Citibank this week filed suit against former Dewey & LeBoeuf chairman Steven Davis, claiming Davis has not repaid a loan that now totals nearly $400,000.
The loan was for a capital contribution from Davis to Dewey & LeBoeuf, said Elkan Abramowitz, who defended Davis in a criminal fraud trial but is not representing him in the Citibank suit.
The firm arranged for partners, like Davis and others, to take out loans for capital contributions, but when Dewey went bankrupt, the partners became responsible, said Abramowitz, a partner at Morvillo Abramowitz Grand Iason & Anello.
The July 17, 2012, loan is dated nearly two months after Dewey filed for bankruptcy, because it was rewritten in connection with the bankruptcy to provide for a higher interest rate, Abramowitz said.
The lawsuit comes just days after Davis signed a deferred prosecution agreement that bars him from practicing law in New York for five years and allows his criminal charges to be dismissed after five years.
Court documents show the loan principal is $360,000, requiring annual $72,000 payments starting in 2013. The lawsuit said he did not make these payments and is past due on interest, resulting in a default.
The suit said the non-default interest rate was 4.75 percent, and by last month, after default, the rate rose to 9 percent, a daily rate of about $89. The unpaid balance equals $399,551, said Citibank.
Other Dewey partners have litigated with banks over capital contribution loans. Citibank sued Steven Otillar, now with Akin Gump Strauss Hauer & Feld, in May 2012, claiming he owed $209,670. And Barclays has been in litigation with former partners over capital contribution claims.
Donald Pearce, Citibank’s attorney and principal of Pearce Law Firm, declined to comment.