Thursday, April 6, 2006
The Recorder reports (here on Law.Com) that two named partners at class action law firm Milberg Weiss Bershad & Schulman, David Bershad and Steven Schulman, will be indicted shortly for fraud related to secret payments to representative plaintiffs in class actions. Seymour Lazar, who served as the named plaintiff in a number of cases litigated by Milberg Weiss' predecessor firm, was indicted in 2005 on fraud charges related to the receipt of the secret payments. Lazar has asserted that they payments were referral fees, although the usual rule is that a representative plaintiff is not permitted to receive any compensation other than that authorized by the court. The class actions were filed before the adoption of the Private Securities Litigation Reform Act in 1995, so any prosecution of Bershad and Schulman may face possible statute of limitations problems if there is not a waiver.
Prosecutors had been investigating the roles of Melvyn Weiss and William Lerach, two of the best-known plaintiff class action attorneys in the country who were partners until their firm split in 2004. They have now been dropped from the case, although they are likely to be witnesses for one side or the other if Bershad and Schulman are indicted. The Recorder story notes that three Milberg Weiss partners and two former clients have been granted immunity, and attorneys for the two lawyers have traveled to Washington D.C. to speak with the Criminal Division at the Department of Justice to try to block an indictment. If indictments are handed up, it promises to be a bitter fight involving seasoned litigators as the defendants. (ph)