Mel Weiss Sentenced to 30 Months for Kickback Scheme
Amanda Bronstad, Law.com
06-03-2008

A federal judge in Los Angeles sentenced Melvyn Weiss, the co-founding partner of Milberg, to 30 months in prison on Monday.

U.S. District Judge John Walter of the Central District of California said it was "difficult to reconcile" Weiss' numerous charitable contributions with his criminal conduct, which "strikes directly at the core and heart of the judicial system."

Weiss is set to report to prison on Aug. 28. His lawyer, Benjamin Brafman, of Brafman & Associates, asked that Weiss serve his sentence at a men's minimum security facility in Morgantown, W.V.

Under a plea deal reached earlier this year, Weiss agreed to forfeit $9.75 million and pay a $250,000 fine. At Monday's hearing, Walter ordered Weiss to pay $5 million of the forfeiture within the next seven days; the remaining is due in 180 days.

"I want to apologize to my family, to my professional colleagues and people within the organization that I built over the last 45 years," said Weiss, who bowed his head during most of the hearing. He said his "contrition is profoundly genuine" and that his punishment great, given he would lose his "life's passion and my ability to earn a living as a professional."

After the hearing, Brafman said he had anticipated Walter to sentence Weiss to 33 months. "Accordingly, we're pleased that the court recognized the extraordinary life of Mr. Weiss and counted it in the sentencing analysis."

Prosecutors allege that Milberg and seven of its partners, including Weiss, obtained $251 million in attorney pay fees by paying $11 million in illegal kickbacks to lead plaintiffs.

On Monday, The Wall Street Journal reported that prosecutors are close to a $75 million settlement with Milberg, which faces an August trial. Assistant U.S. Attorneys Douglas Axel and Richard Robinson, prosecutors in the case, declined to comment on the settlement talks.

A lawyer for Milberg, Bryan Daly, a Los Angeles partner at Mayer Brown, declined to comment on the talks beyond stating that "settlement discussions are ongoing."

In April, Weiss pleaded guilty to a federal racketeering conspiracy charge, admitting he lied to judges and secretly paid kickbacks to plaintiffs, in cash or through intermediary law firms, as part of a criminal enterprise that lasted 25 years.

He also agreed to serve 18 to 33 months in prison, with the option of home or community confinement for no more than half the sentence.

In recent weeks, Brafman, noting that Weiss would be 73 next month and citing his numerous charitable contributions, had been seeking a sentence of 18 months. More than 275 letters were submitted by former judges, law professors and lawyers -- a collection that Brafman referred to at Monday's hearing as a "breathtaking array of extraordinary work."

Brafman called Weiss "one of the greatest lawyers of this generation" and "one of the legal giants of the bar." In reiterating Weiss' charitable work, which involved helping the victims of the Holocaust and Sept. 11, he asked Walter for lenience in his sentence.

Prosecutors in the case had backed a pre-sentencing report recommending 33 months.

At the hearing, Axel said that Weiss was "right in the thick of this conspiracy" and that, by refusing a plea deal, "he put the firm in the firing line in order to avoid responsibility for his own actions."

Walter questioned the relevance of Axel's arguments.

In reaching his decision, Walter said there was "no question that Mr. Weiss's charitable and civic work was extensive," and acknowledged that the letters were among the most impressive he had seen in his career.

But he said he was troubled about Weiss' conduct during a November 2003 meeting at which kickback payments were discussed with a lawyer for one of the lead plaintiffs, Howard Vogel. In court papers, prosecutors had said that meeting, which took place during the government's investigation, showed "criminal arrogance" on the part of Weiss.

Brafman, in court papers, had countered that the meeting was the result of bad judgment.

"I do have concerns of Mr. Weiss's conduct after the government's investigation became known," Walter said at the hearing. Specifically, he said, Weiss had been subpoenaed a few months prior to that meeting to provide documents related to a kickback to another lead plaintiff, Steve Cooperman, which was disguised as a phony art option. With such information, Walter concluded, "all the facts just don't pass muster."

Both Cooperman and Vogel have pleaded guilty in the case.

But, at the hearing, Walter appeared to agree with Brafman that the testimony of Vogel's lawyer was unbelievable.

Brafman also had attacked the government's reliance on testimony by two other partners, David Bershad and Steven Schulman, both of whom have pleaded guilty in the case.

Regarding the sentence, Brafman compared Weiss' age to that of William Lerach, another former partner, who, now 62, was sentenced in February to 24 months, the maximum allowable under a plea deal he reached with prosecutors

last year. Lerach, who pleaded guilty to one count of conspiracy, agreed to pay $8 million in fines and forfeitures and reported to prison last month. As at Lerach's sentencing hearing, Walter called the conduct of the defendant in the case one of the most serious crimes of the court and said he had "serious reservations" about accepting the plea deal. But he disagreed with Brafman that Weiss' sentence should, at the worst, mirror that of Lerach's. Weiss, he said, "was one of the key players if not the architect of the criminal scheme."

Unlike Lerach, Weiss did not withdraw from the conspiracy after the government's investigation began, Walter said. Further, Weiss obstructed the investigation, he said.

Prominent Lawyer to Plead Guilty
By JONATHAN D. GLATER, NY TIMES, March 20, 2008

The prominent lawyer Melvyn I. Weiss of the Milberg Weiss law firm, a prolific filer of lawsuits against publicly held corporations, has reached a plea agreement with federal prosecutors in Los Angeles, according to his defense lawyer.

According to a statement released Thursday by the defense lawyer, Benjamin Brafman, Mr. Weiss will plead guilty to participating in a criminal conspiracy to pay a share of legal fees to plaintiffs in shareholder suits brought by Milberg Weiss. Such kickbacks are improper because they give plaintiffs representing a class of all shareholders an incentive to accept a deal that might not be best for the class.

