“His law partner (and later convicted felon) Mel Weiss was right: “Greed was a growth industry.” But when one of the law firm’s plaintiffs was charged with art theft and defrauding his insurance company, he gave the police a bigger prize: Lerach’s firm.”
LOL! Justice is served.
EXCERPT Milberg Weiss indicted for allegedly paying $11.4M kickbacks
Oct 31, 2006, By Peter Elkind, Fortune Magazine editor-at-large
http://biz.yahoo.com/hftn/061031/103006_8393127.html
But these lawsuits were only that profitable if Milberg Weiss ended up in charge of the case. By gaining the coveted role of lead counsel, the firm commanded the biggest fees and controlled the litigation. Until 1995 that job usually went to whoever filed first, winning the "race to the courthouse." That put a premium on having plaintiffs who lost money on the company's stock available at a moment's notice.
In practice, the plaintiffs were figureheads - the lawyers ran the case. So Milberg Weiss built a stable of plaintiffs with tiny holdings in dozens of companies, ready to lose money and bring suit within hours of a big stock drop. And that's where the likes of Dr Steve Cooperman came in.
When the retired doctor and his lawyer began trying to negotiate a cooperation agreement, Richard Robinson, the veteran assistant U.S. attorney in L.A. who had won Cooperman's conviction for insurance fraud, knew next to nothing about Milberg Weiss.
There were plenty of reasons not to do a deal. Cooperman's story was that Milberg had paid him to serve as plaintiff - usually about 10% of its fees. If true, the practice was illegal. Lead plaintiffs aren't supposed to receive any special compensation, just their share of the settlement and approved expenses. Indeed, the lead plaintiffs (and their attorneys) are required to swear under oath that they aren't getting special payments; lying about it would be a felony. Yet Robinson knew the charges might strike a jury as a legal nicety, since the money to pay the plaintiffs had come from the pockets of the plaintiffs lawyers, not investors.
Milberg was also a huge, politically charged target - a big supporter of Bill Clinton, then still in office (and later John Edwards). Robinson, a lifelong Democrat, had no animus toward plaintiffs lawyers. But like most prosecutors, he was eager to chase a bigger case.
A deal was soon struck: In return for his cooperation, Cooperman would remain free until 2001, then serve just 21 months. (He is now living in Connecticut.) A sealed July 2001 government sentencing recommendation obtained by Fortune cited his "valuable assistance in the initiation and development of a major criminal investigation." The document notes that Cooperman wore a body wire, initiated bugged phone calls, and helped persuade others to cooperate. A lifelong packrat, he produced letters and bank records.
And what a story he had! Cooperman told prosecutors that he, along with relatives and friends, had been paid for serving as plaintiff in about 70 cases over a decade. (The indictment says the total would turn out to be $6.5 million.) He explained that Lerach had introduced him to this new line of work in 1989. After contacting the firm about launching a potential shareholder lawsuit, Cooperman and a Brentwood buddy, Dr. Ronald Fischman, had met with Lerach in San Diego.
Lerach, Cooperman later testified in his divorce trial, "told us that it was very difficult for them to get people to be plaintiffs, and he volunteered that... they compensate the plaintiffs ... by giving them 10% of the fees that they receive." (Lerach declined requests for comment; his lawyer did not return calls.)
According to the indictment, Lerach urged Cooperman and Fischman to buy stock in different companies to position themselves as plaintiffs in future lawsuits. Dozens of cases and payments followed. But because Milberg wasn't supposed to pay plaintiffs, all of this had required certain arrangements.
Following Lerach's instructions, Cooperman testified, he enlisted lawyers to act as intermediaries for the payments. That gave the pretext that Milberg was paying referral fees to the attorneys for originating the case and providing the plaintiff. In most states such fees are legal, as long as the lawyer doesn't share the money with the client. But Cooperman's lawyers did share the money with their client; according to the government, they served as fronts, either passing the money on to Cooperman by personal check or using it to pay bills that Cooperman had run up for other litigation.
Milberg, for example, sent 35 checks totaling $3.5 million to Richard Purtich, an L.A. insurance lawyer who had represented Cooperman in various court battles. (Purtich has pleaded guilty to a felony tax charge in the case.) Cooperman directed another $2 million in Milberg payments to James Tierney. Cooperman's brother-in-law Bruce Bjork served as another conduit; according to the government, Milberg paid him $245,000 for consulting work he never performed, and he passed most of it on to Cooperman. (Bjork declined comment.)
Cooperman reported recruiting others to serve as plaintiffs and share in the windfall - his wife, Nancy; a second brother-in-law; a Beverly Hills pop psychologist named Mel Kinder; and Fischman. (Most of these people are now cooperating with prosecutors.)
During his divorce trial, Cooperman said both Weiss and Lerach paid him directly. He testified that one $175,000 check came "from Mr. Weiss himself." (Weiss's lawyer says it was a down payment for a painting he planned to buy from Cooperman.) Cooperman described driving with his wife to San Diego to pick up "a cash payment" from Lerach."... We sat at - at a conference table where he handed us an envelope. And he said, 'Here is $16,000.'" (Nancy Cooperman testified that she never saw any cash change hands.)
As Cooperman described it, a major player in the payment scheme was David Bershad, the now indicted partner who served as Weiss's No. 2 and, in effect, chief operating officer of the firm. (Between 1983 and 2005, Bershad earned $160.9 million.) The indictment says Bershad kept a safe in his credenza, from which cash payments to plaintiffs were doled out. Bershad typically signed the checks to Cooperman's intermediaries.
Cooperman's kickbacks continued until Feb. 25,1999, when his pending trial for insurance fraud brought his career as a paid plaintiff to an end with a final payment of $145,305. But by then, Cooperman testified, it was clear that his was neither the only such arrangement nor the first: "At the time what was going on with Milberg Weiss was a very well-known activity. It was just an activity that Milberg Weiss did with a number of people." --SNIP--long read