Steven Davis leaves a Manhattan courtroom after a mistrial is declared in the Dewey & LeBoeuf trial on Oct. 19. (NYLJ/Rick Kopstein)
Former Dewey & LeBoeuf chairman Steven Davis has signed a deferred prosecution agreement in which he has agreed not to practice law for five years in New York and has been suspended from practice before the Securities and Exchange Commission.
Meanwhile, former Dewey executive director Stephen DiCarmine and chief financial officer Joel Sanders are scheduled to be retried on Sept. 12, after apparently rejecting plea offers by prosecutors.
More than two months after a mistrial was declared in the fraud trial against the three Dewey executives, the Manhattan District Attorney’s Office announced the signed deferred prosecution agreement with Davis in court Friday. The agreement will allow Davis, who is unemployed, to escape a retrial and have his charges dismissed after five years.
In October, Acting Supreme Court Justice Robert Stolz declared a mistrial on 93 counts against Davis, DiCarmine and Sanders. The three were accused of defrauding investors and lenders before Dewey collapsed in 2012.
DiCarmine and Sanders still face charges of first-degree grand larceny, scheme to defraud, securities fraud under the Martin Act and conspiracy.
Lawyers for Sanders and DiCarmine don’t plan to accept plea offers that prosecutors announced in court in December.
Those offers to DiCarmine and Sanders would have involved pleading to first-degree scheme to defraud, a Class E felony. DiCarmine would have received conditional discharge after completing 500 hours of community service while Sanders would have been sentenced to one to three years in prison.
Outside the courtroom Friday, DiCarmine’s attorney, Austin Campriello, said his client is not any more responsible for what happened at Dewey & LeBoeuf than Davis.
“He’s innocent,” Campriello said, adding his client would not accept a felony plea.
“There was no distinction in the evidence,” DiCarmine said.
Campriello, a Bryan Cave partner, said he had asked the district attorney’s office for a deferred prosecution agreement for DiCarmine and agreed to consider what he said were more onerous conditions such as 1,000 hours of community service, a seven-year restriction on practicing law and a minor financial burden.
Campriello said his offer was not accepted.
Sanders’ attorney Andrew Frisch, who runs his own boutique, told reporters he plans to file a motion to dismiss the case against Sanders in furtherance of justice. He said the case has placed onerous financial conditions on his client.
“Who has the resources to represent themselves against one set of charges like this?” he asked. “No one can afford this and now you’re asking him to do it twice?”
Sanders and DiCarmine’s attorneys are expected to file dismissal motions this month, and Stolz could rule by late February.
Next up is the trial of former Dewey junior manager Zachary Warren, whose case was severed from the three Dewey executives.
Stolz set Warren’s trial, which may last about a month, for March 14.
Warren’s attorneys at Zuckerman Spaeder and Assistant District Attorney Peirce Moser argued in court Friday over whether prosecutors could admit evidence arising from events after Warren left Dewey in July 2009 to attend law school.
Warren, who is affiliated with a Pittsburgh employment law firm, is facing conspiracy and scheme to defraud charges.
The deferred prosecution agreement, signed by Moser and Davis, said the district attorney believes the admissible evidence against Davis “establishes his guilt on the remaining counts beyond a reasonable doubt, but based on the outcome of the trial, recognizes that a jury at any retrial may fail to reach a verdict or may acquit [Davis] on the remaining counts.”
Davis, the agreement said, “recognizes that based on the admissible evidence, a jury at any retrial may convict him on some or all of the remaining counts.”
The terms of the agreement state that Davis agrees not to practice law in New York for five years; not to violate his obligations under a separate SEC agreement; and to appear in court in his case during the life of the agreement.
The district attorney’s office said it will defer prosecution of Davis during the five-year period so long as he does not violate his obligations. If Davis complies, the district attorney will ask the court to dismiss the indictment.
Stolz said in court Friday that Davis is released on his own recognizance, and he has no travel restrictions.
Shortly after, Davis walked out of criminal court for perhaps the last time this year.
Davis, who is unemployed, will be heading back to his home in London and will be looking for work.
In an interview, Davis’ attorney, Elkan Abramowitz, a partner at Morvillo Abramowitz Grand Iason & Anello, said the restriction in the deferred prosecution agreement means Davis cannot physically practice law in New York state, but he remains a member of the New York bar. He is not licensed in another state.
Abramowitz said Davis, who was not a litigator and had an energy practice, can still advise clients outside New York. “He’s actively looking for an opportunity to practice law,” Abramowitz said.
The agreement leaves open the possibility that he could one day work for an American law firm in London.
Before he was indicted, Davis was hired by the government of Ras al Khaimah in the United Arab Emirates to serve as its top in-house legal adviser.
Abramowitz said he and his client are gratified that the district attorney “concluded that a deferred prosecution agreement is an appropriate resolution.”
In conjunction with the agreement, the SEC filed settlement papers Friday with Davis in the Southern District, in which Davis does not admit or deny the SEC allegations.
The proposed SEC and Davis settlement, which is subject to court approval, would resolve all liability issues concerning Davis; bar him from future violations of federal securities law; and prohibit him from serving as an officer or director of a public company.
However, it does not resolve the commission’s request for monetary relief. The commission could pursue that relief at a later day.
The SEC’s civil claims against Sanders, DiCarmine and former finance director Francis Canellas remain pending.
The SEC’s suit, filed in 2014, alleges the defendants facilitated a $150 million fraudulent bond offering using phony financial figures to convince insurance companies to invest in Dewey.
Meanwhile, one juror who served during the five-month Dewey trial attended court Friday. The juror, who declined to be identified, said she believed the defendants should be acquitted. “I think they’ve suffered enough,” she said.