The plot has thickened in the Dewey & LeBoeuf saga, courtesy of a former partner who has accused Citibank of fraud in connection with the firm’s collapse.
Steven Otillar took out a $207,000 capital loan from Citbank when he joined the now-defunct firm as a partner in 2011. According to Citi, the loan agreement included a clause that triggered default of the loan if Otillar left the firm or if Dewey collapsed. When the ex-partner did not repay the loan following Dewey’s Chapter 11 bankruptcy filing, Citi sued him. The bank recently sought summary judgment, arguing that Otillar has no legal grounds to claim that he does not owe loan payments.
Otillar responded with his own court filing, accusing the bank of colluding with firm leadership to conceal Dewey’s financial troubles from other partners and the public. Otillar claims that the bank had a fiduciary duty to inform potential partners about the firm’s precarious finances, and says that he signed the loan agreement only after repeated urgings from Citibank Senior Vice President Rohit Malhotra.
Otillar went on to call the program “a fraudulent scheme,” saying that “[Dewey] and its management team conspired with Citibank to devise the [loan] program as a means to entice new hires to make capital contributions as soon as possible after joining the firm.”
Dewey has drawn the ire of other former partners, including one who sued the firm for fraud earlier this year. Henry Bunsow claimed in his suit that firm management was “running a Ponzi scheme in order to enrich themselves and select partners of the Firm.”
Read the full story at Thomson Reuters.
For more InsideCounsel coverage of Dewey & LeBoeuf’s bankruptcy, see: