Joel Sanders. Photo courtesy of The American Lawyer.
Summary: On Monday, the former CFO of Dewey & LeBoeuf was convicted of three white collar charges.
Once mighty law firm Dewey & LeBoeuf shuttered five years ago, and since then, its former executives have faced criminal charges of fraud in court. On Monday, Joel Sanders, the former chief financial officer, was found guilty of securities fraud, scheme to defraud, and conspiracy. Prosecutors said that he had tried to conceal the failing firm’s finances from its investors.
According to The New York Times, Sanders, 58, fell on the sword while another former executive Stephen DiCarmine, 60, was acquitted for the same charges. The Manhattan jury deliberated for six days before they reached their verdict with the two men, who had gone through a similar trial over two years prior.
In 2014, Manhattan District Attorney Cyrus R. Vance Jr. prosecuted Sanders, DiCarmine, and another high-level executive for defrauding their investors, and Vance also got many low-level Dewey employees to admit to guilt in exchange for deals. While the first trial should have been a lock, it resulted in a mistrial because jurors were confused by all of the technicalities of the white collar crimes presented.
Vance made the mistake of charging the executives almost 100 crimes during the first trial, but for the retrial, he streamlined the case by only charging Sanders and DiCarmine with three charges each. The other executive in the first trial had struck a deal.
Sanders and DiCarmine were responsible for Dewey & LeBoeuf’s financials, and during this trial, which began in January, Justice Robert M. Stolz told jurors to determine whether or not the two had tried to purposely conceal the dire books of the firm.
In 2012, Dewey & LeBoeuf had filed for bankruptcy a few years after a hyped up merger between two premier law firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae. The megafirm which employed over 1,300 lawyers soon found itself in financial trouble, and instead of admitting that, the top brass worked in overdrive to hide their books from bank lenders and insurance companies.
After today’s conviction, Sanders faces four years in prison. Vance said that he had used clever accounting tricks such as mischaracterizing expenses and payments to partners to defraud his investors. By the time the firm filed bankruptcy in 2012, they owed creditors up to $245 million.
“Joel Sanders used his position as chief financial officer to mask the failing financial health of Dewey & LeBoeuf, leading insurers and lenders to believe the firm was still above water,” Vance said to Bloomberg. “For years, the firm’s financial department — led by Sanders — orchestrated a scheme to hide and manipulate its losses, directing employees to alter accounts to feign compliance with the firm’s lending agreements.”
Sanders’ sentencing is scheduled for October 8.
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