Former Dewey & LeBoeuf finance director Francis Canellas outside the firm's Manhattan offices in May 2012.
Former Dewey & LeBoeuf finance director Francis Canellas outside the firm’s Manhattan offices in May 2012. (NYLJ/Rick Kopstein)

The lead cooperating witness in the criminal case against Dewey & LeBoeuf’s former leaders has reached a new agreement with prosecutors, admitting to a lesser charge with a shorter recommended sentence.

The move comes just months before a retrial in the case is scheduled to begin in January.

Francis Canellas, Dewey’s former finance director, originally admitted to second-degree grand larceny, a felony that carries no minimum sentence and a maximum of 5 to 15 years. On Oct. 5, he signed a new agreement with prosecutors in which admits only to scheme to defraud, a charge with no minimum jail time and a maximum charge of just four years.

In the new agreement, prosecutors are recommended a sentence of 1 to 3 years in prison.

The Dewey case culminated in a lengthy trial last year against former firm chairman Steven Davis, executive director Stephen DiCarmine and chief financial officer Joel Sanders. The Manhattan District Attorney’s Office claims they concealed the firm’s true finances from its lenders prior to its 2012 collapse and bankruptcy.

Over seven days of testimony in July 2015, Canellas said he and others used accounting adjustments to make it appear that the struggling firm would be able to meet financial agreements with lenders. At one point, Canellas choked up on the stand when explaining that he had lied at his job but was now telling the truth.

The once-massive case, which initially included more than 100 charges against the defendants, was heavily winnowed down during and after the trial.

A jury threw out a handful of minor counts before deadlocking on the more serious charges of grand larceny, scheme to defraud, conspiracy and securities fraud under New York’s Martin Act. After a mistrial was declared almost exactly one year ago, Acting Manhattan Supreme Court Justice Robert Stolz dismissed the grand larceny charges and allowed Davis to enter a deferred prosecution agreement. He will not be retried with Sanders and DiCarmine.

The amendment to Canellas’ plea noted that Stolz dismissed the grand larceny counts against the other two defendants and explains that the district attorney has decided that under these circumstances, “fairness requires that the defendant be permitted to withdraw his guilty plea.” It goes on to say that Canellas will plead guilty to scheme to defraud after withdrawing his grand larceny plea.

Canellas’ case is before Manhattan Supreme Court Justice Michael Obus because his lawyer, Brian Maas, a partner at Frankfurt Kurnit Klein & Selz, is a former partner of Stolz’s. Maas declined to comment on Friday.

Prosecutors had recommended a 2-to-6 year sentence for Canellas in exchange for his cooperation during the trial.

Andrew Frisch, who has his own white collar boutique, is representing Sanders. DiCarmine’s lawyer, Rita Glavin, a white-collar partner at Seward & Kissel, declined to comment Friday.

The Manhattan District Attorney’s Office declined to comment.