Ex-Dewey & LeBoeuf CFO avoids jail as judge hands down $1m fine and community service

Joel Sanders, the former chief financial officer at now-defunct Dewey & LeBoeuf, has avoided a prison term after a New York state Supreme Court justice instead ordered him to pay a $1m fine and perform 750 hours of community service.

The Manhattan District Attorney’s Office had urged for the maximum sentence under his May 2017 conviction: one-and-a-third to four years in prison.

The no-prison sentence imposed by Manhattan Supreme Court Justice Robert Stolz is a remarkable outcome for a criminal case that began in 2014, when prosecutors filed more than 100 charges against four former Dewey figures, including the firm’s top three executives.

Prosecutors alleged the executives hid the firm’s precarious finances from investors and lenders before Dewey’s May 2012 bankruptcy, in what remains the largest-ever law firm failure. At its peak, the US firm boasted revenues of more than $900m.

Steven Davis, the ex-Dewey chairman now living in London, ultimately avoided a second criminal trial by signing a deferred prosecution agreement; Dewey’s former executive director Stephen DiCarmine was acquitted in May after a retrial; and former Dewey junior manager Zachary Warren never went to trial after signing a deferred prosecution agreement. Meanwhile, the case was pared back to only three counts after a 2015 mistrial.

Sanders (pictured above at Manhattan Supreme Court before his sentencing) was convicted in May of two Class E felonies and one misdemeanor: first-degree scheme to defraud and securities fraud under the Martin Act as well as fifth-degree conspiracy.

In urging Stolz to impose a jail sentence, Assistant District Attorney Peirce Moser said during a sentencing hearing that a jury “determined beyond a reasonable doubt that Joel Sanders participated in a quarter of a billion-dollar scheme” that he had helped craft and perpetuate.

Moser said that in New York state, defendants with similar cases with the same convictions have received prison time upon conviction. And while seven cooperators in Dewey’s accounting department accepted responsibility by pleading guilty and testifying during trial, “Joel Sanders never has”, Moser said.

But Andrew Frisch, Sanders’ longtime defence lawyer through two criminal trials, said the prosecution “has it backward” and that “Joel’s defining characteristic is that, if anything, he accepts too much”.

“He is the guy who you call in the middle of the night when there’s a problem,” he said.

Frisch gave an emotional appeal to Stolz, at times citing Thomas Dewey, the former Manhattan DA whose own law firm was a predecessor to Dewey & LeBoeuf, and incorporated the rising – and falling – political movements to curtail jail sentences. The “enthusiasm and momentum of 2016 was shortlived and since January this year we’re back to the national mentality of prison: lock them up”, Frisch said.

Frisch also cited support from certain former Dewey partners and Sanders’ current law firm, Florida-based Greenspoon Marder, which hired Sanders in 2012 and has continued to employ him even after his conviction.

For his part, Sanders, soft-spoken after sitting quietly during two trials and never testifying himself, told Stolz that he was “deeply sorry for anything that I did or didn’t do that caused anybody harm”.

“After the merger, I was completely focused on keeping the firm going,” said Sanders, referring to the fateful 2007 combination between Dewey Ballantine and LeBoeuf Lamb Greene & MacRae that formed 1,300-lawyer Dewey & LeBoeuf.

Stolz, after all was said by the parties, said the cases cited by prosecutors that resulted in prison sentences are different. On balance, Stolz said, he found the case favours a sentence for Sanders without incarceration.

Stolz referred to Sanders’ lack of any criminal history prior to his conviction and the fact that he was convicted of a scheme that ended at least five years ago, while Sanders went through “two trials of exceptional length”. The judge added he also found it unlikely that Sanders will become a repeat offender.

In ruling on a sentence, Stolz gave Sanders a conditional discharge on each count. Stolz said Sanders must pay one third of the $1m fine annually during the three years of the conditional discharge. If Sanders fails to pay the fine, a one-year jail term is imposed on each felony count, the judge said.

Stolz adjourned the case until September 2018 to ensure that Sanders has paid at least one third of the $1m and performed at least 250 hours of community service.

The no-prison sentence was shocking to several observers in the courtroom. Sanders’ friends and family, taking up several rows in the courtroom in downtown Manhattan, produced audible gasps and cheers, while Sanders’ wife turned to a family member and loudly wept with relief.

Once outside the courtroom, Frisch, Sanders’ lawyer for the past several years, simply said: “It’s an unusual case and an unusual ending.”

DiCarmine, Sanders’ onetime co-defendant who was acquitted in May, sat in the back of the courtroom during sentencing. “The right sentence is no sentence because Joel is innocent,” DiCarmine said afterward.

While the core of Sanders’ legal problems have concluded, Sanders is still battling a suit brought by the US Securities and Exchange Commission. Meanwhile, he has hired another defence lawyer, Christopher Oprison, a litigator and former White House counsel who joined DLA Piper’s Miami office in August, for an appeal of his criminal conviction.

In an interview, Oprison cited evidentiary issues, juror misconduct and double jeopardy as grounds for an appeal. “This is a case that never should have been brought,” he said.

The Manhattan DA’s office declined to comment on the sentence issued by Stolz, instead issuing a statement about Sanders’ jury conviction in May. The case, the statement said, demonstrates the office’s “commitment to prosecuting those who sacrifice professional integrity for financial gain”.

For the full story of Dewey’s demise, see Our Lehman: how Dewey went from proud US giant to the largest-ever legal failure and Our Lehman – the final days of Dewey.