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A criminal investigation into history’s most colossal law firm failure is starting to intensify, the Wall Street Journal reports.Manhattan’s district attorney has subpoenaed the now-defunct law firm Dewey & LeBoeuf and one of its lenders as part of a criminal investigation into whether the firm lied to lenders and its own partners.
The DA is looking closely at statements Dewey made to a bank syndicate when it was desperately trying to extend a $100 million dollar revolving line of credit in the months before its downfall, the Journal reported.
Prosecutors are also probing whether Dewey properly repaid partners who took out loans to buy equity in the firm, and then fled the firm before its collapse.
A lawyer for several firm leaders — including ousted chairman Steven Davis, former executive director Stephen DiCarmine, and ex-Chief Financial Officer Joel Sanders — said his clients didn’t even break any civil laws.
“[A]nd they certainly didn’t do anything wrong criminally,” Ned Bassen told the Journal.
Dewey filed for bankruptcy in May, after its own disenchanted partners tipped off Manhattan prosecutors to potential wrongdoing, Bloomberg has reported.
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