Accounting fraud case against Dewey & LeBoeuf recalls Enron and WorldCom collapses

In a report by the New York Times' the DealBook, it was said that the criminal case against former chairman Steven Davis of Dewey & LeBoeuf cited actions that were similar to the cases that led to the collapses of both Enron and WorldCom ten years ago.

DealBook said the US government will be taking on the challenge on finding evidence that would be adequate to link Davis with accounting fraud just like in the lawsuits filed against the Enron and WorldCom heads. The 106-count indictment has claimed that upper management of Dewey & LeBoeuf mischaracterized assets to cover up the true financial state of the company. Amid the mismanagement scandal, Dewey & LeBoeuf filed for bankruptcy protection in May 2012, DealBook said.

Former chief executive Bernard Ebbers of WorldCom claimed ignorance of accounting fraud to mask his company's declining revenue nearly ten years ago, DealBook said. The same thing was also the defense of former Enron CEO Kenneth Lay. DealBook said the courts did not buy both ex-CEOs' claims.

Davis, along with former executive director Stephen DiCarmine, former chief financial officer Joel Sanders are named in the lawsuits as defendants. Low-level employee Zachary Warren was also named as well because of a comment that linked him to the deceptive accounting done by the Dewey & LeBoeuf management, DealBook said. Steven and others allegedly deceived the company's bank lenders and insurance companies by falsifying business records, among other things to assure investors of its $150 million in bonds that they remain a financially-sound company.

DealBook said that under New York law, larceny would mean the US government showing proof that the defendant had with intention to defraud individuals or entities with their properties amounting to over $1 million. So far, DealBook said that the indictment is backed with a series of emails about the defendants' knowledge with the deceptive accounting practices at the company, along with guilty please from seven other Dewey & LeBoeuf employees in the company's finance office. DealBook said some of them are ready to testify against their former employer.

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Dewey & LeBoeuf accounting fraud case, Enron corruption scandal

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