Defense Seeks Exclusion of Testimony in Dewey & LeBoeuf Case

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Summary: Prosecutors and defense attorneys in the Dewey & LeBoeuf trial argue whether certain witness testimony should be admissible.

According to the New York Law Journal, prosecutors in the trial of Dewey & LeBoeuf executives, which is scheduled for the spring, have revealed that they will be relying on a significant amount of testimony from former employees of the firm. Specifically, the prosecutors intend to call former finance director Francis Canellas to the stand.

  

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However, defense attorneys want to exclude any hearsay from the testimony of such cooperators. The defense also seeks to ban other evidence, such as one defendant’s connections to organized crime.

Over 100 charges have been brought against executive director Stephen DiCarmine, chief financial officer Joel Sanders, and chairman Steve Davis. The Manhattan District Attorney has accused the three of creating and carrying out a fraudulent scheme at the firm. Dewey & LeBoeuf was declared bankrupt in 2012.

According to Bloomberg, the Securities and Exchange Commission also brought charges against the firm.

Davis, DiCarmine, and Sanders are represented by Elkan Abramowitz of Morvillo Abramowitz Grand Iason & Anello, Austin Campriello of Bryan Cave, and Andrew Frisch, respectively.

A fourth defendant, Zachary Warren, will be tried separately.

On Friday, both defense attorneys and prosecutors filed motions in limine, or motions to limit the evidence admissible at trial, which is on the court’s calendar for April 27. The hearings were conducted in front of Justice Robert Stolz.

Both the prosecution and the defense centered on the testimony of seven accounting employees that have entered guilty pleas and have signed cooperation agreements. Included in this group is Canellas, budget director Ilya Alter, and controller Thomas Mullikin.

In October, a bankruptcy court ruled that suits may continue against the former partners.

According to Assistant District Attorneys Gregory Weiss, Michael Kitsis, Steve Pilnyak and Peirce Moser, the group of seven is expected to testify at the trial.

Prosecutors argue that each of the former employees will testify that they, as well as others at Dewey, created or directed others to make false accounting entries that would appear to be compliant with financial covenants or improve the company’s financial performance.

Prosecutors commented, “Some of these witnesses will testify that they took direction from one another, especially from Canellas, on improper adjustments and related conduct, but others will testify that they took such direction from defendant Sanders at times, or from Canellas calling from defendant Sanders’ office.”

Alter and Canellas are expected to tell the court that they came up with the inappropriate adjustments at Sanders’ request. They are also expected to state that they discussed the improper adjustments with Sanders before they were ever made.

Prosecutors also noted that the witness testimony will incriminate DiCarmine and Davis. Alter is expected to testify that he and Canellas prepared a slide that listed the improper adjustments that had been created and whether those would affect the firm’s 2009 budget. The slide was allegedly created at Sanders’ request, and was later shared with DiCarmine and Sanders.

In July, a settlement was reached in the clawback lawsuit.

Canellas is then expected to explain that, at the end of 2011, Sanders told him to provide a list of year-end accounting adjustments to a meeting with Davis.

Prosecutors argue that there is a prima facie case of conspiracy, as well as each defendant’s participation in the conspiracy. They have requested for Justice Stolz to grant an order that allows them to introduce these statements under a hearsay exception called the co-conspirator exception.

Since the accused crimes took place from November 2008 to March 2012, the District Attorney’s office is also arguing that it should be able to present evidence of the prior crimes of the defendants. Additionally, prosecutors want to introduce statements made by Davis that will cast doubt on his truthfulness, regardless of whether he takes the stand. According to the prosecutors, Davis made statements to their office in November and December that were administered by a proffer agreement that would let Davis provide information with the understanding that prosecutors would not use Davis’ statements as evidence at trial. However, Davis’ court submissions have contradicted the statements made during the November meeting.

In addition, the defense attorneys for Davis, DiCarmine, and Sanders have sought to prohibit the introduction of any evidence regarding Vincent Basciano, DiCarmine’s cousin. Basciano was convicted of murder and is serving a life sentence in prison. He is thought to be a high-ranking member of an organized crime family.

The defense argues that Basciano is irrelevant to the present case. They have not said whether DiCarmine plans to take the stand, but if he does testify in his own defense, it is probable that his family background will be questioned on direct examination.

The defense explained, “Although we cannot imagine the New York County District Attorney’s Office trying to slip this relationship into this trial, out of an excess of caution we ask that it be prohibited from doing so. Any uncertainty could keep Mr. DiCarmine from testifying, thereby impinging on his constitutional right to testify in his own defense.”

The defense also complains that the statements of the seven cooperating witnesses “are replete with hearsay.”

The defense argues that unless there is admissible proof of a conspiracy, and the involvement of each defendant in that conspiracy, the supposed co-conspirator statements will not be admissible as evidence against the defendants. They argue that the prosecution’s alleged evidence of conspiracy is “based entirely on inadmissible evidence,” pointing to a series of emails that were cited in the indictment as well as statements made by Canellas. They argue that none of this evidence should be allowed to be submitted at trial. According to the New York Times, some emails between the defendants spoke of “fake income,” “accounting tricks,” and how they could fool the law firm’s “clueless auditor.”

New allegations were brought against the executives in June.

The defense explained that Davis, when he drafted an email cited by the prosecution, had no basis to suspect that counting checks received in January as December revenue, as well as requesting an antedated check, were improper actions. They commented, “Numerous partners advised Mr. Davis in January that they had or would ask their clients—including sophisticated, well-respected public companies and financial institutions—for checks dated December 31.”

Both the prosecution and the defense have also requested that Justice Stolz allows the modification of a protective order from April 2014 that prohibited the disclosure of names of those who have not been charged in relation to their conduct at Dewey.

Source: New York Law Journal

Photo credit: litigationdaily.com (Elkan Abramowitz), bryancave.com (Austin Campiello), andrewfrisch.com (Andrew Frisch), manhattanda.com (Cyrus R. Vance, Jr.), csmonitor.com (primary article photo)