Compliance
SEC Charges Raft Of Individuals Behind Fraudulent Bond Offering At Global Law Firm
The SEC has charged five executives and finance professionals with facilitating a $150 million fraudulent bond offering by the international law firm Dewey & LeBoeuf dating back to late 2008.
The US Securities and Exchange Commission has charged five executives and finance professionals with facilitating a $150 million fraudulent bond offering by the international law firm Dewey & LeBoeuf, dating back to late 2008.
The five allegedly “turned to accounting fraud when the firm needed money to weather the economic recession and steep costs from a merger,” the SEC said.
Dewey & LeBoeuf’s leading financial professionals “combed through its financial statements line by line and devised ways to artificially inflate income and distort financial performance,” the authority added.
“Dewey & LeBoeuf then resorted to the bond markets to raise significant amounts of cash through a private offering that seized on the phony financial number.”
The SEC’s complaint was filed in federal court in Manhattan and charges the following executives at Dewey & LeBoeuf: chairman Steven Davis; executive director Stephen DiCarmine; chief financial officer Joel Sanders, finance director Frank Canellas; and controller Tom Mullikin.
Dewey & LeBoeuf “is no longer in business,” the SEC said.
Meanwhile, in a parallel action, criminal charges were announced against Davis, DiCarmine and Sanders.
After beginning to “conjure up fake revenue” by manipulating entries in Dewey & LeBoeuf’s internal accounting system in late 2008, the firm’s profitability was inflated by 15 per cent, or $36 million, in its 2008 financial results.
Dewey & LeBoeuf finance executives allegedly continued using these and other fraudulent techniques to prepare its 2009 financial statements, which, according to the authority, were mis-stated by $23 million.
The SEC said it is seeking disgorgement and financial penalties, in addition to permanent injunctions, against all five defendants.
The authority is also seeking officer and director bars against Davis, DiCarmine and Sanders, and will seek to prohibit Davis and DiCarmine from practicing as lawyers on behalf of any publicly-traded company or other entity regulated by the SEC.
The investigation continues.