Under the terms of the plea agreement, Mr. Weiss faces a sentence of up to 33 months in prison. Mr. Weiss has also agreed to pay a total of $10 million in fines and penalties, according to the statement.

He was indicted in September on charges including conspiracy, obstruction of justice and making false statements, in a broad-ranging indictment that also named Seymour M. Lazar, an investor who served as a frequent plaintiff in shareholder litigation filed by Mr. Weiss’s firm; Paul T. Selzer, a Palm Springs, Calif., lawyer who advised Mr. Lazar; and the New York law firm of Milberg Weiss itself. The indictment charged that over a period of more than 25 years, Mr. Weiss and other lawyers at his firm improperly paid the kickbacks to plaintiffs in class actions and shareholder derivative actions.

Although the plea agreement would resolve the criminal case against Mr. Weiss, his former firm remains a defendant. However, the firm announced Thursday that it had changed its name to Milberg and that Mr. Weiss was resigning from his position. The firm has already shrunk, from hundreds of lawyers to about 70.

“The firm is now seeking to find a fair and appropriate resolution of remaining issues so that we can continue our work on behalf of injured investors and consumers,” said Sanford Dumain, a member of the executive committee of Milberg Weiss, said in a statement on Thursday.

In the statement, Mr. Dumain said: “Last year, management of the firm was taken over entirely by partners who were neither engaged in nor aware of the wrongdoing. None of the lawyers or staff remaining at the firm has ever been implicated in this misconduct. More than two years ago, as the issues were coming to light, the firm, under the guidance of current management, implemented state-of-the-art compliance procedures regarding case starting and referral fees to help ensure that past problems would not occur again.”Mr. Weiss’s longtime partner and later rival in the shareholder litigation business, William S. Lerach, in October pleaded guilty to a charge of conspiracy to obstruct justice and was sentenced last month to two years in prison.

Facing Sentencing, Mel Weiss Denies Allegations of 'Criminal Arrogance'
Amanda Bronstad, Law.com
05-30-2008

Melvyn Weiss, the co-founding partner of Milberg Weiss, said his meeting with a representative of a paid plaintiff was "less sinister" than the federal government alleges and that his failure to turn over a subpoenaed fax was bad judgment, not "criminal arrogance," according to sentencing papers filed on Wednesday.

Weiss, who pleaded guilty to one count of racketeering conspiracy, is scheduled to be sentenced on Monday.

Federal prosecutors contend that Milberg Weiss, now called Milberg, and seven of its partners, including Weiss, obtained $251 million in attorney fees by paying kickbacks to lead plaintiffs.

Last week, Weiss, who agreed to a prison sentence of 18 to 33 months, sought the minimum sentence under the plea deal. He drew several comparisons to William Lerach, a former Milberg partner who was sentenced earlier this year to 24 months in prison, the maximum allowable under a plea deal he struck last year.

Prosecutors, in recommending the maximum for Weiss, asserted that his criminal behavior necessitated more time in prison. A pre-sentencing report also recommended the maximum.

Prosecutors said that Weiss, while under criminal investigation, met with an intermediary lawyer for one of the lead plaintiffs, Howard Vogel, to discuss his share of attorney fees -- behavior that "reflects a criminal arrogance" justifying a higher sentence. He also obstructed justice by failing to turn over a subpoenaed fax.

Weiss refuted both those allegations in Wednesday's filing.

"While Mr. Weiss deeply regrets his decision to meet with a representative of Howard Vogel while the criminal investigation was underway, it was a decision he made as a result of rationalizing his behavior at the time, not a decision fueled by criminal arrogance," he said in court papers.

He said his memory of the meeting differs from that of former partners Steven Schulman and David Bershad, upon whom prosecutors base their claims. Schulman and Bershad have reached plea deals with prosecutors.

Prior to that meeting, Weiss said he had never met Vogel and didn't work on the case at issue.

As to the fax, which involved payments to another lead plaintiff, Steve Cooperman, allegedly disguised as an art option, Weiss admitted that part of what he "instructed his then attorney to tell the Government about the art documents may not have been completely truthful." But he never destroyed the fax and had limited contact with Cooperman, compared to Lerach and Bershad, he added.

He also said that Cooperman's interest in cultivating a personal relationship with him explains why he first considered the fax to be personal, not subject to a grand jury subpoena.

"It was well-known to all that Mr. Weiss was an art collector and ... that Cooperman was trying to cultivate a 'personal' art relationship with Weiss, that was separate and apart from Cooperman's relationship with the firm as a paid plaintiff," court papers say.

April 3, 2008
Lawyer Pleads Guilty in Kickback Scheme
By THE ASSOCIATED PRESS
LINK

LOS ANGELES (AP) — Melvyn I. Weiss, co-founder of a prominent New York law firm, pleaded guilty Wednesday to a racketeering conspiracy charge in a kickback scheme.
Mr. Weiss, 72, entered his plea under an agreement with prosecutors. He has been ordered to pay nearly $10 million in fines and forfeiture penalties, and could be sentenced to up to 33 months in prison at a later hearing.
Asked by Judge John F. Walter of Federal District Court if he was pleading guilty, he said, “Yes, I am.”
Mr. Weiss went on to apologize and said, “I take responsibility for everything.”
Prosecutors have said that the Milberg Weiss firm, now called Milberg, made an estimated $250 million over two decades by filing legal actions on behalf of professional plaintiffs who received $11.3 million in kickbacks. A seven-year investigation brought guilty pleas by three of Mr. Weiss’s former partners.
The firm dominated securities class-action suits, in which shareholders claim executives misled them about a company’s financial status.

