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The prominent class-action law firm is the subject of an investigation for fraud and conspiracy.
Stephen Taub, CFO.com | US
June 28, 2005
Federal prosecutors are probing one of the most powerful and influential class-action law firms, Milberg, Weiss, Bershad, and Schulman, for alleged fraud, conspiracy, and kickbacks in dozens of securities lawsuits, according to The Wall Street Journal.
The three-year investigation could lead to criminal charges against the firm as well as its principals, the paper noted. A grand jury in Los Angeles that was convened last October has been hearing evidence of alleged illegal payments to plaintiffs who appeared in dozens of securities class-action lawsuits brought by the firm during the past 20 years, according to the paper.
Milberg, Weiss is one of the oldest and best-known companies that specialize in the kinds of class-action cases that have become a lightning rod for advocates of tort reform. The law firm has brought hundreds of class-action cases over 30 years and won tens of billions of dollars in settlements and judgments against companies, according to the Journal. (When the firm was known as Milberg Weiss Bershad Hynes & Lerach, to be "Lerached" was slang for being sued, as we noted in our September 2002 interview.)
An indictment brought last week against a 78-year-old retired Palm Springs, California, entertainment lawyer offers a peek at the probe, the paper reported. In that case, Seymour Lazar was charged with fraud, conspiracy, money laundering, and obstruction, according to the report. The indictment alleges that a New York law firm paid "millions of dollars in secret and illegal kickbacks" to Lazar.
Lazar or a member of his family allegedly appeared as a plaintiff in more than 50 Milberg, Weiss securities cases from 1981 to 2004, the newspaper reported. The government charges that Lazar and family members got more than $2.4 million in secret payments from the law firm.
The indictment alleges that Lazar was illegally promised a share of the $44 million in legal fees that Milberg, Weiss earned during that period from class-action cases in which Lazar or a family member was a plaintiff, according to the Journal.
Although the charges don't identify Milberg, Weiss by name, officials of the firm reportedly confirmed to the newspaper that it is the firm cited in the indictment. Lawyers close to the case informed the Journal that the firm has been told that senior partners who allegedly authorized the payments to the plaintiff could be indicted, along with the firm.