Sunday, January 1, 2006

If It "Just Smells Bad" There's Probably a Reason

Lawyers (and others) sometimes refer to the "smell test" for a transaction -- if it doesn't smell right, then it's not something to get involved in.  For Milberg Weiss, the government's prosecution of Seymour Lazar for payments he received from the firm for serving as a lead plaintiff in class actions does not appear to have passed that test, at least according to a memorandum written by the law firm that served as the conduit for the payments.  Prosecutors in Los Angeles filed an internal memorandum from Best, Best & Krieger regarding the transfers from Milberg Weiss to Lazar that stated "To us it just smells bad and probably would to an investigator." Paul Selzer, a former partner at Best, Best & Krieger, was indicted along with Lazar for his role in funneling the payments from Milberg Weiss to Lazar.  Prosecutors filed the memo as part of a response to a motion by Lazar to end his house arrest, and it's not clear why the document was made public.  It certainly indicates that lawyers close to the transactions were worried about the legality of the payments from Milberg Weiss, and the long-running investigation of the firm and former partner William Lerach has been moving along slowly but could pick up steam if Lazar were to agree to cooperate in the investigation.  The memo was written in 1994, and much of the conduct involved in the case took place in the 1990s, raising a question whether the statute of limitations may have run on some of the transactions for a prosecution of Milberg Weiss and any of its lawyers (leaving aside a possible conspiracy charge that could be used to cover a longer period). A story in The Record (available on Law.Com here) discusses the Best, Best & Krieger memorandum. (ph)

January 1, 2006 in Legal Ethics | Permalink | Comments (0) | TrackBack (0)

Health Care Fraud Defendants Sentenced

Two defendants charged with health care fraud related to a scheme to submit false billings to Medicare for durable medical equipment received sentences of 50 and 34 months on Dec. 30. Virgilio Miranda and Lazaro Martinez received the sentences for their role in a scheme described in a press release (here) issued by the U.S. Attorney's Office for the Southern District of Florida as "involving two Miami durable medical equipment (DME) companies, AID Medical Equipment, Inc. and Progressive Services, Inc., both of which were alleged to have been placed into ownership under [Lemay] Chang’s name to conceal the involvement of others, including Miranda and Martinez, in the scheme, which involved the submission of approximately $3 million in Medicare claims."  Miranda and Martinez also pled guilty to conspiracy to tamper with a witness when they tried to persuade Chang to leave the U.S. after he received a grand jury subpoena and delivered a $70,000 cash payment to him.  Chang received a 16-month sentence in an earlier proceeding, and the defendants were ordered to pay $2.66 million in restitution. (ph)

January 1, 2006 in Fraud, Sentencing | Permalink | Comments (0) | TrackBack (0)