Risk Management

Melvyn Weiss Is Latest to Plead Guilty

Cofounder of what companies thought of as the infamous Milberg Weiss firm becomes fourth current or former partner to admit wrongdoing.
Stephen TaubMarch 20, 2008

Melvyn I. Weiss, once among the most powerful of plaintiffs’ attorneys, has agreed to plead guilty to a federal racketeering charge, and to acknowledge that he and others concealed secret payment arrangements at his famous firm Milberg Weiss.

Under his plea agreement, filed on Thursday and announced by the U.S. Attorney’s Office for the Central District of California, he faces a sentence of between 18 months and 33 months for his part in making the Milberg Weiss payments to plaintiffs in class-action lawsuits, according to

Weiss becomes the fourth current or former partner of the law firm to admit criminal conduct.

The government expects to ask U.S. District Judge John F. Walter to impose the 33-month term after Weiss formally pleads guilty, according to the announcement.

Weiss, a cofounder of Milberg Weiss, also agreed to forfeit $9.75 million in ill-gotten gains and to pay a criminal fine of $250,000.

Previously, former Milberg Weiss partners William S. Lerach, David J. Bershad, and Steven G. Schulman had pleaded guilty for their roles in the scheme. According to the U.S. Attorney, $11.3 million in illegal kickbacks were paid to three named plaintiffs in exchange for their service as named plaintiffs in more than 225 class-action and shareholder derivative-action lawsuits that were filed through the country. Milberg Weiss made more than $200 million in attorneys’ fees from these lawsuits.

Weiss admitted in the plea agreement that he was part of a criminal enterprise involving senior members of the law firm and a stable of people who served, or caused friends and relatives to serve, as named plaintiffs in lawsuits filed by the firm. To conceal the illegal kickback scheme from judges presiding over the lawsuits and other parties involved in the cases, participants in the conspiracy allegedly made false and misleading statements in court documents and in under-oath depositions.

“This kickback scheme lasted for more than 25 years and had a severely detrimental effect on the administration of justice across the nation as lies were routinely made to judges overseeing significant cases,” said U.S. Attorney Thomas P. O’ Brien. “The scheme was based in greed and it affected the integrity of the courts and the interests of an untold number of absent class members.”

There still are two defendants remaining in the case — the Milberg Weiss firm itself and attorney Paul T. Selzer — scheduled to go on trial in August.

Lerach, who pleaded guilty last year to a conspiracy charge, was sentenced last month to two years in federal prison. Schulman and Bershad are scheduled to be sentenced later this year.

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