Defunct SF Law Firm was a Ponzi Scheme, Lawsuit Alleges

The defunct law firm of Dewey & LeBoeuf, embroiled in bankruptcy proceedings, was nothing more than a "Ponzi scheme" to benefit the firm's top partners, a former employee alleges in a lawsuit.

San Francisco lawyer Henry Bunsow, an intellectual property lawyer, says that top partners at the firm "misrepresented" the firm's earnings as they tried to recruit lawyers from other firms, Reuters reported.

Partners like Steven Davis, the firm's former chairman, were "running a Ponzi scheme in order to enrich themselves and select members" of Dewey, according to the complaint, filed last week in California Superior Court in San Francisco.

Dewey & LeBoeuf was once one of the nation's top law firms, but collapsed earlier this year under a crushing load of debt and a raft of lawyer departures, the wire service reported.

Former partners there like Bunsow failed to receive promised compensation from 2011 due to the debt, Reuters reported.

Defendants in the lawsuit include Davis; Jeffrey Kessler, the former head of litigation; Joel Sanders, the former chief financial officer; Stephen DiCarmine, its former executive director; and James Woods, an executive committee member, Reuters reported.

Bunsow said in court filings he was promised $5 million in compensation by Dewey partners, who also promised other lawyers high compensation figures, Reuters reported.