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2017-05-08 16:58:02
Former Dewey & LeBoeuf Executive Convicted in Split Verdict

Nearly five years after the collapse of Dewey & LeBoeuf, and roughly 20 months after a mistrial in an earlier criminal case, a jury in Manhattan on Monday convicted one former executive of the once mighty New York law firm on charges that he schemed to hide the firm’s failing finances from financial backers.

Joel Sanders, the law firm’s former chief financial officer, was found guilty on all three counts. But another former executive on trial, Stephen DiCarmine, was acquitted of the charges.

The verdict came after six days of deliberation by the jury in a courtroom in State Supreme Court in Lower Manhattan.

The second trial took place with much less attention than the first, which was closely followed by New York lawyers given the spectacular nature of Dewey’s collapse into bankruptcy in May 2012. Two years after the firm’s fall, criminal charges were filed against some of its most senior executives.

Dewey & LeBoeuf — which was created a decade ago from the merger of two storied law firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae — once employed more than 1,300 lawyers. But the big law firm quickly ran into trouble during the financial crisis that erupted soon after the merger.

Manhattan prosecutors said that Mr. DiCarmine, 60, and Mr. Sanders, 58, were part of a plot to manipulate the firm’s financial records to defraud bank lenders and insurance companies that invested in a bond offering.

The jury convicted Mr. Sanders on charges of securities fraud, scheme to defraud and conspiracy.

In his charge to the jury on May 1, Justice Robert M. Stolz told the jurors that Mr. DiCarmine and Mr. Sanders were on trial not for the financial collapse of Dewey but on charges that they sought to conceal the severity of its financial situation.

Dewey represents one of the most significant white-collar cases filed by Cyrus R. Vance Jr. during his tenure as Manhattan district attorney. The initial indictment had more than 100 charges. In bringing the case, Mr. Vance also announced his office had secured guilty pleas — most of them for misdemeanors — from seven low-level employees at the law firm.

But in the first trial, Justice Stolz declared a mistrial after the jury had deliberated for 21 full days. That was something of an embarrassment for Mr. Vance given all the resources his office had invested in the case and the fanfare with which he announced the indictment in March 2014.

A few months after the trial, prosecutors whittled down the case by dismissing dozens of charges and entered into a five-year deferred prosecution agreement with one of the defendants: Steven H. Davis, the firm’s former chairman. Justice Stolz later tossed out the most serious larceny charges that Mr. DiCarmine and Mr. Sanders faced.

A fourth man who was indicted, Zachary Warren, had the criminal charges against him dismissed in January under the terms of a deferred prosecution agreement. Mr. Warren, who was a low-level employee at Dewey, is now a lawyer at Williams & Connolly in Washington.

Prosecutors went to trial in the second proceeding, which began in January, with a more slimmed-down case — just three charges against each man. But this trial followed for the most part a script similar to the first one’s.

The prosecution called more than 30 witnesses, including its star witness, Francis Canellas, Dewey’s former finance director. Just as at the first trial, the defense did not call any witnesses, relying on the strength of its cross-examination of the prosecution’s witnesses to make its case.

And a jury of eight women and four men — just as in the first trial — decided the fates of Mr. DiCarmine and Mr. Sanders. One juror was a lawyer at a large New York law firm.

The Securities and Exchange Commission has filed a lawsuit against Mr. DiCarmine and Mr. Sanders that is pending.