The spectacular collapse of Dewey & LeBoeuf, the Manhattan law firm whose demise I chronicled in The New Yorker last year, has reached the criminal-indictment stage. As I pointed out in a recent blog post, one of the defendants is a previously little-known figure named Zachary Warren, who was hauled into court last month along with the firm’s top three leaders. Warren was charged with conspiracy, a “scheme to defraud,” and six felony counts of having “made and caused” false entries in books and records. Warren pleaded not guilty and was released on a two-hundred-thousand-dollar bail.
Warren’s job at Dewey & LeBoeuf, his first after he graduated from Stanford University, was to nudge partners to collect on their bills. His position in the firm’s hierarchy was so low that some of his co-defendants had trouble recognizing him. Even though he’d never taken an accounting course and left the firm to attend law school a year before the 2010 bond offering that is now described as fraudulent, he was said to have helped orchestrate what the Manhattan district attorney, Cyrus Vance, Jr., called “a massive effort to cook the books.”
Warren also stands out because of his exemplary record and, at least before the indictments, his promising future. After leaving Dewey & LeBoeuf, he was on the law review at Georgetown University Law Center and clerked for the federal judge J. Frederick Motz, in Baltimore, Maryland. He currently holds a coveted clerkship on the Sixth Circuit Court of Appeals in Memphis. He passed the California bar exam and has a job offer from Williams & Connolly, a prominent Washington, D.C., law firm. After news broke of Warren’s indictment, Judge Motz described him to me as “a wonderful person” and a “decent, fine young man.” He added, “I trust him completely.”
Even more perplexing is the way that the district attorney’s office has treated Warren during its investigation. On March 27th and 28th, Vance’s office released details of seven guilty pleas that it obtained during the investigation. Four turned out to be pleas to minor misdemeanor charges of one sort or another, all from accounting and administrative personnel who are relatively low ranking, but arguably higher in the chain than Warren. Vance said that in their cases he wouldn’t seek any jail time and would recommend a sentence of community service. The other three guilty pleas were from the firm’s director of finance, Francis J. Canellas, and two other accounting personnel. Each pleaded guilty to one felony.
In contrast, Warren was never given the opportunity to plead to a misdemeanor before he was indicted. (Unlike a felony, a misdemeanor wouldn’t necessarily derail his legal career.) He spoke to prosecutors only twice: once in a relatively brief phone interview, and again in a much longer session last fall that he initially thought would be with the Securities and Exchange Commission, which was looking at possible civil charges. An S.E.C. lawyer asked Warren if he would mind if someone from the district attorney’s office showed up. Evidently not realizing that he might be in jeopardy of criminal prosecution, Warren agreed. He asked for time off from work and paid his own way to Washington, where the interview took place, on November 15th. He didn’t bring a lawyer.
Whatever Warren said seems to have inflamed prosecutors. Or perhaps it’s what he didn’t say. Warren later told friends that they seemed furious at his inability to recall meetings at Dewey & LeBoeuf that had occurred nearly five years earlier. Prosecutors concluded that he was evasive and untruthful.
For a law-school graduate, Warren may have been naïve. He told friends he thought the worst that could happen was that he’d be subpoenaed to testify before a grand jury. When months passed and he heard nothing further, he assumed he was out of the woods. Then, on the afternoon of Friday, February 28th, he got a phone call. “You’ve been indicted,” an assistant district attorney told him. He was ordered to appear in court the following week, and he spent a morning in a jail cell with his co-defendants.
The indictments shed little light on what, exactly, Warren did that amounted to a crime. More details were expected to emerge when the other defendants’ guilty pleas were revealed. Each plea agreement was accompanied by a so-called allocution, in which defendants admit in detail what they did and why. Prosecutors often use allocutions to show the strength of their cases against remaining defendants.
But Warren is mentioned in only one of the recently unsealed statements, and then only in passing. Canellas, who was the firm’s director of finance, said that he made numerous false accounting adjustments in order to keep the firm in compliance with its loan agreements, and that he and Joel Sanders, the firm’s chief financial officer, discussed “plausible rationales” for the adjustments that would satisfy the auditors. “I remember that at least one of these conversations took place in Zach Warren’s office, in Warren’s presence,” Canellas stated. “We had a flip chart in the office, and Sanders and I wrote down the adjustments we thought of.”
That’s it. Warren appears to have been little more than a bystander to one conversation in a multifaceted conspiracy that allegedly spanned years. It’s no wonder that, five years later, he might have had trouble even remembering such an incident, assuming that it happened the way Canellas said it did.
The district attorney’s office may have far more incriminating evidence. If so, it’s keeping it close to the vest. (A spokeswoman declined comment, as did Warren’s lawyer.) Meanwhile, Warren’s current and prospective employers are standing behind him. He’s still clerking for the Sixth Circuit, and Williams & Connelly hasn’t withdrawn its job offer. He’ll need the income. As high-ranking managers of the firm, his co-defendants have prominent lawyers, whose fees are being paid by Dewey & LeBoeuf’s insurance carrier. Warren was too low in the organization to qualify as a manager. He’s on his own.
Photograph by Carlo Allegri/Reuters/Corbis.
