The U.S. Securities and Exchange Commission filed a civil lawsuit against former executives from real estate law firm Dewey & LeBoeuf today, and criminal charges are expected to follow.
Ex-Dewey chairman Steven Davis, former executive director Stephen DiCarmine, ex-chief financial officer Joel Sanders, former finance director Frank Canellas and ex-controller Thomas Mullikin are expected to be the target of charges for defrauding investors and lenders, a source familiar with the matter told Reuters. The related SEC complaint accused the group of misleading investors about the state of the law firm’s finances in marketing materials for a $150 million bond offering back in 2010.
Dewey executives “orchestrated and executed a bold and long-running accounting fraud intended to conceal the firm’s precarious financial condition,” the securities regulator said in a statement cited by Reuters. Attorney’s for Davis, DiCarmine and Sanders did not immediately return the news wire’s calls requesting comment, while a Manhattan District Attorney spokeswoman and lawyer for Canellas declined comment.
Dewey & LeBoeuf, created in a merger between Manhattan-based Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae in 2006, filed for bankruptcy protection in 2012. The firm, which had a large real estate practice, owed $225 million to secured lenders, $50 million to landlords at its office buildings and $40 million to vendors at the time, as The Real Deal reported. [Reuters] — Julie Strickland