Monday, August 8, 2005
The grand jury investigation of leading lawyers from famed securities class action firm Milberg Weiss is expanding, according to a report in the Wall Street Journal (here). According to the Journal, two former Milberg Weiss partners have received immunity, and one has testified before the grand jury. The investigation has already produced the indictment of Seymour Lazar, who served as a representative plaintiff in a number of class actions in which the firm was lead counsel. The indictment alleges that Lazar received secret payments from the firm, and he worked closely with former name partner William Lerach, who split away from Milberg Weiss last year to form his own firm. The article also asserts that the government is looking into payments made to an expert witness who testified in a number of Milberg Weiss securities class action cases on damages issues; the expert was charged with fraud and embezzlement in an unrelated case.
As discussed in an earlier post (here, which includes a link to the Lazar indictment), the major problem the government faces is the statute of limitations for much of the alleged misconduct, most of which occurred before 2000. The Journal articles notes that the government's focus is on a conspiracy case, which would allow for older acts that would otherwise fall outside the limitations period to be used so long as at least one overt act took place within the last five years. The problem is establishing a single, overarching conspiracy that incorporates all the alleged misconduct, which may be difficult to prove. The Journal notes that new subpoenas have been sent to other law firms that acted as co-counsel with Milberg Weiss, although attorney-client privilege issues could slow the investigation even further. (ph)