|Zach Warren Follows Dewey Leaders (c. ALM)|
The Indictment in “The People of the State of New York against “Steven Davis, Stephen DeCarmine, Joel Sanders and Zachary Warren” is in the running to be the most depressing and appalling read of 2014. The stars of this document are the Managing Partner, The Executive Director and the Chief Financial Officer…smart men who were foolish enough to leave a trail of damning emails. But the indictment wasn’t limited to people in “the C Suite.”
to take employee C to lunch to reassure him because “he is hearing and
seeing too much.” Employee C asked Employee N for backdated checks. The
sinister web appears to have threaded its way into many corners of the
finance department. The section entitled “overt acts” introduces employees A,B, C, D, E , F and N who testified about various aspects of the fraudulent activities which they observed or participated in. Additional staff members are subjects of a related SEC indictment.
The NY State indictment alleges that staff were asked to “make adjustments” to business records, reclassify disbursement payments, reclassify ” of counsel” payments, reverse disbursement write-offs. charge firm costs to clients, miscode credit card expenses, reclassify salaried partner expenses, .produce back-dated checks, apply loan repayments as revenue. The “grand scheme” was designed to hide the true financial condition of the firm from the partners, the firms auditors and investors. Were staff really supposed to second guess the decisions of the managing partner, executive director and CFO? Are staff supposed to discern the line of demarcation in gray space where “sharp lawyering” and “creative accounting” techniques morph into fraud?
A Colossal Failure of Culture