Friday, February 1, 2008
Preparing your client for a hearing is a must for every attorney. But offering to have your client's memory fade in exchange for favors is a major problem, as illustrated in a recent SEC case. The SEC filed an administrative action (here) to bar an attorney licensed in New York from appearing before the Commission because of what he told the attorney for a brokerage firm and its president who were being investigated. The attorney's client came to the SEC's attention as a potential witness, and so the attorney began dealing with the investigators seeking to arrange her testimony. At the same time, the attorney also had some conversations with the brokerage firm's lawyer that were rather revealing. How did the SEC learn what was said, you might ask? Well, it seems that the brokerage firm's attorney taped the conversations, as summarized in the administrative filing:
During the taped conversations, Respondent requested that Blumer [the brokerage firm's president] arrange for a "severance package" (i.e., removing his client as the co-signer on two car leases with Blumer and paying her salary) for his client. In return for this severance package, Respondent indicated that his client might not cooperate with the Commission and/or that her recollection of the relevant events might "fade." In the last of these conversations, Blumer’s attorney asked Respondent "what package" his client wanted to "not cooperate." Respondent stated, "Get her off those leases and, you know, your salary, and you can even pay it out over a year." Blumer’s attorney then asked, "what will we get if they do that, she won't cooperate or she won't remember?" Respondent stated "probably both."
New York is a one-party consent state for taping telephone calls, so there's no problem on that front. Can't you trust the attorney you're trying to extort in exchange for having your client's memory "fade" a little bit? It seems not, and the New York attorney may find himself in a bit of hot water with the Bar authorities who tend to take a dim view of such conduct. Whether the U.S. Attorney's Office takes an interest in a possible obstruction of justice case remains to be seen. Be careful what you offer in exchange for favorable testimony, it can cost you your career. (ph)
Thursday, January 31, 2008
It isn't every day that federal prosecutors point to the collateral consequences of a white collar defendant's guilty plea as a reason to impose a lighter sentence, but that seems to be what happened in the recommended sentence for leading plaintiffs lawyer William Lerach. The government's sentencing memorandum, available below, tries to walk a fine line between advocating for a higher sentence than the one recommended by the Probation Office while still adhering to the plea agreement that capped Lerach's potential prison term at twenty-four months for his role in making secret payments to representative plaintiffs in cases litigated by his former firm, Milberg Weiss. So in the same filing prosecutors asked for a higher Sentencing Guidelines calculation to trigger the maximum twenty-four month sentence, nine months longer than recommended in the Presentence Report. Then in defending the decision to limit the potential punishment to a maximum of two years, the government states:
Defendant, who will be sixty-two years old upon commencement of his sentence, now stands in disgrace before the profession of which he considered himself a national leader, and the courts before which defendant practiced. Given what is surely an ignominious conclusion to an otherwise successful career, a period of incarceration greater than twenty-four months is not necessary to promote the sentencing goals set forth in Section 3553(a).
While that position is nothing new in argument by defense lawyers on behalf of their clients, I don't recall seeing prosecutors point to the reputational effects of a guilty plea as a justification for a sentence lower than the one called for in the Guidelines.
In Lerach's case, it is an odd argument because his reputation was built at least in part on the very conduct involved in the prosecution. In a different section of the brief seeking a higher sentence, albeit still within the twenty-four month limit, the government asserts that "[t]he conduct at issue amounted to a systematic effort to obstruct and undermine the lawful functioning of the judicial system in hundreds of lawsuits brought in federal and state courts throughout the United States." So Lerach attacked the heart of the legal system, while the "ignominious conclusion" of his career argues in favor of some measure of leniency. Part of his prominence in the profession likely contributed to his ability to pursue class action lawsuits while making the secret payments, so the loss of prestige is not just a tangential result of his crime. I almost get the feeling that portraying Lerach's fall from grace as a justification for a lighter sentence is a bit like the person convicted of setting fire to his home for the insurance money begging for mercy because he's now homeless -- this isn't so much a "collateral consequence" as a direct result of one's choice to commit a crime.
So, have prosecutors gone soft? The language arguing for a more limited sentence is sure to be used in other white collar cases in which a defendant suffers from collateral personal and career consequences as a result of a guilty plea or conviction. It may be that prosecutors have to take this almost schizophrenic approach because the plea agreement ended up being potentially too favorable to the second most powerful lawyer at Milberg Weiss, which itself is under indictment. You learn to live with your deals, but the rhetoric used in defending this one could come back to haunt prosecutors later on. (ph)
Sunday, October 21, 2007
One of the original defendants in the Milberg Weiss kickback case pleaded guilty, leaving only two individuals remaining along with the firm. Seymour Lazar entered a guilty plea to obstruction of justice, filing a false tax return, and making a false declaration in federal court. Lazar had served as the representative plaintiff in a number of Milberg Weiss class actions, and admitted to accepting $2.6 million from the firm for his compliant service as the named plaintiff in the actions. According to an AP story (here), prosecutors will recommend the eighty-year old Lazar be sentenced to home detention due to his declining health. Lazar is unlikely to be a witness in the prosecution of Melvyn Weiss, the only attorney from the firm who is fighting the charges after three of his former partners -- Steven Schulman, David Bershad, and William Lerach -- pleaded guilty and admitted to making the payments to class representatives. Lazar proclaimed his innocence rather loudly after being indicted, and would not be a particularly strong witness for the government if he is only sentenced to home detention.
