Dewey & LeBoeuf Chairman Takes Plea Deal

MatchSteven H. Davis, the former chairman of Dewey & LeBoeuf, will not face another criminal trial over allegations of accounting fraud at the once mighty New York law firm, but he will remain in legal limbo for the next five years.

In a deal with Manhattan prosecutors that was formally approved on Friday, Mr. Davis agreed not to practice law in New York for five years as part of a deferred-prosecution agreement. The signing of the agreement, which was confirmed during an appearance in New York State Supreme Court in Manhattan, had been in the works for several weeks and was discussed in open court last month. Negotiations began soon after a six-month trial of Mr. Davis and two co-defendants ended in a hung jury in October after the panel deadlocked on dozens of charges. The length of the prohibition against Mr. Davis’s practicing law in New York was something of a surprise, given that he has largely been out of work since Dewey crumbled and declared bankruptcy in spring 2010. The criminal trial of Mr. Davis and two other former top executives at Dewey was one of the most significant white-collar cases brought by Cyrus R. Vance Jr., the Manhattan district attorney. In announcing the filing of criminal charges in March 2014, Mr. Vance said Mr. Davis and the other defendants had overseen a “massive effort to cook the books at Dewey & LeBoeuf” that defrauded bank lenders and investors in a debt offering at the height of the financial crisis. Peirce Moser, an assistant prosecutor working for Mr. Vance who participated in the first trial, said in court that the criminal indictment against Mr. Davis, 62, would be dismissed after 60 months if he abides by the terms of the deal, which include committing no crimes.

Prosecutors remain committed to retrying Mr. Davis’s co-defendants, Stephen DiCarmine, 59, and Joel Sanders, 57, after both men rejected plea deals. A new trial for Mr. DiCarmine, the former executive director at Dewey, and Mr. Sanders, the firm’s former chief financial officer, is tentatively scheduled for September. The plea deals offered to both men would have required each to plead guilty to a felony charge. Mr. Sanders also would have had to serve a prison term. Austin Campriello, a lawyer for Mr. DiCarmine, said he told prosecutors his client was innocent but would agree to the terms of the same deferred-prosecution agreement offered to Mr. Davis. Prosecutors rejected that offer. Zachary Warren, a fourth man charged in the fraudulent accounting scheme at Dewey, is scheduled to be tried in March. The case of Mr. Warren, a low-level employee at Dewey, was severed from that of Mr. Davis, Mr. DiCarmine and Mr. Sanders many months ago. The decision by Mr. Vance and his prosecutorial team not to retry Mr. Davis reflects the fact that the evidence against him was far weaker than that against the other defendants and that jurors in interviews after the trial were largely sympathetic to him. The deferred-prosecution agreement notes that “the jury was deeply divided on some of the remaining counts” and a new trial could end with either an acquittal or another hung jury.

In a separate settlement  with the Securities and Exchange Commission, Mr. Davis agreed not to act as an officer or director for a public company and not to appear as a lawyer before the regulatory agency. The S.E.C. filed a lawsuit against Mr. Davis and others over a debt offering that Dewey used to raise money from institutional investors. The S.E.C. contends they misled investors about the financial situation of the law firm. In settling with the S.E.C., Mr. Davis neither admitted to nor denied the allegations in the complaint. By cutting a separate deal with Mr. Davis, prosecutors will have an easier time simplifying the trial of Mr. DiCarmine and Mr. Sanders, which got bogged down by a mountain of documentary evidence. Prosecutors have already dismissed dozens of the charges the jury could not reach a verdict on in the first trial. Still to be decided are motions filed by lawyers for Mr. DiCarmine and Mr. Sanders to dismiss some other charges, including some of the grand larceny charges filed against them. Justice Robert M. Stolz said he expected to rule on those motions by the time Mr. DiCarmine and Mr. Sanders are scheduled to appear in court on Feb. 26. The first trial took a toll on jurors. A few fell sick during the 21 days of deliberations before Mr. Stolz declared a mistrial. One juror told the judge he dozed off in the jury room because he was not feeling well.

A juror from the first trial, who did not want to be identified, came to court on Friday to watch the talks between the lawyers and the judge. The juror said she would have voted to acquit all three men and was curious about how the case was proceeding. In response to reporters’ questions afterward, she said she remained sympathetic to the plight of all the defendants. “They have suffered enough,” she said. “They can’t get jobs.”