[Photo:  BusinessInsider]

by Howard Haykin

The SEC reports that 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 Davis - in connection with their roles in a fraudulent $150 million bond offering undertaken by the now defunct international law firm. In the settlements, which resolve completely the cases against Canellas, Mullikin, and Davis:

• Canellas agreed to pay $43,000 in disgorgement and prejudgment interest.
• Mullikin agreed to pay $9,000 in disgorgement and prejudgment interest.
• Davis agreed to be prohibited from acting as an officer or director of a public company and to pay a $130,000 civil penalty.

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 (“PPM”) for the offering and provided to investors. The SEC alleged that Canellas (Dewey's then director of finance), along with Dewey's former CFO, orchestrated a scheme to falsify Dewey's financial statements and provide the false financial statements to investors. The SEC also alleged that they instructed Mullikin (Dewey's then controller) and others in the finance department, to carry out the scheme. Davis (Dewey'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.