Dewey Witness Says She Never Intended To Defraud

State prosecutors in Manhattan accuse Sanders, ex-Dewey chairman Steven Davis and former executive director Stephen DiCarmine of presenting banks and other lenders with a fraudulently rosy picture of the firm's finances in order to borrow huge sums of money. All three defendants have denied wrongdoing.

Cascino is one of seven former Dewey & LeBoeuf employees who pleaded guilty and agreed to cooperate with the Manhattan District Attorney's office in its fraud case against the defunct firm's top executives. She pleaded guilty to falsifying business records, a misdemeanor, in exchange for prosecutors recommending she face a conditional discharge with 50 hours of community service. Cascino said she took directions from Sanders and Dewey & LeBoeuf finance director Francis Canellas, another cooperating witness. Cascino told the jury that she altered accounting entries in order to inflate the firm's accounts receivable, usually at the behest of ex-finance director Canellas, though at times she said her instructions also came from Sanders. She said she reversed client disbursements that had previously been written off and posted client checks received early each year to books kept for the previous year. “There was no way those amounts were going to be billed and collected,” she said of the write-offs that she reversed. She said she made the adjustments to increase the firm's bottom line.

The first instance Cascino described was in January 2009, when she reversed about $4 million worth of client bills that had previously been written off. She said she had been told to do so by Canellas and, when she objected, he threatened to tell Sanders.

E-mails projected on a screen for the jury to see showed that in 2011, she asked Sanders about approximately $2.81 million in write-offs related to four clients.

“The following disbursement amounts were written off and were not budgeted for this year. Do you want me to reverse these write offs?” she wrote in the e-mail.

“We can't take the expense hit this year,” Sanders responded.

Davis' attorney, Elkan Abramowitz, a partner at Morvillo Abramowitz Grand Iason and Anello, questioned Cascino about the firm's habit of seeking checks with December dates in January. Prosecutors have shown evidence that Davis knew about the practice.

“This was a practice you were familiar with at LeBoeuf Lamb?” he asked, referring to Dewey & LeBoeuf processor firm LeBoeuf, Lamb, Greene & MacRae, which merged with Dewey Ballantine in 2007. Cascino had worked at LeBoeuf Lamb for decades prior to the merger.

“Yes, but it would just be the first few days in January,” she said, explaining that at both firms, the books weren't closed until a few days into the new year.

“At the time that you were involved with this, you did not think that there was anything inappropriate about that, correct?” Abramowitz asked.

“That's correct,” Cascino said.

Bryan Cave partner Austin Campriello, who is representing DiCarmine, also questioned Cascino. Much of his testimony focused on e-mails between Cascino and DiCarmine.

In early July of 2010, Cascino reported to DiCarmine on the total number of billable hours the lawyers and paralegals recorded in June, as she did every month.

“Enjoy the weekend and the sun,” DiCarmine responded, after congratulating her on a good number. “I'm in the Hamptons now and it's mint.”

In another exchange, meant to show how serious DiCarmine was about partners getting in their time, Campriello asked Cascino about Michael Groll, a high producing insurance partner, who Cascino said had trouble submitting his hours.

Cascino clarified that she knew the accounting adjustments she was involved in were wrong, but did not know they were criminal.

“Did you lie to partners and other employees?” Moser asked.

“Yes, sir,” she said.

“Did you lie to auditors,” he asked. Cascino admitted that she had.

Moser walked Cascino through a long series of additional adjustments she said she made in 2009, 2010 and 2011. She was shown reports that she said she pulled from Dewey & LeBoeuf's accounting system while she was in the DA's office helping them with their investigation.

Cascino said highlighted entries in the reports showed disbursements made to the firm that she had reclassified as fees. Though the adjustments didn't change the amount of cash at the firm, it did increase the appearance of the firm's income, Cascino said.

She also testified that she took a $1.08 million check a partner sent the firm as part of his capital contribution and applied it as a receipt for a matter that did not exist. That matter involved a client that was not associated with the partner who sent in the capital contribution, she said.

When asked generally who instructed her to make these adjustments, Cascino said she couldn't remember exactly, but it was either Sanders or Canellas. But when asked about specific adjustments, Cascino mainly said the instructions came from Canellas.

Some partners at Dewey balked at Cascino's accounting adjustments, according to e-mails presented to the jury.

“I noticed a disbursement of approximately $24,000 on this matter labeled 'reinstatement of disbursements,'” a partner in London wrote to Cascino in a September 2009 email, copying Sanders. “I have no idea what this is. It should be removed and the matter closed. The deal is long finished.”

Cascino responded to the e-mail, saying the charge had been removed.

A series of additional e-mails showed that finance managers and billing department employees in several of the firm's international offices had asked Cascino about seemingly incorrect write-offs at different times throughout 2009, 2010 and 2011. In most cases, she told them to ignore the errors and said she would fix them. Once, she responded that the accounting was thrown off by “corrupted batches” in 2010 that she needed to correct.

“Were there corrupted batches?” asked Manhattan assistant district attorney Peirce Moser, who questioned Cascino.

“Absolutely not,” she responded.

Nell Gluckman is a reporter for The American Lawyer, an ALM sibling of this newsletter. She can be reached at [email protected].

A cooperating witness in the Dewey & LeBoeuf criminal trial, Dianne Cascino, testified last month that she didn't believe she was breaking the law when she made accounting adjustments as the firm's director of revenue support.

