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Ex-Dewey & LeBoeuf execs acquitted on some counts, jury stuck on others

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(Reuters) — A Manhattan jury on Tuesday acquitted three former executives of bankrupt law firm Dewey & LeBoeuf of several criminal charges but remained deadlocked on most of the charges, including the most serious, grand larceny.

Former Dewey Chairman Steven Davis and former Executive Director Stephen DiCarmine were each found not guilty of four counts of falsifying business records, while former Chief Financial Officer Joel Sanders was found not guilty on one such charge.

All three men were acquitted of numerous other false business records counts last week, when the jury also said it was deadlocked on most of the counts.

But scores of falsifying business records charges remain against the defendants, as do all of the most serious counts. Each defendant faces 15 counts of grand larceny, which carries a maximum sentence of 25 years in prison. In addition, they each face charges of scheming to defraud and violating New York's securities fraud law, the Martin Act.

The fact that so little of the case has been decided may be why the defendants showed little reaction to the reading of another partial verdict in their favor on Tuesday.

As he did last week, Robert Stolz, the judge overseeing the trial in New York state court, ordered jurors, now in their 18th day of deliberations, to continue to try to reach a unanimous verdict.

The order came over the objection of Sanders' attorney, Andrew Frisch, who asked for a mistrial saying he did not see a “realistic possibility” of a verdict even with further deliberations.

“There is no reason to believe that the presentation of this case again would be to a jury that was any more intelligent, reasonable, hard-working or fair,” Judge Stolz told the jury as he pushed them to find a verdict.

The three defendants are accused of using illegal accounting adjustments to mask the firm's teetering finances between 2008 and 2012 and convince lenders and investors, including Bank of America Corp.and Citigroup Inc., that the law firm was still healthy.

Dewey's 2012 bankruptcy was the largest ever for a U.S. law firm. It counted 1,400 lawyers at its peak.

Prosecutors have argued the three executives directed the firm's finance department to back-date checks, reclassify certain expenses as assets and reverse write-offs, among other adjustments.

But the defense responded that the accounting practices in question were not necessarily illegal and that the firm's demise was primarily due to a rash of defections by its top partners, rather than any adjustments.