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New York v. Davis, et al

New York v. Davis, et al

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The 106-count New York indictment against the former top leaders of the law firm Dewey & LeBoeuf: Steven Davis, Stephen DiCarmine, Joel Sanders and Zachary Warren.
The 106-count New York indictment against the former top leaders of the law firm Dewey & LeBoeuf: Steven Davis, Stephen DiCarmine, Joel Sanders and Zachary Warren.

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Published by: DealBook on Mar 06, 2014
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03/12/2014

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SUPREME
COURT
OF
THE
STATE
OF
NEW
YORK
COUNTY
OF
NEW
YORK
THE
PEOPLE
OF
THE
STATE
OFNEW
YORK
STEVEN
DAVIS,
STEPHEN
DICAR.MINE,
JOELSANDERS,
ZACHARYWARREN,
Defendants.
COUNT
ONE:
THE
GRAND
JURY
OF
THE
COUNTYOFNEW
YORK,
by
this
indictment,
accuses
defendants
STEVENDAVIS,
STEPHENDICARMINE,
JOEL
SANDERS,
and
ZACHARYWARREN
of
the
crime
of
SCHEMETO
DKFRAIJD
IN
THK
FIRSTDECREE,
in
violation
of
Penal
Law
$
190.65(1)(b),
committed
as
follows:
The
defendants,
STEVENDAVIS,
STEPHEN
DICARMINE,
JOEL
SANDERS,
and
ZACHARY
WARREN,
in
theCounty
of
New
York
and
elsewhere,
from
on
or
about
November
3,
2008,
to
on
or
aboutMarch
7,
2012,
bothdatesbeingapproximate
and
inclusive,engaged
in
a
scheme
constituting
a
systematicongoing
course
of
conduct
withintent
to
defraudmore
than
oneperson
and
to
obtain
propertyfrom
more
than
one
person
by
false
and
fraudulent
pretenses,
representations
and
promises,
and
so
obtained
property
with
a
value
in
excess
of
one
thousand
dollars
from
one
and
more
such
persons.
 
Background
Dewey
k,
LeBoeuf
LLP
(the
 Firm
)
was
aninternationallaw
firm
headquartered
in
New
York
County.
It
wasformed
on
or
about
October
I,
2007,
through
the
combination
of
two
existing
law
firms,
DeweyBallantine
LLP
and
LeBoeuf,
Lamb,
Greene
k
MacRae
LLP.
At
its
height,approximately
1,300
partners
and
employees
worked
in
the
Firm's
Manhattan
office
and
approximately
3,000
partners
and
employeesworked
for
the
Firm
worldwide.
The
partnersatthe
Firm
were
primarily
equity
partners,
with
a
few
non-equity
partners.
The
Firm
also
employed
salaried
lawyers
who
weredeemed
to
be
 Of
Counsel.
In
2012,
the
Firm
collapsed
and
declared
bankruptcy.
Duringthe
period
of
the
scheme,
defendant
DAVIS
wasthe
Firm's
Chairman,
and
later,
member
of
the
Office
of
the
Chair;
defendant
SANDERS
wasthe
Firm's
Chief
Financial
Officer;
defendant
DICARMINE
was
the
Firm'sExecutive
Director.
Defendant
WARREN
was
the
Firm's
Client
Relations
Manager
in
2008
and
2009,
when
he
left
the
Firm.
Defendants
DAVIS,
DICARMINE,
and
SANDERS
were
in
regular
communication
and
controlled
the
operations
of
the
Firm.Theyalso
tightly
controlled
information
concerning
the
firm's
financial
condition.TheFirm's
first
full
year
of
operations
was
2008.
The
merger,
coming
just
before
thefinancial
crisis,
wastroubled
from
the
start
andthe
Firm's
firstyear
financial
performance
was
severelybelow
expectations.
By
the
end
of
thatyear,the
Firm
had
more
than
$
100
million
in
term
debt
outstanding
and
available
lines
of
credit
of
more
than
$
130
million
with
four
banks
(the
 Banks
).
The
Firm's
credit
agreements
with
the
Banks
contained
several
covenants,
including
a
cashflow
covenant(the
 Cash
FlowCovenant
)
requiringthe
Firm
to
maintain
a
 
minimum
defined
year-end
cash
flow.
Because
of
its
poor
financial
performance,
the
Firmwasunable
to
meetthis
covenant
in
2008.
The
defendants
and
others
at
the
Firm
were
awarethat
thefailure
to
meet
the
Cash
Flow
Covenant
during
the
2008
creditcrisis
could
have
disastrous
effects
on
the
Firm.
To
avoid
this,
the
defendants
and
othersat
the
Firm
(individually
and
collectively,
the
 'Schemers )
engaged
in
ascheme
(the
 Scheme
)
to
defraudthe
Firm's
lenders
and
others
by,.
among
other
things,misrepresenting
the
Firm's
financial
performance
and
compliance
with
the
Cash
Flow
Covenant.
In
later
years,
amongother
things,the
Schemers
continued
to
misrepresent
the
Firm's
financial
performance
and
condition
and
thatthe
Firmwas
in
compliance
withthe
Cash
Flow
Covenant
and
other
covenants
and
defrauded
additional
lenders
and
investors
using
similar
mi
sstatements.
As
part
of
the
effortsto
ensure
the
success
of
the
Scheme,
the
Schemers
lied
to
and
otherwise
misledthe
Firm's
partners
and
auditors,
as
well
as
others.
The
Schemers.
themselves
or
working
through
others,
withheld
information
and
affirmatively
concealed
the
Scheme
when
they
were
questioned
by
partners,
including
members
of
the
Firm's
Executive
Committee,
auditors,
or
others.
By
or
about
the
end
of
2008,
the
Schemers
had
created
a
document
they
called
the
 Master
Plan
that
described
certain
fraudulent
accounting
adjustmentsthatthe
Schemersdecided
to
pursue
as
part
of
the
Scheme.
From
in
or
about
the
end
of
2008
until
the
Firm's
bankruptcy
in
2012,
the
Schemers
input
numerous
of
these
and
other
fraudulent
adjustments,
and
engaged
in
other
fraudulent
conduct,
most
of
whichmade
it
appear
that
the
Firm
had
eitherincreasedrevenue,
decreased
expenses,
or
limited
distributions
to
partners.
Some
of
these

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