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NYC prosecutor: Execs lied as law firm collapsed

NEW YORK — Three former executives conspired to hide a law firm’s financial problems from auditors and their own partners as it headed toward collapse in the biggest US law firm bankruptcy, prosecutors said Thursday.

Dewey & LeBouef LLP’s former chairman, Steven Davis, onetime chief executive Stephen DiCarmine, and former chief financial officer Joel Sanders are accused of ‘‘concocting and overseeing a massive effort to cook the books,’’ Manhattan District Attorney Cyrus R. Vance Jr. said as he unveiled fraud charges.

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The defendants say they did nothing but strive, legally, to save a struggling firm from the 2008 financial meltdown.

The firm traced its roots to the early 1900s and counted former New York governor Thomas E. Dewey among its partners. At its height, it employed nearly 3,000 people. Its 2012 implosion rocked the legal community.

Problems began after Dewey Ballantine LLP and LeBoeuf, Lamb, Greene & MacRae LLP joined to form Dewey & LeBouef in 2007. By the end of 2008, it was more than $100 million in debt, Vance said. So Dewey’s leaders began doctoring records and devising accounting shenanigans, said Vance’s office and the FBI.

The men sent e-mails celebrating their trickery, according to an indictment. After DiCarmine came up with one accounting maneuver, Sanders gushed: ‘‘That’s why we get the extra 10 or 20% bonus.”

Months later, the indictment says, Sanders wrote to another, unidentified employee: ‘‘Can you find another clueless auditor for next year?’’

The defense says authorities misunderstood law firm accounting.

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