Accounting / Accountants, Biglaw, Crime, Dewey & LeBoeuf, White-Collar Crime

New And Juicy Details Of Zachary Warren's Alleged Role In The Dewey Debacle

What are the latest allegations about Zachary Warren, the handsome and high-powered young lawyer facing criminal charges in the Dewey & LeBoeuf fraud case?

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Back in March, we wrote the following about Zachary Warren, the young lawyer hit with criminal charges arising out of his post-college, pre-law-school employment at Dewey & LeBoeuf: “we’ve heard rumors that in the coming weeks the DA’s office will show more of its hand — in ways that could materially affect our perception of Zach Warren. We reserve the right to change our opinion of him after additional facts emerge.”

Now some additional facts (or at least allegations) have emerged. As we noted in Morning Docket, the Manhattan District Attorney’s office just laid more of its cards on the table, in opposing Warren’s motion to have his trial severed from that of his more notorious co-defendants.

We have a copy of the government’s opposition. What revelations does it contain?

You can access the full memorandum of law, signed by assistant district attorney Peirce Moser, here. The government makes various legal arguments in opposing severance, such as the strong presumption in favor of joint trials, but the juiciest information in the memo relates to factual matters.

In this paragraph from the memo, in which the DA’s office takes Zachary Warren’s impressive legal pedigree and turns it around on him, we learned that Warren was savvy enough to inquire about immunity:

Burn. We previously wondered whether Warren was offered the opportunity to cooperate with the DA’s investigation into Dewey’s ex-leaders — former CEO Steven Davis, former executive director Stephen DiCarmine, and former CFO Joel Sanders. It now seems that Warren could have approached the DA’s office after retaining counsel and tried to cut a deal for himself, but it appears that he never did.

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The DA’s office previously got criticized in the New York Times for supposedly referring to Zach Warren as a “mastermind” of the accounting fraud at Dewey designed to make the firm look more solvent than it actually was. Here the government acknowledges that Warren wasn’t a “mastermind” but alleges that he was “a willing foot solider”:

In support of its contentions, the government cites some emails that don’t sound very favorable to Warren:

In subsequent paragraphs, the government sets forth its theory of the accounting fraud at Dewey and Warren’s alleged involvement in it. The scheme turned on the difference between fees payable to Dewey as a result of legal services provided and disbursements to third-party service providers (like Westlaw or car services) that ran through Dewey, and it also relied upon the distinction between write-offs and amounts still potentially collectible. The government alleges that various Dewey employees, including Warren, participated in a scheme to deliberately mis-classify fees and disbursements in order to make Dewey’s financials look better than they actually were. For example, according to the government memo (paragraph 34), “[a]s part of the Master Plan, defendant Sanders, defendant Warren, and [former finance director Frank] Canellas planned to have approximately $4 million worth of disbursement write-offs put back on the Firm’s balance sheet as unbilled receivables.”

What was Warren’s motivation for allegedly participating in this scheme? According to the government, money. In paragraphs 46 through 50, the government mentions Warren’s base salary as client relations manager ($100,000) and the bonus compensation he received in 2009 ($115,000):

Citing emails again, the government claims that even though Warren left Dewey to go to Georgetown Law in July 2009, he continued to communicate with his alleged co-conspirators into 2010, mainly to try and chase down additional bonus money that he was owed. And there was this as well:

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Defendant Warren also otherwise remained in contact with [various Dewey employees], and even applied for a job as a summer associate at Dewey in the Fall of 2010.

That would have been for Zachary Warren’s 1L summer, when Biglaw jobs are hard to get and therefore especially coveted, but we’re guessing he’s glad he didn’t land it. Warren wound up summering at Williams & Connolly rather than Dewey — and he’s probably happy about that. At this point in his life, Zach Warren probably rues the day he had anything to do with Dewey.

People v. Warren: Memorandum In Opposition To Severance Motion [New York Supreme Court]
Dewey Prosecutors Punch Back on Zachary Warren, Former Client Manager [WSJ Law Blog via Morning Docket]

Earlier: What Else Dewey Know About Zachary Warren?
What Dewey Know About Zachary Warren, Defendant No. 4 In The Criminal Case?

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