Dewey & LeBoeuf’s former offices in Manhattan. (Rick Kopstein/ALM)
As the Dewey & LeBoeuf criminal retrial continued Thursday, a lawyer for onetime Dewey chief financial officer Joel Sanders pressed a key witness about changes to his cooperation and plea agreement after an earlier trial ended with a hung jury in 2015.
Andrew Frisch, Sanders’ lead counsel, peppered former Dewey finance director Francis Canellas with questions about his meetings with prosecutors prior to testifying. Canellas is a cooperating witness in the prosecution’s case, which accuses Sanders and former Dewey executive director Stephen DiCarmine of plotting to mislead lenders and investors about Dewey’s finances before the firm’s 2012 collapse.
Frisch asked Canellas about his initial deal, in which he agreed to plead guilty to second-degree grand larceny and cooperate with the government’s case in exchange for leniency. He pushed Canellas to say that he had previously admitted to grand larceny under oath.
“Did you commit grand larceny?” Frisch said.
Canellas said that the description of actions he admitted to in an allocution related to his plea agreement “hasn’t changed.” But, he acknowledged, the scheme to defraud charge he admitted to in an amended October 2016 plea deal was a lesser offense than in his original plea.
“The interpretation of what those actions were, under the penal code, is what changed,” said Canellas.
Frisch’s cross-examination came on Canellas’ fourth day on the stand. He previously told the jury that he and others—with Sanders’ knowledge—had made a series of improper accounting adjustments as part of an effort to keep Dewey from breaching terms of a pair of revolving lines of credit worth about $100 million. The firm’s lenders weren’t made aware of the adjustments, he said.
On Thursday, when the jury was not present, DiCarmine’s lead defense lawyer, Rita Glavin of Seward & Kissel, told acting Manhattan Supreme Court Justice Robert Stolz that she plans to file a motion regarding the prosecution’s meetings with Canellas. Canellas testified on Thursday that he met with prosecutors between five and 10 times since the end of the first trial.
Glavin argued on Thursday that the defense lawyers had received “next to nothing” in terms of documentation of prosecutors’ meetings with Canellas and other cooperators.
“We believe they had a pens down, no notes policy,” said Glavin. After Canellas’ testimony had ended for the day, Glavin said she didn’t believe that she could effectively cross-examine Canellas—or that DiCarmine could get a fair trial—because defense lawyers hadn’t received any records from the prosecution that would show if there were inconsistencies between what Canellas and other cooperating witnesses had told prosecutors as time went on.
“While they may not be required to take notes … they absolutely have to keep track [of] any inconsistencies,” Glavin said.
Manhattan assistant district attorney Peirce Moser, responding to Glavin’s argument, said, “We gave them what we had.”
Stolz said he would wait for Glavin’s motion to decide on the issue, but he also expressed concern that he hadn’t heard her complaint until now, months after jury selection and well into the trial.
Earlier in the day, Moser finished his direct questioning of Canellas, asking the former finance director about the accounting treatment of a pair of $600,000 checks, one each written toward the end of 2011 by Sanders and DiCarmine.
Those checks, Canellas said, related to loans that Sanders and DiCarmine had taken in 2008 from a trust set up as part of a long-term incentive plan for certain high-ranking Dewey employees and partners. Under the arrangement, as Canellas described it, the firm agreed to repay the debt on behalf of Sanders and DiCarmine, but they would later be responsible for reimbursing the firm.
Although the two checks were meant to fulfill Sanders’ and DiCarmine’s obligations under that arrangement, Canellas said he was told to record the checks from Sanders and DiCarmine as revenue in the firm’s accounting system. That, he said, was an improper accounting entry.
“By the way, is loan repayment revenue?” Moser asked.
“It is not,” Canellas replied.
Canellas will be back on the stand Friday.
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