“You were not intending to defraud anyone, correct?” asked New York defense attorney Andrew Frisch, who is representing ex-Dewey & LeBoeuf CFO Joel Sanders.

“Correct,” Cascino responded.

State prosecutors in Manhattan accuse Sanders, ex-Dewey chairman Steven Davis and former executive director Stephen DiCarmine of presenting banks and other lenders with a fraudulently rosy picture of the firm's finances in order to borrow huge sums of money. All three defendants have denied wrongdoing.

Cascino is one of seven former Dewey & LeBoeuf employees who pleaded guilty and agreed to cooperate with the Manhattan District Attorney's office in its fraud case against the defunct firm's top executives. She pleaded guilty to falsifying business records, a misdemeanor, in exchange for prosecutors recommending she face a conditional discharge with 50 hours of community service. Cascino said she took directions from Sanders and Dewey & LeBoeuf finance director Francis Canellas, another cooperating witness. Cascino told the jury that she altered accounting entries in order to inflate the firm's accounts receivable, usually at the behest of ex-finance director Canellas, though at times she said her instructions also came from Sanders. She said she reversed client disbursements that had previously been written off and posted client checks received early each year to books kept for the previous year. “There was no way those amounts were going to be billed and collected,” she said of the write-offs that she reversed. She said she made the adjustments to increase the firm's bottom line.

The first instance Cascino described was in January 2009, when she reversed about $4 million worth of client bills that had previously been written off. She said she had been told to do so by Canellas and, when she objected, he threatened to tell Sanders.

E-mails projected on a screen for the jury to see showed that in 2011, she asked Sanders about approximately $2.81 million in write-offs related to four clients.

“The following disbursement amounts were written off and were not budgeted for this year. Do you want me to reverse these write offs?” she wrote in the e-mail.

“We can't take the expense hit this year,” Sanders responded.

Davis' attorney, Elkan Abramowitz, a partner at Morvillo Abramowitz Grand Iason and Anello, questioned Cascino about the firm's habit of seeking checks with December dates in January. Prosecutors have shown evidence that Davis knew about the practice.

“This was a practice you were familiar with at LeBoeuf Lamb?” he asked, referring to Dewey & LeBoeuf processor firm LeBoeuf, Lamb, Greene & MacRae, which merged with Dewey Ballantine in 2007. Cascino had worked at LeBoeuf Lamb for decades prior to the merger.

“Yes, but it would just be the first few days in January,” she said, explaining that at both firms, the books weren't closed until a few days into the new year.

“At the time that you were involved with this, you did not think that there was anything inappropriate about that, correct?” Abramowitz asked.

“That's correct,” Cascino said.

Bryan Cave partner Austin Campriello, who is representing DiCarmine, also questioned Cascino. Much of his testimony focused on e-mails between Cascino and DiCarmine.

In early July of 2010, Cascino reported to DiCarmine on the total number of billable hours the lawyers and paralegals recorded in June, as she did every month.

“Enjoy the weekend and the sun,” DiCarmine responded, after congratulating her on a good number. “I'm in the Hamptons now and it's mint.”

In another exchange, meant to show how serious DiCarmine was about partners getting in their time, Campriello asked Cascino about Michael Groll, a high producing insurance partner, who Cascino said had trouble submitting his hours.

Cascino clarified that she knew the accounting adjustments she was involved in were wrong, but did not know they were criminal.

“Did you lie to partners and other employees?” Moser asked.

“Yes, sir,” she said.

“Did you lie to auditors,” he asked. Cascino admitted that she had.

Moser walked Cascino through a long series of additional adjustments she said she made in 2009, 2010 and 2011. She was shown reports that she said she pulled from Dewey & LeBoeuf's accounting system while she was in the DA's office helping them with their investigation.

Cascino said highlighted entries in the reports showed disbursements made to the firm that she had reclassified as fees. Though the adjustments didn't change the amount of cash at the firm, it did increase the appearance of the firm's income, Cascino said.

She also testified that she took a $1.08 million check a partner sent the firm as part of his capital contribution and applied it as a receipt for a matter that did not exist. That matter involved a client that was not associated with the partner who sent in the capital contribution, she said.

When asked generally who instructed her to make these adjustments, Cascino said she couldn't remember exactly, but it was either Sanders or Canellas. But when asked about specific adjustments, Cascino mainly said the instructions came from Canellas.

Some partners at Dewey balked at Cascino's accounting adjustments, according to e-mails presented to the jury.

“I noticed a disbursement of approximately $24,000 on this matter labeled 'reinstatement of disbursements,'” a partner in London wrote to Cascino in a September 2009 email, copying Sanders. “I have no idea what this is. It should be removed and the matter closed. The deal is long finished.”

Cascino responded to the e-mail, saying the charge had been removed.

A series of additional e-mails showed that finance managers and billing department employees in several of the firm's international offices had asked Cascino about seemingly incorrect write-offs at different times throughout 2009, 2010 and 2011. In most cases, she told them to ignore the errors and said she would fix them. Once, she responded that the accounting was thrown off by “corrupted batches” in 2010 that she needed to correct.

“Were there corrupted batches?” asked Manhattan assistant district attorney Peirce Moser, who questioned Cascino.

“Absolutely not,” she responded.

Nell Gluckman is a reporter for The American Lawyer, an ALM sibling of this newsletter. She can be reached at [email protected].