“In these modern times, where almost no individual, in good faith, can possibly understand, let alone comply with all of our government’s complex laws and regulations, is it any surprise that a trial “by a jury of our peers”, has become a farce?…

…My lawyers (some of the best in the nation) and other lawyers I knew or met, consistently referred to an American trial by jury as some highly subjective and arbitrary event, ”a roll of the dice”, dependent more on the judge and jury assigned to you (and how your lawyers might present your case), than on the facts and the truth. I am not commenting on the Dewey case merits here. I am just saying, it’s ridiculous and outrageous that defendants, especially individual Americans, who have their lives and liberties at risk, have their cases heard and decided by ordinary men and women, with no specialized expertise in the laws/regulations/industry at hand? (Generalist judges have some of these same problems. That’s a key reason why some government agencies now use their own specialized judges, which is another matter. In my own civil SEC securities case, I was surprised and concerned that the federal judge, handled all manner of other civil matters and on other days, also criminal matters! It worked for me. The right decision was made based on the facts and the law, but my lawyer’s worried every day about “rolling the dice” at trial. I also believe I was lucky that the SEC decided to not have a jury of “my peers” trial. I don’t believe luck should matter, when it comes to our life and liberty, in an American court room, do you?) Let’s really admit the truth. This concept, of “a jury of our peers”, was established hundreds of years ago, when our laws were few, simple and understandable to almost everyone. It really doesn’t work today, does it? How long are we going to deprive American citizens, who run through this system, their Constitutional rights, because of this obviously farcical concept for these times? P.S. I am all about the facts and the truth and justice, but I am always going to initially take the side of the defendant. That’s why I didn’t discuss the plaintiffs/prosecutors concerns with juries, like might be the case in the Dewey matter. (See article below.) In America, those prosecuting us have to prove their allegations, with facts and applying the law.”, Mike Perry, former Chairman and CEO, IndyMac Bank

October 20, 2015, Sara Randazzo and Nicole Hong, The Wall Street Journal


Jury in Dewey Law-Firm Case Felt Inundated by Details

Jurors faced piles of evidence, testimony that many said the group found hard to absorb

A mistrial was declared Monday in a financial fraud case against three former Dewey & LeBoeuf executives. PHOTO: REUTERS

By Sara Randazzo and Nicole Hong

Prosecutors spent four months trying to prove three former executives of collapsed law firm Dewey & LeBoeuf LLP were guilty of more than 150 counts in a financial fraud scheme. In the jury room, it proved to be too much to handle.

The mistrial this week in the closely-watched case is the latest example of the hurdles prosecutors face bringing complex financial cases to a jury. Prosecutors and enforcement officials have been criticized for failing to charge individuals with wrongdoing in the wake of the financial crisis, often opting for large monetary settlements instead. But such cases can be highly complex and carry long odds of getting past juries with scant financial backgrounds.

Prosecutors from the office of Manhattan District Attorney Cyrus Vance Jr. sought to prove that Dewey’s top three leaders masked the troubled nature of the firm’s finances ahead of its 2012 collapse. During the trial, they called 41 witnesses and displayed hundreds of emails to detail the often arcane accounting adjustments they claimed underpinned the alleged scheme.

Early on in the four month trial, prosecutors struggled to lay out a clear narrative. Opening statements turned into an hours-long explanation of concepts like disbursement write-offs and reclassifying lease termination payments.

“I feel like people were going a little crazy toward the end because they really didn’t understand the law,” said Edith Hines, a 64-year-old retired state worker, who added: “We couldn’t go any further.”

On Tuesday, a spokeswoman for Mr. Vance said his office will continue to pursue such cases “no matter how challenging or novel the crime may be.” A retrial may be warranted, the office said.

Over some 120 hours of deliberations in a small room overlooking Manhattan’s Chinatown, 12 jurors including a bus driver and a law firm receptionist pored over piles of evidence and testimony that many of them said were difficult to absorb. Several jurors early on made up their minds and refused to budge, some said. Illness spread through the jury room, delaying proceedings. One went to the emergency room to be treated for muscle spasms from sitting too long.

After reaching acquittals on a few dozen counts, intractable disagreements on the more serious charges prompted a mistrial on Monday in a New York state court.

“I don’t know what else we could have done,” said Arianne Bernardo, a 29-year-old respiratory therapist. “People were not going to change their vote.”

When jurors began deliberating Sept. 16, the seven women and five men were surprised to find they had to reach decisions on 151 separate counts, roughly 50 each against Dewey’s former chairman, Steven Davis; former finance chief Joel Sanders; and former executive director, Stephen DiCarmine.

The volume of counts was “ridiculous,” said Pan Wong, a software engineer who helped lead deliberations and dispel tension, according to other jurors.

Descriptions of the 22 days of deliberations by seven of the jurors suggest prosecutors miscalculated by inundating the panel with so much detail. One juror said some thought the three defendants should have been tried separately. Others said they wanted more explanation of what made the accounting adjustments illegal and of which exhibits corresponded to which charges. A few didn’t understand why some witnesses were called.

“The jurors were confused. They didn’t know what the story was,” said Scott Wagner, a partner at law firm Bilzin Sumberg Baena Price & Axelrod LLP who has handled corporate investigations.

Jurors said they spent the first few days of deliberations gathering exhibits, alerting the courtroom with a buzzer and written notes when they had new requests. Hundreds of documents arrived in the room in binders, which the jurors organized using sticky notes and created a timeline on a whiteboard.

