Southern District Judge Valerie Caproni has stayed the civil case brought by the Securities and Exchange Commission against five former leaders of the defunct law firm Dewey & LeBoeuf, in response to the Manhattan district attorney’s request for a stay while criminal charges are pending.
Among the five Dewey defendants in the SEC action, three have pleaded not guilty to criminal charges, including former chairman Steven Davis, former executive director Stephen DiCarmine and former chief financial officer Joel Sanders. The other two—ex-finance director Francis Canellas and ex-controller Thomas Mullikin—have pleaded guilty in state court and may be trial witnesses.
The D.A., in papers filed Friday in the Southern District, argued that because Canellas and Mullikin are cooperating, if they were deposed in the SEC suit and did not claim their Fifth Amendment privilege, “the other defendants would gain the unfair advantage of being able to conduct a test run of their cross examination in the criminal case.”
Assistant District Attorney Steve Pilnyak, who wrote the brief, said the D.A. has handed over more than 1 million electronic documents to the defense in the criminal case, while nearly 50 boxes of hardcopy files will be produced.
Davis and DiCarmine, who filed papers in support of a stay, said there was substantial overlap between the indictment and the SEC complaint and proceeding civilly would be “terribly unfair.” Bryan Cave partner Austin Campriello is advising DiCarmine, and Elkan Abramowitz, partner of Morvillo Abramowitz Grand Iason & Anello, is representing Davis.
The SEC claims the five defendants “orchestrated and executed a bold and long-running accounting fraud.”
Caproni stayed the SEC action for “substantially the reasons cited by the parties and in the interests of justice.”