Emails in Dewey & LeBoeuf Trial Reveal Anger toward Chairman

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Summary: Emails presented as evidence in the Dewey & LeBoeuf trial reveal hostility toward the former chairman of the firm.

According to Law360, the Dewey & LeBoeuf trial centered on vulgar emails on Tuesday. According to prosecutors, Steven Davis, the former chairman of Dewey, along with former Executive Director Stephen DiCarmine and former Chief Financial Officer Joel Sanders, orchestrated a fraudulent scheme that used accounting tricks to steal from investors and lenders. Seven former employees have pleaded guilty to various charges and are witnesses in the current trial.

  

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The testimony on Tuesday was primarily that of John Schwolsky. Schwolsky headed a successful insurance transactional practice at Dewey, before leaving in the spring of 2012 with 11 other partners to work for Willkie Farr & Gallagher while Dewey was threatened with collapsing.

One of the highest paid partners testified earlier this week.

Schwolsky discussed conversations between himself and former partners Alexander M. Dye and Michael Groll. Email exchanges were read to the jury. The correspondence and Schwolsky’s testimony demonstrated a power struggle at LeBouef Lamb before it merged with Dewey Ballantine in October 2007.

Dye and Schwolsky served on LeBouef Lamb’s executive committee. Dye pictured himself taking over LeBouef Lamb as Davis’ five-year term ended. Schwolsky and Dye, who worked together at the firm, were summoned to an executive committee meeting in March 2007. At that meeting, they were told that Davis was reappointed to another term as the firm head; the decision had been made without them.

Schwolsky said he was angry that he was left out of the decision. He testified, “I felt I had been excluded from the process. I felt I was one of the most productive partners. It was a real shock to see that I had not been involved in the process.”

Dye did not take the decision well, and in several emails laden with expletives, he said he was furious with Davis and other executive committee members for supporting him. Dye also felt that DiCarmine was reading his email.

The jury was selected in May.

One email from Dye to Schwolsky read, “Why in the f— is Woods the one guy who is determining the future of this firm. These are the a–holes who are afraid of melee not us. I think many of our colleagues would be surprised to [learn] that squat ignorant motherf—er is the kingmaker.” Dye later referred to Davis as “the bad guy,” and signed the email with “Suck my c— DiCarmine.”

In a different exchange that discussed the chairmanship vote, Dye ended the email with, “BTW, Steve DiCarmine, if you are reading this, I’ll have your f—ing head on a stick.”

Dye encouraged Schwolsky and Michael Groll, another insurance partner, to prepare to move. Dye said they should start planning dinners with investment banking clients to refresh these relationships in case of a firm switch. Dye typed, “”We need to put these dinners together with all of the bankers now. We’ve been putting this off for too long. Time to get intimate with the menu at Le Bernardin,” Le Bernardin is an expensive French seafood restaurant in midtown Manhattan.

The prosecution and defense argued what testimony should be admissible before the trial began.

The emails did catch Davis’ attention, Schwolsky testified. In late May or early June of 2007, Davis asked Schwolsky and Dye to resign from the committee. However, Davis also tried to repair his relationship with Schwolsky. Schwolsky was offered an increase in pay in 2007, and a guaranteed income of $3 million annually for 2008 through 2010. The relationship improved as time went on. After the merger, Schwolsky and Dye went to Dewey & LeBoeuf.

However, Schwolsky ended up leaving Dewey for Willkie Farr in March of 2012. He commented that he was not confident that Dewey’s plans to stay afloat would work. He added, “Morale in our group was at rock bottom.” At one point, partners were told that they needed to take a 50% pay cut, according to the Wall Street Journal.

Soon thereafter, Dewey filed for bankruptcy after a number of its partners departed.

The trial will continue on Wednesday. According to the Global Legal Post, it is expected to last six months.

Elkan Abramowitz, Lawrence S. Bader, Jasmine Juteau and Priya Raghavan of Morvilla Abramowitz Grand Iason & Anello represent Davis. Austin V. Campriello and Anne T. Redcross of ” href=”https://www.lawcrossing.com/lawfirmprofile/bacxd9174d1oe7fc102s548914bld9e5bade/Bryan-Cave-LLP/” target=”_blank”>Bryan Cave LLP represent DiCarmine. Andrew J. Frisch, Cesar de Castro and Amanda L. Bassen represent Sanders.

Peirce Moser, Steve Pilnyak, Christopher Conroy, and Gregory Weiss are prosecuting the case on behalf of the Manhattan District Attorney’s Office.

Source: Law360

Photo credit: New York Times, Bloomberg (Abramowitz), maglaw.com (Bader, Juteau, Raghavan) Lawcrossing.com (Campriello), LinkedIn (Redcross, Weiss), AndrewFrisch.com (Frisch, Bassen), cdecastrolaw.com (de Castro), newyorklawjournal.com (Moser, Pilnyak)