Lawyers representing former Dewey & LeBoeuf executive director Stephen DiCarmine and former chief financial officer Joel Sanders filed fresh briefs Friday asking a Manhattan state court judge to drop criminal charges against the defendants.
DiCarmine and Sanders are scheduled to face a retrial later this year, after their prosecution led to a mistrial in October. Along with former Dewey chairman Steven Davis, the former executives were accused of orchestrating a scheme to steal from the law firm’s investors in the follow-up to its 2012 collapse and bankruptcy.
On Jan. 8, Davis entered into a five-year deferred prosecution agreement, which precludes him from practicing law in New York. If he follows the terms of his agreement with the Manhattan District Attorney’s Office, it will drop the charges against him.
DiCarmine and Sanders face charges of first-degree grand larceny, scheme to defraud, conspiracy and securities fraud under New York’s Martin Act.
In papers filed Friday, Bryan Cave partner Austin Campriello, who represents DiCarmine, urged Acting Supreme Court Justice Robert Stolz to dismiss the grand larceny charge. The evidence presented during the trial, he wrote, does not prove that the defendants had an intent to steal from the banks and insurance companies that invested in the firm.
“Email traffic shows that Mr. DiCarmine and Mr. Sanders realistically believed that the firm would pay its lenders and worked tirelessly to make that happen,” Campriello wrote in the brief, which supplements an earlier motion to dismiss the full range of charges.
Campriello acknowledged that the defendants knew at times that the firm was struggling to repay its debt. For example, when Sanders wrote to DiCarmine in April 2010 that the firm faced a $20 million cash shortfall, DiCarmine responded: “We ain’t getting out of this hole in 2010.”
But the defense lawyer claimed that focusing on the cash hole reveals a “fundamental misunderstanding of the economics of large law firms.”
“Because they typically take in a disproportionate amount of their revenue in the fourth quarter of the year, many thriving large law firms use lines of credit in an effort to maintain cash flow for the first three quarters of the year,” the brief asserts. Dewey & LeBoeuf had a $100 million revolving line of credit with a syndicate of banks, as well as a $150 million private placement with 13 insurance companies.
Sanders’ attorney Andrew Frisch, who runs his own white-collar defense boutique, argued in a separate filing Friday that a new trial would place an unfair financial burden on his client.
“The total cost to the defense for the first trial was in multiple seven figures,” Frisch wrote. “Mr. Sanders began to completely fund his own defense well before the start of the trial.”
Frisch also wrote that it is unfair for the district attorney to defer prosecution of the “purported mastermind of the fraud”—Davis—while “his underlings face another multimonth trial.”
Prosecutors have two weeks to respond to the lawyer’s arguments, and Stolz has indicated that he will rule on the underlying motions to dismiss by Feb. 26. The retrial is tentatively scheduled for September.
The trial of former Dewey junior manager Zachary Warren, whose case was severed from that of the three Dewey executives, is set to begin March 14.