By Karen Freifeld and Jonathan Stempel
NEW YORK, March 6 (Reuters) - Three former top executives ofDewey & LeBoeuf law firm were charged with fraud and theft forconcealing from banks, investors and other lawyers thedeteriorating health of the once prestigious firm before it wentbankrupt in 2012.
Thursday's criminal charges were announced by Manhattanprosecutors less than two years after Dewey, which once had morethan 1,400 lawyers worldwide, became the largest U.S. law firmto seek bankruptcy protection. It later shut down.
Manhattan District Attorney Cyrus Vance Jr described theformer executives of "concocting and overseeing a massive effortto cook the books" at the law firm. "Fraud is not an acceptableaccounting practice," Vance said.
Vance unveiled grand larceny, fraud and other felony chargesagainst former chairman Steven Davis, 60, former executivedirector Stephen DiCarmine, 57, and former chief financialofficer Joel Sanders, 55. A fourth defendant, client relationsmanager Zachary Warren, 29, was also criminally charged.
Separately, the U.S. Securities and Exchange Commissionfiled civil fraud charges against Davis, DiCarmine, Sanders andtwo other former Dewey officials, finance director FrankCanellas, 34, and controller Thomas Mullikin, 43, saying theymisled investors in a 2010 bond offering.
Elkan Abramowitz, a lawyer for Davis, said evidence willshow his client did not commit a crime, and that Davis' actionsas Dewey's chairman "were taken in good faith in an effort tomake the firm a success."
Lawyers for the other defendants did not immediately respondto requests for comment or could not immediately be reached.
Dewey & LeBoeuf had been formed in a 2007 merger of two lawlaw firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae.
'WE NEED TO HIDE THIS'
Prosecutors said Davis, DiCarmine and Sanders defraudedlenders starting in late 2008 by misrepresenting the law firm'scompliance with cash flow and other loan covenants.
Prosecutors accused the three men of trying to cover theirtracks by making false entries in the firm's books,misclassifying revenue and expenses, and seeking backdatedchecks.
The men were also accused by Vance of having stolen nearly$200 million from 13 insurers and two financial institutions.
The prosecutors say that their evidence includes a note fromSanders to two employees after he had been told in 2011 thatDewey had failed to write off millions of dollars in receivablesfrom a client, which helped make its books look better.
"We need to hide this actually writing it off,"Sanders wrote, according to Vance.
The SEC cases focuses on the regulator's allegations thatinvestors were misled about Dewey's finances in marketingmaterials for a $150 million bond offering in 2010.
According to the SEC, Dewey officials "orchestrated andexecuted a bold and long-running accounting fraud intended toconceal the firm's precarious financial condition."
Dewey's lenders have included JPMorgan Chase & Co,Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc.