The liquidating trustee of Dewey & LeBoeuf has raised new claims against two former firm leaders in his suit to recover more than $21.8 million from them.
Months after the trustee, Alan Jacobs, filed the clawback complaint against former executive director Stephen DiCarmine and former CFO Joel Sanders in 2013, the SEC filed a civil fraud case and the Manhattan District Attorney announced criminal charges against firm leaders and the guilty pleas of seven former accounting employees.
Jacobs’ amended complaint, filed in bankruptcy court this week, incorporates details from these cases and adds new claims for “actual intent” fraudulent transfers.
Bankruptcy experts said the new claims could make it easier for Jacobs to recover from Sanders and DiCarmine, because he would not have to prove the firm was insolvent when the payments were made or what value Sanders and DiCarmine provided to the firm. These arguments are required under the trustee’s original claims for avoidance and recovery of constructively fraudulent transfers.
The circumstances surrounding the firms payment to Sanders and DeCarmine reveal “several badges of fraud,” Jacobs said. “The purported contracts awarded the insiders exorbitant compensation and required, literally, nothing in return,” he claims.
In a statement, Austin Campriello, a Bryan Cave partner and DiCarmine’s attorney, said, “Steve was only an employee, not a partner; if some of the partners had been as faithful and loyal to the firm as Steve was, the firm might still be in business.”
Ned Bassen, a Hughes Hubbard & Reed partner and Sanders’ attorney, said there was no basis for any of the original allegations, calling the new claims “simply a regurgitation of allegations made by others rather than facts.”