Michael Perino paper: The Milberg Weiss Prosecution: No Harm, No Foul?
S. 3033, the Securities Litigation Attorney Accountability and Transparency Act, introduced by Sen. John Cornyn (R-TX).
"The Sorcerer, the Apprentice, and the Broom: What to Do about Private Securities Class Actions," March 2007, Peter J. Wallison.

Gizella Weisshaus, a holocaust victim who started the Swiss Bank Assets Litigation by hiring Edward Fagan, recognized in 1998-1999 that Mel Weiss and Ed Fagan were not pursuing the case correctly.

Milberg LLP Pro Bono: helped lawyer Edward Fagan in the Swiss Banks Assets litigation
11/01/00 Swiss Banks
Milberg filed this class action suit on behalf of victims of Nazi persecution against several Swiss banks for their collaboration with the Nazis including retaining accounts and laundering illegal assets. The case settled in 1998 for $1.25 billion and the money is now being distributed among several categories of survivors who suffered as a result of Swiss wrongdoings.

07/01/00 Slave Labor
Milberg filed a series of class action suits against German companies who had exploited slave and forced labor during World War II. After very long and contentious negotiations between the parties, German, US and Israeli governments, as well as international Jewish organizations, a framework agreement of an approximately $5 billion settlement was reached. The settlement is now funding several programs including slave labor and medical experimentation compensation, insurance and assets claims, as well as educational programs.

March 20, 2008, 12:53 pm
Mel Weiss: “I Deeply Regret My Conduct”Posted by Ashby Jones
LINK

melThe paperwork on Mel Weiss is pouring out. Click here for the government’s statement; here for the plea agreement itself; and here for a release from Ben Brafman, Weiss’s attorney. And see a statement from the Milberg firm below.

The Brafman release is interesting, partly because it contains a statement from Weiss himself.

Here’s the statement, in its entirety:

ATTORNEY FOR MELVYN I. WEISS ANNOUNCES DETAILS OF PLEA AGREEMENT WITH PROSECUTORS IN THE CENTRAL DISTRICT OF LOS ANGELES, CALIFORNIA

Benjamin Brafman today announced that he has reached an agreement with prosecutors that would have Mr. Weiss plead guilty and thus avoid a trial of the indictment that is now scheduled for August 2008.

According to Brafman, Mr. Weiss will plead guilty to his limited participation in a criminal conspiracy relating to allegations that he and other former Milberg Weiss attorneys agreed to share part of the firm’s fees with certain individuals who were Plaintiffs in several of the thousands of Class Action lawsuits filed by the firm during its 40 year history. The Plea Agreement provides that Mr. Weiss may receive a sentence of from 18-33 months imprisonment, with the Court having the discretion to substitute a period of home confinement and/or community confinement for up to half of any prison sentence, should the Court conclude that a prison sentence is appropriate. Mr. Weiss has also agreed to pay a total of $10 million dollars in fines and forfeiture penalties.

According to Mr. Brafman, “It is important for the public and legal community to note that despite his plea, Mr. Weiss provided access to the Courts for millions of victims of corporate wrongdoing. Through a lifetime of legal work and public service, he has participated in important pro-bono, humanitarian and philanthropic efforts that have improved the quality of life for millions of citizens throughout the world. Accordingly, despite his participation in the criminal conduct he has today acknowledged, I am nevertheless hopeful and confident that the Court will recognize Mel Weiss to be one of the true legal giants of his generation and a consummate humanitarian whose contributions to the Bar and the world community have been nothing short of spectacular.”

STATEMENT OF MELVYN I. WEISS

“I deeply regret my conduct and apologize to all those who have been affected, including all of the wonderful and extremely talented lawyers and other employees of the Firm, none of whom had any involvement in any wrongdoing. I believe that it is very important to preserve this unique legal resource for the benefit of victims of wrongdoing affecting the masses, who historically have been under-served in so many ways.”

Statement of Sanford Dumain, member of the firm’s executive committee

It is with deep disappointment that we have learned that Melvyn I. Weiss has engaged in misconduct and has agreed to plead guilty to conspiracy charges in the Central District of California. Mr. Weiss is resigning from the Firm, which will change its name to Milberg LLP.

Having previously believed former leaders’ assurances of their innocence, the Firm is now seeking to find a fair and appropriate resolution of remaining issues so that we can continue our work on behalf of injured investors and consumers.

Last year, management of the Firm was taken over entirely by partners who were neither engaged in nor aware of the wrongdoing. None of the lawyers or staff remaining at the Firm has ever been implicated in this misconduct. More than two years ago, as the issues were coming to light, the Firm, under the guidance of current management, implemented state-of-the-art compliance procedures regarding case starting and referral fees to help ensure that past problems would not occur again.

Milberg LLP apologizes to all judges, lawyers, clients and class members, who deserve full and complete adherence to all legal and ethical norms. We pledge faithful adherence to those norms as we move forward and rebuild our practice.

The Firm now has approximately 70 attorneys and remains among the largest plaintiff class action firms in the country. It continues to earn lead counsel appointments in major cases. Our talented team of attorneys, investigators, forensic accountants and all of our other dedicated employees will continue to promote the positive aspects of Mel Weiss’s legal, public interest and philanthropic career, including his many achievements on behalf of those who would otherwise be denied access to the courts.

