Monday, February 11, 2008

Lerach Draws a Two-Year Prison Sentence

William Lerach became the first partner from law firm Milberg Weiss to be sentenced for his role in paying kickbacks to representative plaintiffs in class actions in which the firm served as lead counsel.  U.S. District Judge John Walter sentenced Lerach to two years in prison -- he will serve about eighteen months of that in a federal correctional institution or work camp -- along with 1,000 hours of community service, two years supervised release, and a $250,000 fine.  The Judge stated that "[t]his whole conspiracy corrupted the law firm and it corrupted it in the most evil way" in giving Lerach the maximum sentence under the plea agreement.  Lerach's lawyers argued for a much reduced punishment of six months in prison and six months home confinement, while the government sought the full two years permissible.

With Lerach sentenced, the other two major cooperators in the case, former name partners Steven Schulman and David Bershad, will have to ponder what this means for them.  Each has provided information to prosecutors, and Bershad was especially important because he handled Milberg Weiss' finances.  Perhaps the greatest anxiety is being felt by Melvyn Weiss, who with Lerach served as the public face of Milberg Weiss and faces a multi-count indictment that includes RICO and money laundering charges.  While those who plead guilty get the benefit of cooperation through a substantially reduced sentence, Weiss has vowed to go to trial to clear his name.  Lerach got a particularly favorable deal in light of the potential Sentencing Guidelines range of 27 to 33 months for even the reduced charge to which he pleaded guilty.  RICO or money laundering convictions would likely put Weiss in at least a four to five year prison sentence range, and he could easily be bumped up to ten years with various enhancements.  Other charges in the indictment include obstruction of justice and false statement counts, and if Weiss is convicted of those that will only exacerbate the sentence.  The trial penalty that could be assessed if Weiss is convicted on all counts will be substantial, and he would likely receive a far longer sentence than his erstwhile partner Lerach, who will probably be out of prison not all that long after Weiss' trial is concluded, if it takes place.

The other major remaining defendant in the case is the law firm itself, which still has not entered into a plea agreement.  The admissions of Lerach, Schulman, and Bershad that they engaged in criminal conduct while at Milberg Weiss will make any defense nearly impossible under the principle of vicarious liability applied to organizations.  Predictions of the demise of Milberg Weiss and its plea agreement have all been proven wrong to this point, however, so I'm not going to hazard another guess about what the firm might do.  Judge Walter showed that he is not a softie on this case, so anyone going to trial will do so with some trepidation. An AP story (here) discusses the Lerach sentencing. (ph)

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Fraud, Legal Ethics, Sentencing | Permalink

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Comments

How much time with Bill do? Is it like state prison where they give you a break for taking classes, good time, etc.? Could he be out in 15 or 18 months instead of the 24?

Posted by: ChuckD | Feb 12, 2008 10:58:55 AM

Under the Federal Bureau of Prisons rules, Lerach can receive a good time credit of up to 15% of his sentence, so he will have to serve a bit less than 21 months. The last two to four months can be served in a half-way house, so his time in a federal prison camp or FCI will be about 18 months or so.

Peter Henning

Posted by: Peter Henning | Feb 12, 2008 5:16:17 PM

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