Saturday, April 29, 2006

Closing In on Milberg Weiss

The government's investigation of securities class action law firm Milberg Weiss for alleged kickbacks paid to representative plaintiffs in lawsuits took a significant step forward with a plea agreement by retired real estate mortgage broker Howard Vogel.  Vogel or members of his family served as the named plaintiffs in a number of class actions for which Milberg Weiss served as class counsel, and he admitted to receiving $2.5 million for services in 40 cases, including a $1.1 million payment from the attorney's fees in a class action against Oxford Health.  More importantly, according to a New York Times article (here), the payments occurred as recently as 2005, avoiding any statute of limitations issues.

In 2005, a grand jury indicted Seymour Lazar and an attorney for the receipt of alleged kickbacks from Milberg Weiss, and that case is scheduled to go to trial later in 2006.  In that case, Lazar has asserted that any payments were referral fees from one lawyer (or law firm) to another, and Lazar is an attorney although he did not work on the class action suits and his receipt of attorney fees was not disclosed to the court as part of the settlement.  Vogel is not an attorney, so alleged payments of a portion of the attorney's fees by Milberg Weiss could not be defended on the ground that they are otherwise acceptable referral fees because the professional rules do not permit lawyers to share fees with non-lawyers, particularly with the representative plaintiff in a class action.  One payment to Vogel involved cash in an envelope given to him by a law firm partner, not the usual method of splitting attorney's fees.

Although Milberg Weiss is not named in the Vogel plea documents, it has acknowledged that it is the law firm referred to as the "New York law firm" that made the payments.  Partners at the law firm, which broke up in 2004, are described by letter, for example as "Partner E" and "Partner D."  Will the law firm be indicted?  Prosecutors could name the firm, and its successor, in a conspiracy count in order to tie together a continuing course of conduct over a significant period of time that involves multiple representatives of the firm and different cases.  The benefit of a conspiracy charge for the government is that it can include conduct outside the usual five-year limitations period if they are part of the same agreement.  Along the same lines, prosecutors could seek RICO charges against the individuals, including partners, which is another means to avoid statute of limitations issues for conduct before 2001.  An indictment could allege that the firm is the RICO enterprise, which might spare Milberg Weiss from being indicted while still having the law firm as a featured player in a prosecution.  (ph)

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Fraud, Investigations, Legal Ethics, Prosecutions | Permalink

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Comments

Do you have a link on PACER or otherwise, or even a case name/number for the Vogel indictment? I would like to read it.

Any help would be greatly appreciated.

Posted by: Kelly Melchiondo | Apr 30, 2006 7:27:53 AM

Nothing available yet on PACER, and no post on the case from the US Attorney's Office. When it becomes available I will post it. The information and factual recitation almost always contain interesting additional facts.

Posted by: Peter Henning | Apr 30, 2006 10:16:09 AM

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