| NEW YORK, March 27
NEW YORK, March 27 Dewey & LeBoeuf's ex-finance
director pleaded guilty to grand larceny last month and admitted
he knew false financial statements were being provided to the
firm's lenders, according to court documents unsealed on
Francis Canellas, 34, faces anywhere between no jail time
and five to 15 years, the documents showed, for his role in the
accounting fraud at Dewey & LeBoeuf, which became the largest
U.S. law firm collapse when it went bankrupt in May 2012.
He is one of seven firm employees who have pleaded guilty to
the fraud, according to prosecutors, and has agreed to cooperate
in the case against the firm's management.
Dewey & LeBoeuf's former chairman Steven Davis, 60,
executive director Stephen DiCarmine, 57, chief financial
officer Joel Sanders, 55, and client relations manager Zachary
Warren, 29, were all criminally charged March 6 for the alleged
use of accounting gimmicks and fraud to cheat banks and
investors in a failed attempt to keep the law firm alive.
"We all knew that adjustments were being made to deceive our
lenders and others," Canellas said in a five-page statement
unsealed on Thursday by Manhattan State Supreme Court Justice
Dewey's lenders included JPMorgan Chase & Co,
Citigroup Inc's private banking unit, Bank of America Corp
and HSBC Holdings Plc.
Canellas said the "inappropriate" adjustments began in late
2008 after Sanders told him that DiCarmine and Davis said they
needed to meet cash flow covenants in the firm's credit
agreements. Over the years, he said, he instructed others to
make the adjustments.
Canellas also said he, Sanders and others provided
information "that we knew to be false" to investors in a $150
million bond offering in 2010, and that he participated in
efforts to keep the firm's auditors, Ernst & Young, in the dark.
"We're not surprised that a cooperating witness who has
admitted to a crime is trying to implicate others and blame
them, especially when he got such a sweet deal," said New York
attorney Edward Little, who represents Sanders.
Attorney Austin Campriello, who represents DiCarmine, called
the statement a "very thin reed on which to build a case against
Steve DiCarmine." He said the case against his client "will
Lawyers for Davis and Warren did not immediately return
calls for comment.
Agreements for the six other employees who have pleaded
guilty are expected to be unsealed on Friday.
A separate civil case was filed by the U.S. Securities and
Exchange Commission over the bond offering.
The case is New York v Davis et al, New York State Supreme
Court, New York County.
(Reporting By Karen Freifeld; Editing by Diane Craft)