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UPDATE 1-Ex-Dewey law firm executives charged in New York with fraud, theft

NEW YORK, March 6 (Reuters) - Three former top executives of Dewey & LeBoeuf law firm were charged with fraud and theft for concealing from banks, investors and other lawyers the deteriorating health of the once prestigious firm before it went bankrupt in 2012.

Thursday's criminal charges were announced by Manhattan prosecutors less than two years after Dewey, which once had more than 1,400 lawyers worldwide, became the largest U.S. law firm to seek bankruptcy protection. It later shut down.

Manhattan District Attorney Cyrus Vance Jr described the former executives of "concocting and overseeing a massive effort to cook the books" at the law firm. "Fraud is not an acceptable accounting practice," Vance said.

Vance unveiled grand larceny, fraud and other felony charges against former chairman Steven Davis, 60, former executive director Stephen DiCarmine, 57, and former chief financial officer Joel Sanders, 55. A fourth defendant, client relations manager Zachary Warren, 29, was also criminally charged.

Separately, the U.S. Securities and Exchange Commission filed civil fraud charges against Davis, DiCarmine, Sanders and two other former Dewey officials, finance director Frank Canellas, 34, and controller Thomas Mullikin, 43, saying they misled investors in a 2010 bond offering.

Elkan Abramowitz, a lawyer for Davis, said evidence will show his client did not commit a crime, and that Davis' actions as Dewey's chairman "were taken in good faith in an effort to make the firm a success."

Lawyers for the other defendants did not immediately respond to requests for comment or could not immediately be reached.

Dewey & LeBoeuf had been formed in a 2007 merger of two law law firms, Dewey Ballantine and LeBoeuf, Lamb, Greene & MacRae.

'WE NEED TO HIDE THIS'

Prosecutors said Davis, DiCarmine and Sanders defrauded lenders starting in late 2008 by misrepresenting the law firm's compliance with cash flow and other loan covenants.

Prosecutors accused the three men of trying to cover their tracks by making false entries in the firm's books, misclassifying revenue and expenses, and seeking backdated checks.

The men were also accused by Vance of having stolen nearly $200 million from 13 insurers and two financial institutions.

The prosecutors say that their evidence includes a note from Sanders to two employees after he had been told in 2011 that Dewey had failed to write off millions of dollars in receivables from a client, which helped make its books look better.

"We need to hide this actually writing it off," Sanders wrote, according to Vance.

The SEC cases focuses on the regulator's allegations that investors were misled about Dewey's finances in marketing materials for a $150 million bond offering in 2010.

According to the SEC, Dewey officials "orchestrated and executed a bold and long-running accounting fraud intended to conceal the firm's precarious financial condition."

Dewey's lenders have included JPMorgan Chase & Co, Citigroup Inc's private banking unit, Bank of America Corp and HSBC Holdings Plc.