Some jurors were persuaded by the narrative laid out by seven lower-level Dewey employees who accepted plea agreements and cooperated with the prosecution. Others doubted the cooperators’ credibility. Jurors were caught off guard that the defense didn’t call a single witness, but didn’t fault them for it.

A handful felt the three defendants were innocent from the day deliberations began. That group included Ms. Hines. “I see a law firm that folded over and made a whole lot of mistakes. I don’t see a crime in those mistakes,” she said.


A timeline of events

  • October 2007: Dewey & LeBoeuf forms before the financial crisis when Dewey Ballantine merges with LeBoeuf, Lamb, Greene & MacRae, a rare marriage of top New York law firms. At the time, the combined company had about 1,300 attorneys and annual revenue of close to $1 billion.
  • Late 2008: Because of weak financial performance, the firm is unable to meet the minimum year-end cash flow requirement set by its lenders. Executives are accused of devising a “Master Plan” by which they allegedly begin using improper accounting adjustments to create revenue and inflate net income.
  • 2009: Financial performance continues to deteriorate, and executives seek a waiver from its lenders. Banks adjust terms, but additional conditions exert more financial pressure.
  • April 2010: Firm refinances its debt with $250 million from banks and insurance companies. The role of three former Dewey executives—Steven Davis, former chairman; Stephen DiCarmine, former executive director, and Joel Sanders, former chief financial officer—in securing the refinancing deal becomes a key part of the eventual fraud charges.
  • 2012: Partner defections accelerate.
  • Spring 2012: Manhattan district attorney’s investigation into the firm’s practices becomes public. Meanwhile, merger talks with potential partners dry up.
  • May 2012: Dewey files for bankruptcy protection, the largest law firm failure in U.S. history. The firm owed $315 million to creditors.
  • March 2014: Criminal charges are brought against the three former Dewey executives, accusing them of fraud.
  • September 2015: Trial for the former executives concludes and goes to the jury.
  • October 7: The jury delivers a partial verdict, finding each Dewey defendant not guilty on multiple charges of falsifying business records but remaining deadlocked on more than 100 charges against the trio.
  • October 13: Jury clears the former law firm executives of more counts but still needs to decide on more than 90 counts, including grand larceny.
  • October 19: Judge declares mistrial.

To the lawyers, defendants and family members who awaited a verdict, the first signs of dissension emerged on the eighth day when questions arose about the duties of a juror and what to do in the event of a deadlock. A follow-up question the next day asked if the only duty of a juror is to vote.

Jurors say some members refused to participate in discussions, saying they had reached a decision and would vote when required to do so.

One juror, a 42-year-old computer programmer who declined to be named, said he got into a “verbal confrontation” with another juror who wouldn’t explain his position.Deliberations paused for weekends and two holidays. After Columbus Day, Mr. Wong, the software engineer, arrived sick after being bedridden for several days and nodded off during deliberations. Not wanting to wake him, “we read a lot that day,” said Fernando Yñigo, a 32-year-old web developer. Mr. Wong ended up telling the court he couldn’t stay awake, and they were dismissed early.

The 12 initially tried to take a vote for each individual defendant, but failed to reach any conclusions. Then they reorganized by evaluating the individual charges that were the easiest to understand, starting with falsifying business records counts. Eventually, they reached accord on 23 acquittals of falsifying business records against Mr. Davis, 21 against Mr. DiCarmine and 14 against Mr. Sanders.

Over time, votes shifted on the rest but never became unanimous, even after a judge twice urged them to reach consensus. Some votes were evenly split, others were 10-2, and others 8-4. The jurors kept retracing their steps, repeatedly going through the larger counts including grand larceny and scheme to defraud.

Ms. Hines said she tried to convince people to vote for acquittal, but “couldn’t budge people.” Those pushing for guilty verdicts tried to do the same. By the time they left Monday, the jurors say they came closest to convicting Mr. Sanders, with Mr. Davis receiving the most support for acquittal.

Trapped in court for so many months, the jurors found a lot to complain about, one juror said. But they tried to lighten the mood at lunch by talking about their personal lives, according to another. Each day, salads, soups and sandwiches were delivered from a nearby deli. Jurors also kept a steady supply of candy and cookies in the room.

Skylar Schur, a 38-year-old schoolteacher, said she wished the jury could have come to a conclusion.

“It was too overwhelming for some people, understandably,” she said, adding that by 4 p.m., each day, they were “kind of fried.”

Posted on October 22, 2015, in Postings. Bookmark the permalink. 1 Comment.

  1. Great points, Mike….I think the jury by peers concept is solid, and that you’re actually making a case for it, but we need to define what “peers” are based on the nature and complexity of the case. The peer must be one who has parity in the understanding of the issues at trial, which as you point out, ain’t gonna happen when you pull the average person off the street for complex legal/financial matters. The man on the street juror may work best in the types of criminal cases that were more predominant a couple hundred years ago (robber, battery, murder, etc.) than the current kinds of complex cases that couldn’t have been imagined back in the day….complex cases call for “peer” jurors who are expert on the matters at trial, and that is a very challenging thing to do from a practical standpoint…..think about arguing intellectual property infringement cases based on how an operating system or micro processor infringes on a competitor’s…..

    Mark Nelson 3256 Sitio Tortuga Carlsbad, CA 92009 760.473.7558 mnelson.doit@gmail.com

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