Steven Harper
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The trip from victim to perpetrator can be surprisingly short. Just ask some former Dewey & LeBoeuf employees who pleaded guilty to various crimes in connection with their roles in what the Manhattan district attorney Cyrus Vance Jr. calls a massive financial fraud.

Anyone who is as puzzled as I was by 29-year-old Zachary Warren’s perp walk last month will find the recently unsealed guilty plea agreements in the case positively mind-boggling. In some ways, those agreements are also deeply disturbing on their own terms, but not for the reasons you might think.

Warren, you may recall, was a 24-year-old Dewey staffer when he allegedly had the misfortune of attending a New Year’s Eve day meeting in 2008 with two of his superiors. According to the grand jury indictment naming Warren, the three men were among the “schemers” who developed the “Master Plan” of accounting fraud that persisted for years.

When Warren left Dewey in 2009 to attend law school, the firm was making hundreds of millions of dollars in profits, many individual partners were collecting seven-figure paychecks and no one could imagine the total collapse that would come three years later. Nevertheless, Warren was indicted last month along with three men who actually held positions of responsibility as Dewey unraveled: former chairman Steven Davis, former executive director Stephen DiCarmine, and former chief financial officer Joel Sanders.

A Fateful New Year’s Eve Meeting

The indictment alleges that Sanders was one of the two people with whom Warren met on December 31. We have now learned the identity of the other: then–Dewey finance director Frank Canellas.

Canellas’ ascent in the firm had been impressive. He joined LeBoeuf, Lamb, Greene & MacRae in 2000 as a part-time accounting intern while finishing his bachelor’s degree at Pace University. Seven years later, he had become—at the tender age of 28—the director of finance at the newly formed Dewey & LeBoeuf. Thereafter, his annual compensation increased dramatically, rising to $500,000 by the time of the Dewey collapse.

In February, it turns out, Canellas pleaded guilty to a felony charge of grand larceny for his role in the alleged cooking of Dewey’s books and agreed to cooperate with prosecutors.

In exchange for Canellas’ cooperation, the district attorney has agreed to recommend a light sentence—between two and six years of prison time, compared to the 15-year maximum penalty for conviction on such an offense.

Using the Boss to Get Underlings?

Presumably, one reason Vance squeezed Canellas was to help prove the culpability of higher-ranking employees of the defunct firm, particularly Sanders. But there is something more troubling here than the use of that standard prosecutorial tactic to get at the higher-ups. In his plea agreement statement, Canellas also implicates the rank-and-file employees who, he says, actually made the allegedly bogus accounting adjustments he and his bosses had concocted.

Ironically, in 2012, the people Canellas now implicates were among the hundreds of nonlawyers who suffered the most in the wake of Dewey’s spectacular implosion. While that was happening, observers properly regarded the firm’s low-level staffers generally as helpless victims. Now, for some of them, guilty pleas in exchange for recommendations of leniency give new meaning to the phrase “adding insult to injury.”

What’s the Point?

Why go after the underlings at all? Does it really take a criminal prosecution coupled with the promise of a plea deal to assure the truthful testimony of pawns in a much larger game? With Canellas on the hook, wouldn’t a trial subpoena do the trick for those working under him?

The policy ramifications are even more profound. What message does the district attorney send by flipping a cooperating superior to nail underlings for doing what the superior asked them to do? What does this approach mean for employees far down the food chain in a big law firm or any other organization? Even if you don’t have an accounting degree, should you now second-guess the bookkeeping directives that you receive from people who do? Then what—complain to your local district attorney that you have concerns about your instructions? And why draw the line at accounting issues?

For any employee now worried about becoming the target of a subsequent criminal proceeding, other options make even less practical sense. As the economy crashed in 2008 and 2009, was it the low-level staffers’ duty to refuse a directive relating to the firm’s accounting procedures or any other issue that caused those staffers concern? To quit or get fired from a decent job and enter a collapsing labor market? To apply for work elsewhere, only to have a prospective new employer solicit a prior job reference and learn that the would-be hire is not a “team player”?

Losing Sight of the Mission

Unlike many of Dewey’s senior partners, the six relatively low-level employees who did as Canellas directed (and have now pleaded guilty) did not walk away with millions of dollars. Other than the jobs they held until the firm disintegrated, none benefited financially from the crimes they have admitted committing.

The situation brings to mind a November 2012 court filing made by Davis, the firm’s former chairman. Responding to a motion filed by Dewey’s Official Committee of Unsecured Creditors for permission to sue him personally, Davis’s brief concluded: “While ‘greed’ is a theme of the committee’s motion, the litigation that eventually ensues will address the question of whose greed.”

The Manhattan district attorney’s investigative efforts could center on that question, too. So far, as indictments and plea deals get unsealed, the situation looks more like an unrestrained effort to secure notches on a conviction belt.

Maybe it’s too early to tell where this prosecution is headed. Or maybe vulnerable scapegoats make easier targets than the wealthy, high-powered lawyers who created and benefited from the culture in which those scapegoats did their jobs.

Steven J. Harper is an adjunct professor at Northwestern University and author of “The Lawyer Bubble: A Profession in Crisis” (Basic Books, April 2013) and other books. He retired as a partner at Kirkland & Ellis in 2008, after 30 years in private practice. His blog about the legal profession, The Belly of the Beast, can be found at http://thebellyofthebeast.wordpress.com/. A version of the column above was first published on The Belly of the Beast.