The liquidating trustee of defunct law firm Dewey & LeBoeuf is arguing that his clawback suit against two former firm leaders should not be stayed while they face criminal charges because there is little overlap between the criminal and bankruptcy cases — and because every delay diminishes recovery for creditors, the New York Law Journal reported today. "The trustee's urgency in pursuing these claims is heightened by the real risk that [Joel Sanders and Stephen DiCarmine's] assets will dry up while they scramble to defend themselves against the criminal charges and other potential lawsuits," trustee Alan Jacobs said in court papers filed on July 4. Jacobs is seeking more than $21.8 million from Sanders, the firm's former CFO, and DiCarmine, former executive director, in Jacobs v. DiCarmine, 13-01765. Jacobs claims that the former executives' employment contracts awarded them exorbitant compensation that required nothing in return. Meanwhile, Sanders and DiCarmine are also facing criminal charges that they defrauded and stole from the firm's lenders, investors and others. They have pleaded not guilty.
http://www.newyorklawjournal.com/home/id=1202662172414?kw=Dewey%20Trust…
In related news, three former top executives at Dewey & LeBoeuf, charged by New York prosecutors with breaking the law in a failed bid to keep the struggling law firm afloat, contend they always intended to pay back the firm’s lenders and bond investors, New York Times DealBook blog reported today. The three defendants said that the criminal charges against them should be dismissed because they lacked the intent to deprive the law firm’s creditors of their money. The defendants also said that that they did not understand “complex, arcane and nuanced accounting rules.” A joint motion filed on Friday to dismiss the charges argues that prosecutors working for the Manhattan district attorney, Cyrus R. Vance Jr., are making “scapegoats” out of the defendants: Steven Davis, Dewey’s former chairman; Stephen DiCarmine, the firm’s former executive director; and Joel Sanders, the former chief financial officer.
http://dealbook.nytimes.com/2014/07/14/former-dewey-executives-seek-dis…