Joel Sanders, the former chief financial officer at now-defunct Dewey & LeBoeuf, avoided a prison term on Tuesday when a New York state Supreme Court justice instead ordered him to pay a $1 million fine and perform 750 hours of community service.
The Manhattan District Attorney’s Office had urged for the maximum sentence under his May 2017 conviction: One-and-a-third to four years in prison. Sanders was convicted in May of two Class E felonies and one misdemeanor, first-degree scheme to defraud and securities fraud under the Martin Act, as well as fifth-degree conspiracy.
The no-prison sentence imposed by Manhattan Supreme Court Justice Robert Stolz is a remarkable outcome for a criminal case that began in 2014, when prosecutors filed more than 100 charges against four former Dewey & LeBoeuf figures, including the firm’s top three executives.
Prosecutors alleged the executives hid the firm’s precarious finances from investors and lenders before Dewey & LeBoeuf’s May 2012 bankruptcy, in what remains the largest law firm failure in U.S. history.
Steven Davis, the ex-Dewey & LeBoeuf chairman now living in London, ultimately avoided a second criminal trial by signing a deferred prosecution agreement; Dewey & LeBoeuf’s former executive director Stephen DiCarmine was acquitted in May after a retrial; and former Dewey & LeBoeuf junior manager Zachary Warren never went to trial after signing a deferred prosecution agreement. Meanwhile, the case was pared back to only three counts after a 2015 mistrial.
Legal observers noted that Sanders’ sentencing was somewhat unusual for a high-profile, convicted white-collar criminal defendant. John Coffee Jr., a Columbia Law School professor and securities law expert, said the sentencing is “essentially a slap in the face” to Manhattan District Attorney Cyrus Vance Jr. because it implies that despite the tremendous amount of time and resources put into the case by Vance’s office, it still did not achieve a significant prosecutorial victory.
In urging Stolz to impose a jail sentence, Assistant District Attorney Peirce Moser said during a sentencing hearing Tuesday that a jury “determined beyond a reasonable doubt that Joel Sanders participated in a quarter of a billion-dollar scheme” that he had helped craft and perpetuate.
Moser said that in New York state, defendants in similar situations with the same convictions have received prison time upon conviction. And while seven cooperators in Dewey & LeBoeuf’s accounting department accepted responsibility by pleading guilty and testifying during trial, “Joel Sanders never has,” Moser said.
But Andrew Frisch, Sanders’ longtime defense lawyer through two criminal trials, said the prosecution “has it backward” and that “Joel’s defining characteristic is that if anything he accepts too much.”
Frisch gave an emotional appeal to Stolz, at times citing Thomas Dewey, the former top Manhattan prosecutor whose own law firm was a predecessor to Dewey & LeBoeuf. Frisch cited the rising—and falling—political movements to curtail jail sentences. The “enthusiasm and momentum of 2016 was short-lived and since January of this year we’re back to the national mentality of prison: Lock them up,” Frisch said.
Frisch also cited support from certain former Dewey & LeBoeuf partners and Sanders’ current law firm, Florida-based Greenspoon Marder, which hired Sanders in 2012 and has continued to employ him even after his conviction.
For his part, Sanders, soft-spoken after sitting quietly during two trials and never testifying himself, told Stolz that he was “deeply sorry for anything that I did or didn’t do that caused anybody harm.”
“After the merger, I was completely focused on keeping the firm going,” said the 59-year-old Sanders, referring to the fateful 2007 combination between Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae that formed 1,300-lawyer Dewey & LeBoeuf.
Stolz, after all was said by the parties in court Tuesday, said the cases cited by prosecutors that resulted in prison sentences for other individuals were different than that facing Sanders. On balance, Stolz said, he found the case favors a sentence without incarceration for the former Dewey & LeBoeuf executive.
Stolz referred to Sanders’ lack of any criminal history prior to his conviction and the fact that he was convicted of a scheme that ended at least five years ago, before Sanders went through “two trials of exceptional length.” The judge added he also found it unlikely that Sanders will become a repeat offender.
In ruling on a sentence, Stolz gave Sanders a conditional discharge on each count. Stolz said Sanders must pay one-third of the $1 million fine annually during the three years of the conditional discharge, Stolz ruled, and if Sanders fails to pay the fine, a one-year jail term is imposed on each felony count. The judge adjourned the case until September 2018 to ensure that Sanders has paid at least one-third of the $1 million and performed at least 250 hours of community service.
The no-prison sentence was shocking to several observers. Sanders’ friends and family, taking up several rows in the courtroom in downtown Manhattan, produced audible gasps and cheers, while Sanders’ wife turned to a family member and loudly wept with relief.
Once outside the courtroom, Frisch, a litigator with his own New York firm who served as Sanders’ lawyer for the past several years, noted that it was “highly unusual” for a felony conviction after trial to result in no jail time.
“It’s an unusual case and an unusual ending,” he said.
DiCarmine, Sanders’ onetime co-defendant who was acquitted in May, sat in the back of the courtroom during his former colleague’s sentencing. “The right sentence is no sentence because Joel is innocent,” DiCarmine said afterward.
The sentence by Stolz also stunned those outside the court. Coffee, the securities law expert at Columbia Law School, said the ruling bucks the trend of recent white-collar criminal cases. In federal court, Coffee said, a defendant in a high-profile trial who has neither cooperated nor pleaded guilty is usually given jail time.
“I’m surprised by the sentence, but I’m happily surprised,” said Michael Bachner, a former Manhattan prosecutor who now runs his own defense boutique and has represented many defendants in state court. Still, Bachner noted that Sanders faces all the “incidental and consequential penalties that flow from his conviction,” including a potential impact on his future employment.
While the core of Sanders’ legal problems have concluded, he is still battling a suit brought by the U.S. Securities and Exchange Commission. Meanwhile, Sanders has hired another defense lawyer, Christopher Oprison, a litigator and former White House counsel who joined DLA Piper’s Miami office in August, for an appeal of his criminal conviction.
In an interview Tuesday, Oprison cited evidentiary issues, juror misconduct and double jeopardy as grounds for an appeal. “This is a case that never should have been brought,” he said.
The Manhattan District Attorney’s Office declined to comment on the sentence issued by Stolz, instead issuing a statement about Sanders’ jury conviction in May. The case, the statement said, demonstrates the office’s “commitment to prosecuting those who sacrifice professional integrity for financial gain.”