Mimesis Law
8 December 2019

What’s Eating Steven Davis?

July 16, 2015 (Mimesis Law) — Steven Davis wasn’t exactly some wuss cowering in corners whenever a hard decision had to be made or someone challenged him.  That’s not how you get to be the chairman of a big law firm like Dewey & LeBoeuf.  But then, the firm’s former finance director Francis Canella’s testimony certainly made him seem like a quivering bowl of Jell-o.

Francis Canellas, the now-defunct firm’s former finance director, recalled a meeting he attended with the firm’s auditor at Ernst & Young in either 2010 or 2011. Before going in to the meeting, Mr. Davis “appeared nervous,” Mr. Canellas said during questioning from a prosecutor.

“He was normally very calm and collected, and he just didn’t appear himself that day.”

A guy in charge of a firm has a lot of stuff going through his head.  Should he approve the extra cost to have the firm’s logo gold-embossed on the yellow pads? Should they sue the bastard who stiffed them on the $17 million dollar fee for the five associates who tagged along with the partner during a deposition?  Work, work, work. He’s a busy guy.

But Canellas only knew what was on his plate, not Davis’.  So if Davis “appeared nervous,” which is something akin to a furtive gesture provided Canellas had mad skillz figuring out how nervous looked on a guy named Davis, who also might have been thirsty, itchy and somewhat irritated by the way the cuff was wrinkled on his trousers that morning, he must have been.

Even before the meeting, Dewey’s then-chief financial officer, Joel Sanders, raised the question of whether Ernst & Young might want to talk about adjustments the firm made to its books, Mr. Canellas told jurors Tuesday. Over two days of questioning, Mr. Canellas has detailed to a jury what he says were improper accounting adjustments he and others at the firm made to appear to stay in compliance with the terms of the firm’s bank loans.

So the gist of Canellas’ testimony, which comes to the government as a small sign of appreciation for its showing him the love not showing him the pain he might otherwise suffer, is largely a product of his being a dishonest, maybe even incompetent, employee?

Maybe Davis was nervous that day because he realized that a really big law firm did a shitty job of hiring finance people who could be trusted with handling their duties?  That could explain it too.

In the end, that meeting with the Ernst & Young auditor had nothing to do with accounting adjustments, Mr. Canellas said. Instead, the auditor “said the audit went well and that the books were in good shape,” he said in court.

Or maybe there was no big story to tell, no rational basis to link up Davis’ appearance as viewed through the eyes of a guy who might wet his pants at the thought of having to seek the comfort of a cellmate rather than a spouse, because an outside auditor didn’t see any problem with the books at all.

Which raises a subtle question: Why was this testimony offered at the trial of the Dewey crew?  Why was this testimony allowed at all?  Because of the “clueless auditor” email, of course.

When an auditor working with the firm that year said in June 2009 that he was leaving Ernst & Young, Mr. Sanders sent an email to Mr. Canellas, shown to jurors, that said, “Can you find another clueless auditor for next year?” Mr. Canellas replied: “That’s the plan. Worked perfect this year.”

The “clueless auditor” came around again in March 2010, sending Mr. Sanders an email saying he was once again switching jobs, and inviting him to a seminar, according to evidence presented Tuesday.

Mr. Sanders forwarded the note to Mr. Canellas, saying, “Can we get him back as our auditor?”

As the Dewey trial drags on, it does less to expose criminality than it does to expose the banal concerns, fiscal savvy and humor behind the mahogany panels and flannel suits.  Was Sanders really being serious about the “clueless auditor,” as it’s critical to the government’s case that the jury believe so, or joking around like, well, everybody does in emails?

That big-time law firm Dewey & LeBoeuf was managed with less fiscal sophistication than the corner umbrella stand — which, it should be noted, turned a profit — is beyond question, but that doesn’t make them criminal. Just truly lousy businessfolk.

On the other hand, reading juvenile snarky emails aloud in a courtroom using one’s most serious, somber tones doesn’t turn them into confessions.  And they become no more damning because Frank Canellas recalls Steven Davis seeming a little nervous.  Especially when there are about a million things Davis might be nervous about that had nothing to do with anything Canellas might have a clue about.

 

 

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  • Wrongway
    17 July 2015 at 11:16 pm - Reply

    Speaking of clueless..

    thanx for your post & most importantly, your ability to point out the obvious, that a clueless reader like me would only ‘see’ after the fact..

  • The Real Peterman
    18 July 2015 at 1:01 am - Reply

    To paraphrase George Carlin, somewhere in the world is the world’s worst auditor. Might as well try to get him on your case!