for bankruptcy in May 2012 as partners departed for competitors, owing creditors some $245 million.
The criminal case is People v. Davis, 773-2014, New York State Supreme Court, New York County (Manhattan). The SEC case is Securities and Exchange Commission v. Davis, 14-cv-01528, U.S. District Court, Southern District of New York (Manhattan).