Stephen DiCarmine, left, and Joel Sanders outside the courtroom during their 2015 trial (NYLJ/Rick Kopstein)
A key witness in the criminal retrial over the collapse of Dewey & LeBoeuf told a Manhattan jury on Friday that he never discussed improper accounting adjustments with former Dewey executive director Stephen DiCarmine.
In his fifth day on the stand, former Dewey finance director Francis Canellas, a cooperating witness in the Manhattan District Attorney’s case against DiCarmine and former Dewey CFO Joel Sanders, fielded a string of questions about the two executives’ work at the firm.
DiCarmine and Sanders are accused of misleading the firm’s lenders and investors in the years prior to its 2012 collapse into bankruptcy.
DiCarmine’s lead defense lawyer, Rita Glavin of Seward & Kissel, pressed Canellas about any discussions he might have had with DiCarmine about accounting moves made between 2008 to 2011. In earlier testimony in the retrial, Canellas told jurors that he and others in the finance department had made improper accounting adjustments to help the firm avoid defaulting on two revolving lines of credit worth roughly $100 million.
Canellas previously said that he had discussed those adjustments with Sanders, the former CFO. But on Friday, Glavin asked if he had ever had similar conversations with DiCarmine. Canellas said that he thought at the time that DiCarmine was generally aware of the improper accounting adjustments, but that the two of them never specifically discussed them.
“He did not discuss with me any adjustments that anyone was making in the books,” Canellas said of DiCarmine.
Canellas also testified on Friday that DiCarmine didn’t typically talk to the firm’s financial auditors, and that he wasn’t directly involved with making any adjustments in the firm’s accounting system.
Glavin spent part of her cross-examination asking Canellas about DiCarmine’s reputation as a manager at the firm. Canellas agreed that DiCarmine was often thankful of employees who had spent long hours on firm-related work, and that DiCarmine himself worked extremely long hours and frequently traveled in his role as Dewey’s executive director.
Earlier on Friday, Canellas had said similar things about Sanders’ work habits as CFO, under questioning from his defense lawyer, Andrew Frisch.
Canellas will continue his testimony on Monday. Like much else in the retrial, Canellas’ testimony so far has had fewer dramatic moments than in the first trial, when at one point the former finance director choked up while on the stand and had to take a few minutes to collect himself.
The first trial—which also included charges against former Dewey managing partner Steven Davis—ended in a mistrial in 2015 after jurors deadlocked. Davis no longer faces trial after reaching a deferred prosecution agreement.
Canellas, who initially agreed to plead guilty to grand larceny and to cooperate with the government’s case, has since withdrawn that plea and admitted to lesser charges in an amended agreement.
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