Comments (selected from thread by Editor)
Report offensive comments to lawblog@wsj.com

oh the crapola fed to us by low budget p.r. spinners. Every equity partner at that firm knew about sordid scheme. their alleged good works for others were funded by their ill gotten gains. mel and bill can double bunk themselves but can no longer debunk investors and the media. who is next up to bat? stay tuned for more medium security designees - perhaps this time from the other side of the bar.
Comment by double bunking - March 20, 2008 at 1:20 pm

Oh, and one more thing: $9,750,000 in forfeiture, $5,000,000 of which shall be paid within seven days. Ouchie.
Comment by Anonymous - March 20, 2008 at 1:26 pm

Boy, are they hoping that the public has short memories! Mel Weiss spent at least two years denouncing an outrageous investigation and loudly proclaiming his innocence. Given that he knew that he was guilty, that’s some ice cold stuff. He should apologize for trying to sell his firm and the public a bill of goods.
Comment by What a crock - March 20, 2008 at 1:27 pm

Oh, and one more BIGGIE of a thing. The plea agreement’s non-prosecution provisions are said to bind every US Attorney’s Office in the nation. Did they get them all to sign off on the agreement? I’ve NEVER seen a plea agreement that contained such a clause.
Comment by Anonymous - March 20, 2008 at 1:28 pm

great comment from Sandy (reminds me of Casablanca…) My new nickname for him is “the Sandman”, because he must have been asleep to have continued to believe Mel’s BS for TWO YEARS AFTER THE INDICTMENT! Who are the “Milberg LLP” partners kidding? They knew Mel was guilty years ago, but because there was no actual smoking gun, they willfully disregarded the truth and continued to be his partner. I guess for those that remain, the money is worth giving up morality and personal ethics.
Comment by Anon - March 20, 2008 at 1:29 pm

Mel Weiss is an exceptional human being. Having worked closely with him for 6 years, I can tell all of you that this man has a genuine soul. The WSJ is so quick to write about negative factors, they don’t take into account all the good this man has done for so many people. From family to friends to employees, Mr. Weiss has shown nothing short of great character and strength. Today’s news, in my eyes, makes him appear even stronger and 6ft taller. Mr. Weiss, if you are reading this, you are in my thoughts. Thank you for letting me be part of an amazing firm for 6 wonderful years. Stephen - if you are reading this, your letter is, to put it simply, a true testament to your father and all of his accomplishments. Mr. Weiss, I will leave you with these wise words from one of my favorite poets, Ralph Waldo Emerson…“Whatever course you decide upon, there is always someone to tell you that you are wrong. There are always difficulties arising which tempt you to believe that your critics are right. To map out a course of action and follow it to an end requires courage.”
-Your Friend Always, Brigitte Rudman
Comment by Brigitte Rudman, Former Publicist for Mel Weiss - March 20, 2008 at 1:53 pm

Excuse me? The guy just pleaded guilty to a criminal FELONY and admitted to doing extremely unethical things, lying about them, being cocky about his lies, and essentially ruining a lot of young lawyers’ reputations in his firm. Just because he’s nice to certain people around him doesn’t mean he is some sort of saint. I find it comical that his ego is SO BIG that he can’t just take his medicine like a man, with humility, grace and remorse. No, he has to try to pump himself up OVER AND OVER AND OVER to try to paint some picture of him as a saint. There is no remorse whatsoever, you can tell by the way he acted for the past 2 years. He’s only “sorry” because he got caught. That is not a “genuine soul.” That is a greedy greedy man who knowingly committed crimes to make himself rich. This is no different than the CEOs and executives he goes after. What a hypocrite.
Comment by Gimme A Break.... - March 20, 2008 at 2:41 pm

“RICO Enterprise” obviously fits what Milberg Weiss was. I don’t understand why the DOJ, which worked so hard on its investigation — and it wasn’t easy, starting with Cooperman and Lazar, getting them to flip, etc. — made plea deals with such light sentences. Even at the risk of a government loss, it would have been better for the public (and the judiciary) if at least one case had gone to trial, so we would have learned what we could only learn in a public proceeding. Torkelsen is next (again). Another plea; another missed opportunity to learn what really has been going on for so many years.
Comment by A MW Adversary - March 20, 2008 at 3:46 pm

Read paragraph 6 of the Statement of Facts appended to Mel’s plea agreement. It says that the MW partners who conspired to make illegal payments to plaints “included, among others” Weiss, Lerach, Bershad and Schulman. So, Mel himself is saying that the conspiring partners were not limited to these four. Who are the others?
Comment by Anon - March 20, 2008 at 4:08 pm

Four down and the band plays on. The hundreds of unindicted coconspirator cocounsel remain untouchable. The public will always be underserved by lawyers like this. Now the surviving lawyers will flee to other safer haveens where kickbacks are not paid by check or handled by rats. Shakespeare was right - first things first.
Comment by Tip of the iceberg - March 20, 2008 at 4:59 pm

Won’t this open the door to class-ation suits against Weiss by the non-named parties, for equal treatment (i.e. same cash)? I’m not a class-action guy, so I don’t know. But that would seem to be sweet irony. Hoist by his own petard?
Comment by KS Trial Lawyer - March 20, 2008 at 5:35 pm

it’s hard to see how others in the firm were not involved considering the extent of the cast involved so far. This shows that Mel Weiss is no better than the corporate enrons he and lerach sued.
Comment by disenchanted law student - March 20, 2008 at 6:06 pm

TO 6:06 — look at Mel’s Statement of Facts attached to his plea agreement — para. 6 — he ADMITS that partners IN ADDITION to himself, Lerach, Bershad and Schulman were involved. It’s in black and white. Why isn’t this getting picked up in the press? Why is the prosecution stopping at these 4 when Weiss is admitting that the conspiring partners were “included, among others,” these four?
Comment by anon - March 20, 2008 at 6:08 pm

