Friday, September 21, 2007

Weiss Indicted and Government Seeks Forfeiture of $251 Million

As expected, Milberg Weiss founder Melvyn Weiss and the firm were charged in a second superseding indictment (available below) with conspiracy, RICO conspiracy, mail fraud, and obstruction of justice, and Weiss was accused of making a false statement (Sec. 1001) to agents investigating the firm.  While the basic allegation of paying representative plaintiffs in class actions in which the firm served as lead counsel remains the same, the obstruction and false statement charges add a new wrinkle to the case.  Weiss, and through him the firm, are accused of hiding a 1990 fax from one of the plaintiffs to David Bershad, a named partner in the firm, that discusses checks from the firm.  The government subpoenaed the document in January 2002, and the indictment states that from 2003 until August 2007 Weiss obstructed justice by "causing [the fax] to be withheld from production in response to the Grand Jury Subpoena."  Apparently, his refusal to comply with the subpoena was a continuing obstruction of justice. For the Sec. 1001) charge, Weiss alone is accused of lying to agents in August 2003 about his discovery of the document, and subsequent assertion of the self-incrimination privilege to withhold it.  According to the indictment, the fax was a business record of Milberg Weiss and not subject to a Fifth Amendment claim. 

The false statement count shows the benefit of Bershad's cooperation, because the government alleges that he gave the fax to Weiss, information that clearly comes from Bershad.  This is the first time that I have seen an assertion of the self-incrimination privilege as the basis for a false statement charge, with the government claiming that Weiss knew the document was not a personal record and therefore he could not resist production on that ground.  The obstruction and false statement counts likely are designed to help show Weiss' intent to hide the payments to the plaintiffs, an attempt to undermine any claim that he was unaware of what was going on or blaming others for the conduct. 

The forfeiture count seeks $251 million from Milberg Weiss and Weiss, which is the government's estimate of the fees earned from the cases with the improper payments, what the indictment terms the "tainted attorneys' fees."  (ph)

Download us_v_milberg_weiss_second_superseding_indictment_sept_20_2007.pdf

Fraud, Legal Ethics, Prosecutions | Permalink

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