September 21, 2007
Melvyn Weiss Formally Indicted and Steven Schulman Agrees to Plead Guilty
Article on cnn.com -- Top class-action lawyer indicted. Here's an excerpt:
A federal grand jury in Los Angeles has indicted prominent class-action lawyer and Milberg Weiss co-founder Melvyn Weiss for conspiring to make illegal payments to plaintiffs in more than 250 lawsuits that generated $250 million in attorneys' fees for the firm, the government said Thursday.
Additionally, Steven Schulman, a former partner in the firm, has agreed to plead guilty to a racketeering charge and acknowledge that he and others, including Weiss, conspired to conceal the secret payments from judges presiding over suits filed by Milberg Weiss.
The racketeering conspiracy against Schulman carries a maximum sentence of 20 years in prison. A plea agreement released Thursday by federal prosecutors "contemplates" a sentence of 27 months to 33 months. Schulman had previously pleaded not guilty to the charges.
In a statement, Ben Brafman, Weiss' lawyer, said his client will fight the charges. "We are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated," Brafman said.
Here's an excerpt from the related Wall Street Journal article, In Role Reversal, Melvyn Weiss is Indicted, by Nathan Koppel:
Mr. Weiss's share of firm profits during the years 1983 to 2005 was about $209.9 million, it says. The indictment also alleges Mr. Weiss profited greatly from the kickback scheme. The government alleges that Milberg Weiss earned more than $250 million in fees from cases involving kickbacks and that Mr. Weiss received more than about $41 million of those "tainted" fees.
Yesterday's indictment raises new allegations of kickbacks to certain "Florida plaintiffs" who served as name plaintiffs in 60 or more lawsuits for the firm. Prosecutors allege that around the early 1980s, David Bershad, a Milberg lawyer who has pleaded guilty in the case, told Mr. Weiss and another partner that paying a Florida plaintiff would violate laws prohibiting a lawyer from paying someone to induce the filing of a lawsuit. According to the indictment, Mr. Weiss and the other lawyer replied that because they would be paying in cash, there would be no paper trail and therefore there was little risk they would ever be caught.
Mr. Weiss "carried thousands of dollars in cash from New York to Florida" to compensate plaintiffs for taking the lead in class actions, the indictment alleges. Prosecutors allege Milberg paid kickbacks so it would have a ready stable of plaintiffs willing to file suits quickly, giving the firm an edge in the race to win the lucrative and powerful "lead counsel" status in class actions.
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