The government is stopping because the other partners are the ones who gave the government information in exchange for immunity. How do you think they got the information for the original indictment?
Comment by anonymous - March 20, 2008 at 6:28 pm

another hypocrate exposed ~
http://psychologyofthecall.blogspot.com/
no nonsense men are hard to find, no spin blogs aren’t ..
Comment by bill - March 20, 2008 at 7:51 pm

It’a little wonder that lawyers are held in such low regard. Just reflect on news of the past few weeks - Weiss, Lerach, Spitzer, Scruggs. No amount of societal “good” accomplished by this group, and others like them, can offset the damage caused by the breach of faith, not to mention the oaths each took when admitted to the practice of law, committed by each of them. One lesson to be learned for those contemplating such deeds - it will catch up with you in the end. In the case of Mel Weiss, it’s just unfortunate it took 25 years.
Comment by Mark - March 20, 2008 at 7:54 pm

Not only did the crooks cheat businesses they also cheated some “clean” people who worked with them in uncovering accounting fraud at several firms. Anyone can cheat and win, that’s the only reason they won. These crooks are the same people who attend religious services every week yet defraud others during the balance of the week. Hang em high!
Comment by na - March 20, 2008 at 9:26 pm

If Milberg wants to show its intent to do good, they should take on the eToys case with us. A slam dunk as a matter of law, if anyone has the backbone and it is big, Very BIG, numbers. Multiple hundred million dollar items
http://fraud-corruption-mnat.townhall.com/default.aspx
Comment by www.laserhaas.wordpress.com - March 20, 2008 at 9:54 pm

What about the $3 million in illegal non Milberg contingent fees paid to Torkelson? Other firms were clearly involved. What about the $200 Million net profit in legal fees generated by the scheme? Mel, Bill, Steve and Dave don’t have it all. Does a smart lawyer have to hand over the cash personally to recognize the many issues created by plaintiffs Lazar Cooperman or Vogel after 10, 20 or 30 times. Many otherwise brilliant lawyers were simply blinded by the money. They were frontmen for the admitted felons for years and well paid for their services.

The real question is why are the sentences going down as we move up the food chain? How is it that Lerach and Weiss can both convince prosecutors that they had a limited involvement in their own racket. The names were on the door and each check. Mel had absolute veto power for almost the whole duration of the scheme. I wonder if Mel will be described by prosecutors as a volunteer for justice to justify this gift. For details on what may be the last case ever settled by Milberg Weiss (in re Genta) see www.stoplegalfiction.org
Comment by Theodore A. Bechtold, Esq. - March 20, 2008 at 10:39 pm

Weiss, Lurach, Scruggs. These guys were all hailed as giant slayers, keeping greedy corporations in line. Nothing but a bunch of hoodlums with law degrees. Bribing judges, lying to the court. Pathetic
Comment by the law guy - March 20, 2008 at 11:35 pm

I don’t understand the basis for the following statements in the Sanford Dumain statement: (1) “we have learned that Melvyn I. Weiss has engaged in misconduct and has agreed to plead guilty”; (2) “having previously believed former leaders’ assurances of their innocence”; (3) “last year, management of the Firm was taken over entirely by partners who were neither engaged in nor aware of the wrongdoing”; and (4) “none of the lawyers or staff remaining at the Firm has ever been implicated in this misconduct.”

In 1995, Congress enacted the Private Securities Litigation Reform Act (”PSLRA”). One of the specific abuses which the PSLRA was targeting was kickbacks to plaintiffs. Indeed, as a result of the PSLRA, Congress required that named plainiffs in securities class actions had to sign a certification that they were not receiving compensation beyond their pro rata share of the recovery. The legislative history behind the PSLRA makes abundant references that it was being targeted at Milberg Weiss. Accordingly, how can Sanford Dumain now contend that no one at Milberg — except those who pled guilty — were aware of the situation? It seems to me that anyone who read the PSLRA would have known of such troubling conduct occurring. Is Sanford Dumain seriously contending that none of the lawyers at Milberg Weiss ever read the PSLRA? Maybe the remaining lawyers at Milberg Weiss did not have actual knowledge of the misdeeds but — based on the express safeguards written into the PSLRA against paid plaintiffs — they at the very least were acting in reckless disregard of the facts by which they otherwise could have learned the truth.
Comment by Anonymous - March 22, 2008 at 12:22 pm

Hey Anonymous at 12:22, your nonsense about the PSLRA has nothing to do with Weiss’ plea. According to the plea agreement, he admited to two overt acts - one in the 1980s and the other in 1991. Both predate the PSLRA. The question I have is why did the DOJ selectively prosecute of Milberg Weiss and its name partners. What about Gary Lozow? What about Best Best and Krieger? What about fatso Bob Sugarman? Will the DOJ ever explain why they were not prosecuted? Could it politics?
Comment by Anonymous 12:22 is a Dodo; Bechtold is a Retard - March 22, 2008 at 9:32 pm

Retard at 9:32: My query was how can the remaining partners at Milberg LLP contend that they had no idea about illegal kickbacks to plaintiffs when the issue specifically was addressed by the PSLRA? Whether those to which Mel Wiess, Bill Lerach, Steve Schulman, and Dave Bershad admitted were before or after 1995 is beside the point; the point is that anyone who read the PSLRA in 1995 would know that illegal kickbacks obviously were an industry practice. So where is all this claimed ignorance coming from in Sanford Dumain’s statement? Indeed, did any of these self-admitted clueless partners at Milberg LLP ever once question the relationship between the firm and the involved serial plaintiffs? One would image that a firm such as Milberg LLP which touts its ability to sniff out fraud would have been a little more on the ball when it was proceeding right under its nose, and it seems to me that they recklessly disregarded facts that would have put them on notice of at least the possibility of untoward conduct.
Comment by Anonymous - March 22, 2008 at 9:43 pm

The amazing thing is that the Milberg LLC apologists can probably still keep a straight face even after their leaders head off to jail. Still splitting hairs about what specific acts Mel’s mouthpiece was able to arrange for him to admit to. The description of Lerach as a volunteer for justice at sentencing is the clearest indication that the government is more interested in this going away than expanding the investigation or deterring the conduct.
If you want a better example of “what about these guys?” look no further than Bernstein Liebhard Lifshitz repeated use of a self owned plaintiff. Mel Lifshitz concocted an amazing story explaining that his ownership of this serial plaintiff was actually a repeated clerical error. Just a little mix up in some official filings, nothing more to worry about.

