Risk & Compliance

Ex-Dewey & Leboeuf CFO Convicted of Fraud

Joel Sanders was accused of plotting to conceal the New York law firm's losses before it went bankrupt in 2012.
Matthew HellerMay 9, 2017
Ex-Dewey & Leboeuf CFO Convicted of Fraud

The former CFO of Dewey & LeBoeuf has been convicted of plotting to conceal the law firm’s failing financial situation before it collapsed into bankruptcy in 2012.

Joel Sanders, 59, faces up to four years in prison after a Manhattan jury found him guilty on Monday of three criminal counts — securities fraud, scheme to defraud, and conspiracy. After five days of deliberations, the panel acquitted former Dewey executive director Stephen DiCarmine of the same charges.

It was the second trial for Sanders and DiCarmine, the first having ended in a mistrial in 2015.

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In one of the most significant white-collar cases he has prosecuted, Manhattan District Attorney Cyrus Vance alleged the two defendants were part of a scheme to manipulate Dewey’s financial records to defraud bank lenders and insurance companies that invested in a bond offering.

“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 in a news release after the verdict.

“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,” he added.

But Sanders’s lead defense lawyer said he would appeal. “Mr. Sanders won round one [the first trial], and DA Vance won round two. We expect to win round three, the appeal, by a TKO,” Andrew Frisch said.

Dewey & Leboeuf was created a decade ago from the merger of two storied law firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae, but as The New York Times reports, it “quickly ran into trouble during the financial crisis that erupted soon after the merger.”

A key trial witness, former Dewey finance director Francis Canellas, testified that the firm was at risk of breaching covenants tied to a revolving line of credit worth a total of about $100 million and that he met with Sanders to discuss possible accounting adjustments that could help prevent the firm from breaching the covenants and triggering a default.