Skip to comments.US Prosecutors Implicate Milberg Weiss in Kickback Case
Posted on 06/24/2005 10:18:30 PM PDT by anymouse
A California man has been charged with taking illegal kickbacks to act as a plaintiff in dozens of corporate class-action lawsuits filed by Milberg Weiss, a move that brings a three-year federal probe to the door of one of the leading U.S. securities law firms.
The indictment handed down by a federal grand jury in Los Angeles on Thursday comes as prosecutors try to make a case that Milberg Weiss improperly paid plaintiffs to file lawsuits against publicly traded companies.
A spokeswoman for the law firm said on Friday that Milberg Weiss had been subpoenaed in connection with the investigation and "has complied completely with the government."
Although the indictment against former California entertainment lawyer Seymour Lazar names only "a New York law firm with principal offices in New York and California" as the source of the kickbacks he is alleged to have taken, the cases listed in the indictment were filed by Milberg Weiss.
"The firm and everyone involved intends to vigorously defend this case," Milberg Weiss spokeswoman Marina Ein said.
Ein declined to comment on whether the firm, which employs 125 lawyers, had been notified that it is a target of the ongoing investigation.
The 66-page indictment, which also names Palm Springs lawyer Paul T. Selzer as a defendant, describes a scheme in which Lazar or one of his family members agreed to serve as lead plaintiff for a share of the attorney's fees.
The indictment said Lazar collected at least $2.4 million in "secret and illegal kickback payments" from the law firm through Selzer and others.
It also accuses the law firm of filing "false and misleading" court documents and sworn statements signed by Lazar, and of hiding the payments to Lazar from the courts.
Lazar received illegal payments in cases involving Lockheed Martin Corp. (LMT.N: Quote, Profile, Research) , Genentech Inc. (DNA.N: Quote, Profile, Research) , Denny's restaurants, British Petroleum (BP.L: Quote, Profile, Research) , United Airlines (UALAQ.OB: Quote, Profile, Research) and others, the indictment said.
The firm stopped paying the kickbacks after Lazar was subpoenaed and asked to hand over documents in connection with the federal investigation in 2002, the indictment said.
The federal probe into allegations against Milberg Weiss came to light in January 2002, when a flurry of subpoenas went out to scores of lawyers and stockbrokers from major firms and plaintiffs who had participated in Milberg Weiss lawsuits.
In a statement, Milberg Weiss said that although the indictment did not name the firm it "unfairly implicates the firm in the wrongdoing alleged against Lazar. We are outraged that these allegations have been made against the firm and reject them as baseless."
The 1995 Private Securities Litigation Reform Act, which was drafted with Milberg Weiss in mind, limits plaintiffs to no more than five class actions in three years.
Lazar and Selzer could not be immediately reached for comment.
Although courts may award a "bonus" to the lead plaintiff in a class action, law firms are prohibited from sharing attorneys fees with a client who acted as a named plaintiff, the indictment said.
Class action firms usually take the cases on contingency and can earn up to 30 percent of damages awarded in a settlement or jury verdict, an amount that can reach into the tens or hundreds of millions of dollars.
Milberg Weiss has dominated class-action law in the United States, accounting for 85 percent of all such suits filed in California and 60 percent elsewhere in 2001, according to San Francisco-based insurance brokers Woodruff-Sawyer.
During its 30-year history, the law firm has recovered some $30 billion for investors, consumers and workers, according to the firm's Web site.
In 2004, Milberg Weiss split itself into two separate entities, one headed by senior partner Melvyn Weiss in New York and the other by William Lerach in San Diego.
Lerach, one of America's best-known class-action lawyers, has framed himself as a crusader against corporate corruption.
He captured national attention in early 2002, when he walked into a Houston courthouse carrying a box of shredded Enron Corp. papers symbolizing the company's cover-up of financial shenanigans.
Neither prosecutors nor Milberg Weiss spokeswoman Ein would comment on whether Lerach or Weiss had been named targets of the investigation.
Predators think their law degrees give them a license to steal; they should be charged under the Hobbs Act. Now, look at this---the parasites screwed up here:
Law firm discovers it sued own client in Pokemon case
By Don Bauder
September 24, 1999
San Diego law firm Milberg Weiss won't be suing the distributors of Pokemon after all. As it turns out, the firm discovered yesterday that one of the companies it accused of being involved in an illegal gambling enterprise was its own client.
One week ago, the aggressive San Diego firm, officially known as Milberg Weiss Bershad Hynes & Lerach LLP, charged Nintendo of America and Wizards of the Coast, along with 4Kids Entertainment, with promoting illegal gambling in their distribution of the popular children's cards called Pokemon.
Yesterday, the firm belatedly realized that it is corporate counsel to New York-based 4Kids Entertainment. Therefore, Milberg Weiss has withdrawn as lead plaintiff in the case, and also will not defend the lawsuit as corporate counsel for the defendant it represents. The firm's other co-managing partner is San Diego-based William Lerach.
The suit will be pursued by three other firms -- one in New Jersey, one in Los Angeles and one in San Diego.
Large law firms have elaborate systems, often computerized, for spotting potential conflicts of interest. Before taking on a new client, firms typically check to see if they are already working for or against that client. If the new case would conflict with the long-running representation, something is worked out.
"We have been prosecuting these alleged (Pokemon-related) gambling activities for the last several years," Weiss said. "When this matter came in as a potential additional case, apparently the conflicts check by the litigators did not pick up that the corporate side was representing 4Kids."
Milberg Weiss attorneys earlier explained that Pokemon qualifies as a gambling enterprise because of three elements: Kids must "pay to play" by purchasing packets of the cards; they can "win" rare prize cards, intrinsically more valuable than other cards; and there is an element of chance because the higher value cards are inserted randomly into Pokemon packets.
Milberg Weiss, the nation's largest class-action law firm, is best known for suing companies over ethics matters -- typically, charging that insiders dumped shares while concealing bad corporate news.
Don Bauder is a senior business columnist. Union-Tribune library researcher Erin Hobbs contributed to this report.
Copyright 1999 Union-Tribune Publishing Co.
EXCERPT. REST HERE:
We need Jesus back to throw out these maggots again.
Trial lawyers and their buddies, the rats in congress and state legislature set up the conditions for these bad lawsuits.
Sounds like collusion to me. Plotting in secret to ripoff businesses is fraudulent........more like con artists than lawyers and legislators (snigger).
Hobbs Act comes into play here-----harming our economic interests through illegal means......then there's legal extortion.....besides RICO and all those other nice laws on conspiracy.
I would also not be surprised to find out these sharpies cooked the books and shipped a lot of the proceeds offshore, out of sight of the IRS and state and US banking laws.
Just nice little trial lawyers working for the common rat voter and providing a sure lottery win for those who sue.
As a law professor used to say, To ask the question is to answer it.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.