Industry practice was modeled after the industry leader and Mel, Bill, Steve and Dave were masters of this universe. The Class action bar needs a cleanup of more than these four crooks and it shall have one. Call me whatever names you will I speak the truth. I suggest you find work with those lawyers that have been smart enough to avoid payments to plaintiffs (or pimps) by check or wire transfer.
Comment by Theodore A. Bechtold, Esq. - March 23, 2008 at 1:51 am

Those who think the securities bar is at the root of all of the nation’s finacial ills must also believe that Bear Stears was in fine shape right up to the momenet it imploded. The phrase of the day is “moral hazard” which, for the unitiated, means that financial managers have nothing to fear from failure, or fraud, and may even be rewarded for disaster through hefty severance packages. Arguing that class actions should be abolished because of a few abuses, is like arguing that no criminals ever be prosecuted because some innocent people have unfortunately been convicted. Less enforcement of the law never works.
Comment by Bear Mugged - March 23, 2008 at 3:24 pm

“How were partners not in on the scheme supposed to know that these firms or lawyers were going to turn part of their referral fees over to plaintiffs?”

– because maybe the repeated use of the same serial plaintiffs in case after case raised a red flag as to what was in it for them? This is particularly so when the 1995 PSLRA expressly raised the issue of serial paid plaintiffs who were receiving illegal kickbacks. Accordingly, one would think that all those brilliant minds at Milberg Weiss — purportedly trained in rooting out fraud — would have at least asked the question whether the serial plaintiffs it was using were in fact being compensated for their repeated services beyond the pro rata share of the settlement. But of course, there always was the option of burying one’s head in the sand while the money kept rolling in, and declining to ask the difficult questions.
Comment by Anonymous - March 23, 2008 at 4:52 pm

Every partner at the firm knew what was going on. That’s why several of us left in Fall 1999/Winter 2000. The goings-on were discussed by the partners at the firm retreat in Spring 1999, but the firm’s management refused to reform and the “dissidents” were forced out.
Comment by Former Milberg Weiss Partner - March 24, 2008 at 9:46 am

http://decisions.courts.state.ny.us/fcas/fcas_docs/2008mar/3001130532007001sciv.pdf
Comment by Bechtold Knew Or Should Have Known - March 24, 2008 at 2:21 pm

The inevitable was bound to happen at Mel’s World. He walks away with a slap on the hand, leaving everyone else in the dust. How pathetic the justice system is in this country. He should serve a 10 year hard time sentence for all the lives he’s ruined and I do believe he was the matermind behind it. It was never enough was it Mel? Greed will always do you in. He has disgraced and betrayed the legal profession, his family and the small guys who believed in you. Shame on you Mr. Weiss.
Comment by Comment by former employee - March 24, 2008 at 5:27 pm

I would hope that all the cases he won by cheating would be reopened and looked again. If I was on the legal teams of those corporations whose cases were tried under the manipulative illegal kick back scheme, I would be licking my lips. The most that will probably happen is that an asterisk will be placed beside the case HAHAHA. It will be like Barry Bonds homerun record. What a crock. $10 million dollars is a drop in the bucket for this cheat. True he is going to prison, but for how long. When he gets out he will be coming back to living a life of grandeur. A recap- Cheat the court systems and thousands of people. Win hundreds of millions of dollars, get caught after 25 years, spend 2 years in prison and pay 10 Million dollar fine, get out and return to all the money that you won illegally. How come they do not let drug dealers keep the money they made after being caught?
Comment by ???? - March 27, 2008 at 8:25 am

To ???? at 8:25 - Drug dealers are not usually part of America’s wealthy upper class. Mr. Weiss obviously is. In America we have two criminal justice systems at work - one for the upper class and one for everyone else. The class members in these suits are, for the most part, not members of America’s wealthy upper class and therefore they will not be allowed to go after Weiss’, Lerach’s, or any other rich guys money.
Comment by The way it is... - March 28, 2008 at 8:13 am

I would like to urge the Judge to give this criminal the maximum and to increase his fine. He stole 300 million and only has to pay back $10? UNACCEPTABLE. Work should be done to disband the criminal firm that carries his filthy name. The firm should be raided and every typewriter and post it should be sold at auction and put into a victims fund. As the wsj journalist mentioned- now the same investigation needs to be done of Robert L. Lieff (Lieff the Thief) and his criminal partners including the dirty cops on his payroll. Fiat justitia, ruat caelum.
Comment by Legal observer@reminder.com - April 14, 2008 at 7:01 am

I am a consultant in the field of securities fraud class action litigation, including derivative cases and antitrust matters providing plaintiff certifications to enable law firms to start a 10B-5 class action case. I engaged in November 2000 with a small boutique securities class action law firm based in New York. The associate I worked with, a woman, received approval from the senior partner to forward a 20% referral fee to be applied to my company’s consulting fee payable on those cases the law firm settled as a result of the my companies efforts..

