Many law firms have failed over the years, but none as spectacularly as Dewey & LeBoeuf, the namesake “global super firm” of the former Republican Presidential nominee Thomas E. Dewey. As I noted in my account of the firm’s collapse in the magazine, an unknown number of partners took their complaints about the firm’s leadership to the Manhattan District Attorney, and last fall a grand jury began hearing evidence of potential fraud.

On Thursday, Cyrus Vance, Jr., the Manhattan D.A., unveiled lengthy indictments charging Steven Davis, the firm’s former chairman; Stephen DiCarmine, its executive director; and Joel Sanders, its chief financial officer. He also charged Zachary Warren, who had the title of client-relations manager but was a relatively low-level paralegal.

At a press conference, Vance called the scheme a “massive effort to cook the books.” He added, “Those at the top of the firm directed employees to hide the firm’s true financial condition from creditors, investors, auditors, and even partners of the firm.” The indictment alleges an elaborate accounting fraud that was intended to deceive the firm’s bank lenders and, subsequently, its investors, in a hundred-and-fifty-million-dollar bond offering that replaced the bank loans.

The Securities and Exchange Commission also brought civil charges against Davis, DiCarmine, Sanders, and two other employees, alleging that they made false statements in the offering documents.

Vance revealed that seven people, all involved in the firm’s accounting and bookkeeping operations, have pleaded guilty. Some are coöperating in the investigation. Their identities weren’t disclosed.

Charges involving arcane accounting standards against relatively low-level accountants, or even a non-lawyer chief financial officer, like Sanders, don’t make headlines or garner much attention. For that, the indictments needed Davis and DiCarmine. In DiCarmine’s case, his past testimony as a character witness at the death-penalty hearing for his cousin Vincent Basciano—the head of the Bonanno organized-crime family—may not have endeared him to law enforcement.

The fraudulent scheme that the indictments allege seems like little more than a footnote to the real reason (not mentioned in the indictment) that Dewey & LeBoeuf failed: the refusal of some partners to put the interests of the firm ahead of their multi-million-dollar financial guarantees.

The heart of the District Attorney’s case is whether Davis and DiCarmine—the “two Steves,” as they were known—engaged in fraud with a criminal intent to deceive lenders and investors. That’s a high burden of proof. The extensive evidence laid out by prosecutors has the fingerprints of Sanders; Frank Canellas, the firm’s director of finance; and Thomas Mullikin, the controller. (Canellas and Mullikin weren’t charged, and presumably are coöperating with prosecutors.) At one point, Sanders e-mailed another employee, “I don’t want to cook the books anymore.” But he didn’t send that e-mail to Davis or DiCarmine. There seems to be curiously little evidence tying either of them directly to the purported scheme.

The S.E.C.’s complaint is more circumspect in this regard. It alleges that the accounting fraud was “orchestrated by the firm’s senior-most accountant professionals,” and names Sanders, Canellas, and Mullikin. By contrast, the complaint contends that Davis and DiCarmine were merely “aware of and supported these efforts.” In a civil case, the S.E.C. has a lower burden of proof than what is required in a criminal case (proof beyond a reasonable doubt). And yet the S.E.C. didn’t charge Warren with any wrongdoing.

Covenants in the firm’s bank loans required it to meet certain annual cash-flow requirements, and it’s clear that Dewey & LeBoeuf was in dire straits after the 2008 financial crisis. Managers and accountants were frantically trying to find ways to meet the cash requirements. At the end of 2008, Sanders warned Davis in an e-mail that the firm needed “$50 million tomorrow to meet our covenant.” Davis e-mailed back: “Ugh.” No doubt, Davis was distressed by the news. But that’s hardly a crime.

At about the same time, Sanders wrote DiCarmine, “We came up with a big one: Reclass the disbursements.” DiCarmine responded, according to the indictment, “You always do in the last hours. That’s why we get the extra 10 or 20% bonus. Tell [your wife], stick with me! We’ll buy a ski house next. Just need to keep the ship a float…” Talk of a ski house and a bonus may have been injudicious in the depths of a financial crisis. But in itself it doesn’t prove that DiCarmine knew Sanders was engaging in accounting fraud, if that’s what it was.

Davis and DiCarmine may also argue that they relied on the firm’s outside auditors, Ernst & Young, who certified its books throughout the period. The indictment alleges that the auditors were deceived by people at Dewey & LeBoeuf. That may turn out to be the case, but the indictments offer little evidence that Davis or DiCarmine were the deceivers, or even that they had any direct contact with the auditors, or that they directed others at the firm to lie. Sanders referred to the auditors as “clueless,” but not in an e-mail to Davis or DiCarmine.

As for Warren, who was in his early twenties when he worked at the firm, the indictment alleges that he made false entries in the firm’s books. (Curiously, the S.E.C., which also knew about the entries, didn’t charge him.) Warren’s job was to nudge partners to collect unpaid bills from clients. It’s hard to imagine a low-level paralegal as the mastermind of an accounting fraud, and an e-mail suggests that he may have been in the dark about the scheme’s intent. On New Year’s Eve, 2008, Warren e-mailed an employee (who has since pleaded guilty), “Hey man, I don’t know where you come up with some of this stuff, but you saved the day. It’s been a rough year but it’s been damn good. Nice work dude. Let’s get paid!”

With numerous witnesses coöperating with the investigation, the grand jury may have heard testimony that is more incriminating and which will emerge at trial. If so, there’s little evidence of it in the indictments.

Through their lawyers, Davis, DiCarmine, Sanders, and Warren have all asserted their innocence and said they would fight the charges. On Thursday, they appeared, handcuffed, in court to be arraigned. They pleaded not guilty and were released on bail: two million dollars for Davis, DiCarmine, and Sanders, and two hundred thousand for Warren. If convicted, the two Steves face up to twenty-five years in prison.

Illustration by Barry Blitt.