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Summary: A witness for the defense of Dewey & LeBoeuf former executives pointed the blame on the criminal investigation by the District Attorney’s office for the law firm having to file bankruptcy.
Former executive committee member, Richard Shutran, placed some blame for the quick demise of the law firm on the investigation by New York County District Attorney’s Office. The once 1,400 lawyer firm was in negotiations with other law firms and their lenders when news of the investigation broke out, the negotiations ended within days.
Shutran is the most senior former firm employee to testify in the case at this time. He was a member of the five-member “office of the chair” to replace Davis. He testified that their lenders were willing to extend their credit line until the investigation.
The trial for the three former firm execs has been a blame game between prosecution and defense attorneys. Former chair Steven Davis, executive director Stephen DiCarmine, and CFO Joel Sanders are being accused of lying to lenders and investors about the finances of the law firm as well as accounting fraud. Prosecutors claim that they knew the firm would never be able to pay off its debts. The defendants claim that the departure of several partners and the criminal investigation is to blame for the failure of Dewey & LeBouef.
Although Shutran claimed to not know about the firm’s finances, he was a key player in negotiating terms with JPMorgan Chase Bank, making it possible for the firm to default by reducing their number of partners, and by signing off on bond offerings. He claims he did not think that these actions would make the firm collapse. The prosecution went on to show emails from Shutran asking clients to back date checks so they could be put on the books for the previous year.
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The case is four weeks in but the prosecution’s case is expected to go another four to five months. The slow progress of the case is trying everyone’s nerves and patience.
Photo: reuters.com
