SEC Obtains Judgments Against Former Chairman and Two Other Executives of Defunct Law Firm Dewey & Leboeuf
Litigation Release No. 24258 / September 6, 2018
Securities and Exchange Commission v. Steven H. Davis, et al., Civil Action No. 14-cv-01528 (VEC) (S.D.N.Y.)
A federal district court entered judgments on consent on September 5 and 6, 2018 against former executives of Dewey & LeBoeuf, LLP, Francis Canellas, Thomas Mullikin, and Steven H. Davis, in connection with their roles in a fraudulent $150 million bond offering undertaken by the now defunct international law firm.
In its complaint, filed on March 6, 2014 in federal district court in Manhattan, the SEC alleged that Dewey's 2010 bond offering fraudulently relied on the firm's materially misstated financial results for 2008 and 2009, which were incorporated into the private placement memorandum for the offering and provided to investors. The Commission alleged that Canellas, Dewey's then director of finance, along with Dewey's former chief financial officer, orchestrated a scheme to falsify Dewey's financial statements and provide the false financial statements to investors. The Commission also alleged that they instructed Mullikin, Dewey's then controller, and others in the finance department, to carry out the scheme. Davis, the firm's then chairman, who was aware of the fraudulent adjustments, made key decisions concerning the offering, including approving the offering and signing off on the private placement memorandum.
Canellas consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder, and ordering him to pay $43,178.82 in disgorgement and prejudgment interest.
Mullikin consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and ordering him to pay $8,635.78 in disgorgement and prejudgment interest.
Davis consented to the entry of a judgment permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and prohibiting Davis from acting as an officer or director of a public company. The judgement against Davis also orders him to pay a $130,000 civil penalty. The settlements resolve completely the cases against Canellas, Mullikin, and Davis.
The SEC staff in the New York office responsible for the investigation and the ongoing litigation includes William Finkel, Joseph P. Ceglio, Christopher Mele, Howard Fischer, and Thomas P. Smith, Jr. The case has been supervised by Sanjay Wadhwa.