Citi to Former Dewey Partner: It Wasn't Our Job to Warn You of Firm's Impending Demise

http://www.americanlawyer.com/PubArticleALD.jsp?id=1202571459496&Citi_to_Former_Dewey_Partner_It_Wasnt_Our_Job_to_Warn_You_of_Firms_Impending_Demise

Article by Sara Randazzo


Citibank N.A. is forcefully denying allegations by a former lawyer with the now-defunct Dewey & LeBoeuf that the bank conspired with leaders of the firm to woo lateral partners with a Ponzi-like scheme aimed at paying off Dewey's debts to the bank through a steady flow of capital contribution payments.

The bank filed a summons in New York state court on May 31 against Steven Otillar seeking repayment of roughly $209,670, which court papers say accounts for a $207,000 loan given September 2, 2011, plus interest (the amount equates to a target compensation of $575,000) .In a 25-page filing made Wednesday in New York federal court, Citi asserts that partners should have done their own research into the firm's financial condition and that it was not the bank's responsibility to warn them

Otillar claims Citi conspired with former Dewey leaders to fraudulently induce partners to join the firm. He also claims that Citi should have cautioned him  of Dewey's financial troubles when he took out the loan. The court filing at times seems to avoid the issue of whether or not some of Otillar's assertions are true, arguing instead that they have no place in the current dispute.

An addendum to the Wednesday filing also officially reveals for the first time that three of Dewey's administrators—executive director Stephen DiCarmine, chief financial officer Joel Sanders, and director of finance Frank Canellas—had letters of credit issued by Citi. A declaration by Jeffrey Cole, identified as a senior credit officer in the Citi Private Bank Risk-Law Firm Group, says the three took out the letters in early 2010 for an unspecified dollar amount. All three of the letters expired in December 2011 without having been drawn upon. (The letters essentially held money aside at the bank for the three). In Otillar's August motions, he argued that "the only reason someone would want a letter of credit is that he had reason to believe the firm would not survive."

Stay tuned to this one its going to get very interesting.