The associate and I over the course of the next four years worked and communicated on hundreds of potential cases and I was successful in providing over one hundred plaintiff ’s certifications and identifying fraud committed by many of the officers and directors some of whom are spending time in state and federal prisons today.

The first case I started for the firm, an ADR, settled for $20,000,000 in 2004 and my clients were ecstatic. I suggested that I would forward my bill for consulting fees to the firm, however, when the Final Judgment and Order Approving Settlement in the ADR case was faxed to me, the partners decided they were going to engage an outside law firm to handle my company’s outstanding consulting fees. They drafted an agreement between the “Settling Parties” calling for the settling fee in the ADR case to be paid to an outside law firm.
In addition to the agreement between the “Settling Parties” the partner drafted an agreement for my company to pay funds to cover referral fees to a stock broker and lead plaintiff in the ADR.

The outside law firm charged my company a fee of $20,000 to receive my companies consulting fee. The outside law firm had nothing to do with referring the client: they did not make an appearance in the case; and they did not do any work in the case. I was livid in the way the partners handled the payment of my company’s fee and fees to other parties. I subsequently terminated my relationship with the firm. I retained my own attorney to collect my company’s subsequent consulting fees.

Unfortunately, the partners, not the brightest stars on the planet, forgot what I did for a living; “the consultant engaged by the client to catch the bad guy’s actually catches the client”. I must admit my naiveté in the world of bad behavior practiced by class action attorneys. It took me four years to figure out the sleaze that permeates as a result of greed.

Sleaze and fraud isn’t proprietary just in the world of Wall Street. It was created and crafted by many of the law firms who represented those on Wall Street committing fraud. My client and her partners have behaved very badly and risk losing everything.

“Their life the life of their partners and firm is about to change forever”.
Comment by Whistle Blower - Good Guy Bad Guy? - April 23, 2008 at 8:25 pm

Editorial
Documenting the piracy of Milberg Weiss
The Washington DC Examiner Newspaper, 2008-05-29
LINK
WASHINGTON -

Class-action lawsuit fraud is not a victimless crime. At the very least, it harms the clients on whose behalf the lawyers are supposed to be working. So concludes respected St. John’s University law professor Michael Perino in a new data-driven analysis that shows a clear correlation between the incidence of corruption within disgraced law firm Milberg Weiss and higher fee requests and fee awards by and to the firm. Of course, if a law firm receives a larger portion of a court settlement, the firm’s clients receive proportionally less — which, in Perino’s words, is indeed “a real economic harm” to those same clients.

To review, four Milberg Weiss senior partners of the infamous class-action securities law firm have pleaded guilty recently in an $11.7 million kickback scheme that federal prosecutors said involved more than 250 cases, beginning in 1981.

The kickbacks went to “professional plaintiffs” who filed class-action cases against companies almost as soon as their stock price dropped, no matter why it dropped. The firm’s bribes ensured it would be selected as lead counsel by the lead plaintiff in such suits, thus ensuring that Milberg Weiss garnered the lion’s share of legal fees.

Perino is a congressionally recognized securities law expert who recently completed a multiple regression analysis of 731 class-action settlements. “As settlements grew larger,” he reported, “the fee requests in the [Milberg Weiss] indictment cases grew at a faster rate than the fee requests in the non-indictment cases, which means that on average Milberg Weiss asked for an increasingly greater share of the settlements it obtained even though there is no evidence that it obtained superior results.” Put otherwise, Milberg Weiss lawyers went after a bigger share of the fees whenever one of its favored plaintiffs was involved.

Clients lost in a second way as well because the lawsuits further depressed the value of the companies being sued. The threat of suits alone was often sufficient to induce company executives to settle out of court, including payment of plaintiffs’ legal costs. Among them, the four convicted Milberg Weiss partners snagged at least $200 million in a 22-year span, according to federal prosecutors.

In short, this was little more than piracy, practiced in the courtroom rather than on the high seas. Congress so far has refused to investigate how widespread the piracy was, or whether it continues under other guises. If Congress had any sense of responsibility, the Perino report would spur it to action.

Freeze the Fees For Milberg Weiss

June 4, 2007, 9:10 am, WSJ Law Blog
Milberg Weiss Watch: Spotlight on David Bershad
Posted by Peter Lattman

With news that he’s in talks with the government over a possible plea deal, all eyes — or at least the eyes of those paying attention to the Milberg Weiss investigation — are on David Bershad. He would be the first Milberg attorney to enter a guilty plea in the case and if he cooperates, says a criminal lawyer who has been involved in the case, “it could have a domino effect,” possibly prompting others with exposure to try to strike deals with the government.

We spotlight Bershad in this morning’s WSJ. Bershad, 67, was indicted just more than a year ago along with his firm on charges he and the firm funneled kickbacks to clients.

As a longtime member of firm management who for some time oversaw the firm’s finances, Bershad has an intimate knowledge of Milberg’s affairs, lawyers say. He has had close dealings with Melvyn Weiss, the head of Milberg Weiss, and Bill Lerach, his former partner who left in 2004 to form his own firm, San Dieg0-based Lerach Coughlin. Weiss and Lerach have been investigated but neither has been charged. Bershad didn’t return calls; his lawyer, Robert Luskin, declined to comment.

A graduate of Columbia Law, Bershad in 1968 was the first associate hired by Weiss and the late Lawrence Milberg. He later became the partner in charge of Milberg’s New York office and a member of the firm’s executive committee, for a time sharing “final decision-making authority over all actions” of the firm, according to the May 2006 indictment. From 1983 to 2005, according to the indictment, Mr. Bershad at times owned as much as 17.9% of the firm and his share of its profit was more than $160 million.

Said Howard Sirota, a New York plaintiffs’ lawyer who has worked with and competes against Milberg Weiss: “It was a good cop, bad cop thing: Mel would scream and David would close out the deal quietly.”

