Two former leaders of Dewey & LeBoeuf have settled a trustee’s clawback suit, clearing another piece of civil litigation as they prepare for a criminal trial.
Alan Jacobs, the liquidating trustee of Dewey & LeBoeuf was seeking more than $21.8 million from Joel Sanders, the former CFO, and Stephen DiCarmine, former executive director, in Jacobs v. DiCarmine, 13-01765, in Southern District Bankruptcy Court. Jacobs claimed the former executives’ employment contracts awarded them exorbitant compensation that required nothing in return.
Meanwhile, Sanders, DiCarmine, ex-firm chair Steven Davis and client relations manager Zachary Warren have been criminally charged, with Manhattan prosecutors alleging they oversaw a criminal scheme that helped topple the firm. They have pleaded not guilty.
Jacobs amended his complaint to add claims for “actual intent” fraudulent transfers, incorporating details from criminal court papers. The D.A. and both defendants asked that the case be stayed.
Bankruptcy Judge Martin Glenn (See Profile) had allowed discovery, except depositions, to proceed against Sanders and DiCarmine. But their argument that they would have to defend themselves simultaneously in bankrutpcy and criminal court was to put to rest Tuesday, when Glenn issued an order stating the parties have settled the matter. Details of the settlements were not in court filings.
The settlement puts Sanders and DiCarmine a step closer to focusing only on the criminal case. An SEC suit against ex-firm leaders in the Southern District was stayed, while two other bankruptcy suits were dismissed. Sanders, Davis and DiCarmine are facing a suit brought by insurer Aviva Life and Annuity Co. in Iowa federal court.
Jacobs declined to comment. DiCarmine’s attorneys at Bryan Cave, partners Austin Campriello and Mary Beth Buchanan, declined to comment. Kathryn Coleman, Sanders’ attorney and a partner at Hughes Hubbard & Reed, did not return a call for comment.