Aviva Life and Annuity Co. has sued three top executives of defunct law firm Dewey & LeBoeuf, accusing them of concealing the firm's "serious financial problems" to raise money from potential bondholders, Reuters reported.
The West Des Moines-based insurer, which had purchased $35 million in notes issued by the law firm, filed the lawsuit in federal court in Des Moines on Friday.
The suit names former Dewey Chairman Steven Davis, former Executive Director Stephen DiCarmine and former Chief Financial Officer Joel Sanders as defendants.
Dewey & LeBoeuf, which in May became the largest law firm in U.S. history to file for Chapter 11 bankruptcy, was not named as a party to the lawsuit.
The lawsuit alleges that the three former executives violated federal and state securities laws by concealing critical information about Dewey's financial health in the years leading up to its failure. They hid information not only from investors, but also from the public, the firm's auditors and even its own partners, according to the complaint.
Dewey raised $150 million in a 2010 bond offering in a bid to refinance its existing debt, according to the lawsuit. The bond issuance was rare for law firms, and marked a departure from typical sources of law-firm funding: banks and partner capital.