Milberg Weiss Partners to Be Indicted Within Month, Lawyer Says
By Jef Feeley
LINK

Feb. 23 (Bloomberg) -- Steven Schulman and David Bershad, partners in New York's Milberg Weiss Bershad & Schulman, were told by prosecutors that they will be indicted within the next month on charges they participated in a scheme to pay kickbacks to clients, Schulman's lawyer said.

Assistant U.S. Attorney Richard Robinson told Schulman and Bershad on Feb. 20 that they are facing indictment on wire fraud and money laundering charges over the fees, according to Edward Hayes, who represents Schulman in a federal criminal probe over the payments. Robinson told the two men they could be indicted in the next 30 days, Hayes said in an interview yesterday.

A lawyer for Melvyn Weiss, the firm's lead partner, said Feb. 21 that prosecutors told Weiss and William Lerach, Weiss's former partner, that there are no plans to charge them in the five-year probe of possible kickbacks. The two men run firms that accounted for 57 percent of securities fraud settlements last year, according to a Cornerstone Research survey.

``Mr. Schulman absolutely denies he was involved in any kickback scheme and that any referral fees involved in his cases were 100 percent legitimate,' Hayes said.

Neither Bershad, a founding member of Milberg Weiss, nor his attorney, Andrew Lawler, were immediately available yesterday to comment on Hayes's statements. Tom Mrozek, a spokesman for the U.S. attorney's office in Los Angeles, which has been conducting the investigation, declined to comment on ``any aspect' of the investigation.

$30 Billion

Federal prosecutors have been investigating claims that Milberg Weiss Bershad Hynes & Lerach, the biggest firm representing shareholders in securities fraud cases before it split in two in 2004, illegally paid shareholders to file the suits.

At the time of the breakup, Milberg Weiss had represented clients in half of all securities class actions filed in the past decade. The firm took part in suits that paid clients $30 billion in settlements.

Hayes said prosecutors allege Schulman knew about a scheme to pay referral fees to lawyers who sent them clients with securities-fraud claims. Some of the fees allegedly later made their way to the clients, he added.

``The government contends there are millions in fees' at issue in the case, Hayes said.

Schulman will be charged with fraud over allegedly knowing about the fee scheme and not taking steps to stop it, Hayes said. He'll face money laundering charges because he knew some lawyers were reportedly helping plaintiffs hide the source of money they received from the fees, Hayes said.

Referral Fees

A referral fee is paid from one firm to another for referring a client and splitting up the work, said George M. Cohen, a law professor and legal ethics teacher at the University of Virginia at Charlottesville.

``In many cases, it's not really a huge issue,' Cohen said, though problems may arise if such fees are used by ``lawyers who are less competent and can't get business in a legitimate way.'

``Basically, the rules say you can have some kind of referral fee as long as both lawyers are contributing to the representation or they agree to a joint representation,' Cohen said. ``Then it's OK, as long as the client understands that this is what's going on.'

The Milberg case may be a little different, and the claim ``is that they were making payments to a named plaintiff in various class actions, that he was getting extra payments to bring the claims in class actions,' Cohen said. ``The argument is that if the person is paid extra for serving in that capacity, they may not necessarily act in the best interests of the class, but may act in the best interest of themselves or the law firm.'

Pressure Tactic

Investigators are relying on accusations made by two former Milberg partners about the kickback scheme, Hayes said.

``We don't believe these individuals have any legitimate proof of any wrongdoing,' Hayes said. ``Every document they've pointed to is inconsistent with the allegations' over the fees, he said.

Hayes added the charges are an attempt to pressure Schulman and Bershad into cooperating with prosecutors in their continuing investigation of Weiss's and Lerach's actions.

Lerach now leads San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins. Weiss leads New York-based Milberg Weiss Bershad & Schulman.

First to File

Before 1995, law firms that were the first to file suits against companies whose stock declined often received most of the legal fees when the cases were settled. A change in the law that year gave control of shareholder suits to firms that represent the biggest shareholders.

On Milberg Weiss's Web site, Bershad is listed as a securities and commercial litigator. The site said he has negotiated ``more than 100 complex class-action settlements,' including cases against Lucent and Rite Aid that brought in a total of $900 million for investors.

Schulman also is listed as a securities fraud litigator on the site and recently represented Disney investors seeking to recoup former company President Michael Ovitz's $140 million severance.

Two other men already have been indicted in connection with the federal investigation of referral fees among securities lawyers.

Paul T. Selzer, a California lawyer, and Seymour Lazar, a retired attorney, have been charged with money laundering in connection with the alleged kickback scheme. Selzer is accused of helping to funnel illegal payments to Lazar, who served as lead plaintiff in securities fraud cases.

Selzer allegedly used referral payments made to him by Milberg Weiss to settle Lazar's legal bills with his firm and to make political contributions on his behalf.

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware, at jfeeley@Bloomberg.net.
Last Updated: February 23, 2006 00:16 EST

UPDATE
July 12, 2008, NY TIMES
Lawyer to Plead Guilty in Kickback Scheme
By THE ASSOCIATED PRESS

Paul T. Selzer, a lawyer who is the final defendant in a federal kickback case involving class-action lawsuits against big corporations, has agreed to plead guilty to a tax-related felony, prosecutors in Los Angeles said Friday. In a plea agreement filed in federal court this week, prosecutors said the Milberg Weiss law firm sent $49,000 to Mr. Selzer’s law firm. But the funds went to benefit Seymour Lazar, another defendant in the case, the agreement states. Prosecutors said Mr. Lazar was paid about $2.6 million to be a professional plaintiff.