The plea deal with Lazar lets the government puts its focus on Weiss, who has indicated that he has no intention of making a deal -- although this case has shown that hardline statements about seeking vindication at trial do not necessarily mean the case will play out in court. The strength of the government's case will be the testimony of Schulman and Bershad, who dealt with Weiss directly on the payments. Lerach is not required to cooperate as part of his plea deal, and his contentious relationship with Weiss, which led to the break-up of the original version of Milberg Weiss in 2004, would not make him an effective witness. (ph)
Thursday, October 18, 2007
Justin Scheck has an interesting and thorough article in The Recorder (here) discussing the recent superseding indictment of Melvyn Weiss and his firm, Milberg Weiss, and how the firm appears to have made a series of missteps that jeopardizes its continued existence. While former Milberg Weiss partner William Lerach's plea deal gets extricates his new firm -- formerly Lerach Coughlin, now Coughlin Stoia with Lerach's retirement -- from the criminal investigation, Weiss' indictment keeps his firm in the cross-hairs, with no resolution of the charges in sight yet. With the plea agreements of two former Milberg Weiss name partners, Steven Schulman and David Bershad, it will be just this side of impossible for the firm to defend itself from the charges because of the acts of its agents can be attributed to the entity. The article describes the firm's leadership as being in turn "indecisive, myopic, stubborn and simply unlucky." Milberg Weiss has been under indictment for almost a year and a half now, and it continues to survive, although perhaps not thrive with the indictment hanging over its head. Getting out of the case will cost it millions, so it won't be easy to resolve the case. (ph)
Friday, September 21, 2007
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)
Thursday, September 20, 2007
With the impending superseding indictment of Melvyn Weiss and his firm, Milberg Weiss, the prosecution of the firm and its members for paying secret kickbacks to plaintiffs is nearing its denouement. The plea agreement (available below) of William Lerach, the symbol -- for good or evil, depending on your point of view -- of aggressive class action attorneys has drawn considerable attention and criticism for the sentence and lack of a cooperation requirement. The deal puts his sentencing range at one to two years along with an $8 million fine, and if the district court does not accept its terms then the agreement can be scuttled by either side. An additional aspect of the sentence is that no more than half can be served in community confinement, i.e. a halfway house, or home detention, i.e. in the living room. That means Lerach could serve as little as six months in jail, and it will likely be in a prison camp or similar minimum security federal facility.
Some have criticized the sentence as too light compared to those received by other well-known white collar defendants, such as the 25 years received by Bernie Ebbers or Jeffrey Skilling's 24+ year term, which he is serving even while his appeal is before the Fifth Circuit. Even Andrew Fastow's comparatively mild sentence for his role in the Enron debacle was six years, far more than Lerach will serve. The Wall Street Journal, which has never particularly cared for Lerach and his ilk, criticized the $8 million fine he will pay in an editorial (here), asserting that "It's hard to put a number on the money Mr. Lerach took off shareholders over the past three decades or so, but it's safe to say that $8 million isn't close. Even after his fine and minimal jail sentence, he will presumably remain a rich man."
In any discussion of a criminal sentence, it is important to remember that it has to be based on the crime of conviction, in this case conspiracy to obstruct justice and make false statements to the court. The Milberg Weiss case has never been a fraud prosecution, at least in the sense of depriving victims of money or property. While the convictions of Ebbers and Skilling/Fastow involved significant accounting fraud, it is not entirely clear whether the Milberg Weiss kickbacks paid to the representative plaintiffs necessarily provided a direct monetary benefit to the firm in excess of what it recovered in the cases. The plea agreement states that the payments allowed the firm to file its cases earlier, and the degree of oversight exercised by the named plaintiffs was non-existent, in all likelihood, so Milberg Weiss was free to pursue its legal strategy unfettered by any client demands. An earlier defense filing in the case assailed the government's theory as trying to stretch a violation of the professional responsibility rules into a crime. While making false statements to the court is certainly criminal, and the kickbacks were not only unethical but likely crimes given the representations the class counsel must make about its representation, what Lerach and others who have entered guilty pleas did was not necessarily a scheme to defraud. While the WSJ may bemoan Lerach's tactics, due process limits the sentence to conduct related to the criminal offense, and it's hard to see how claims of ripped-off shareholders relates to a conspiracy to mislead judges.
The absence of a cooperation provision in the plea agreement has aroused suspicion because the government usually requires it as part of a deal. The Ideoblog (here) notes that "it's still possible that the government made an implicit, non-disclosed deal with Lerach." While there is good reason to be suspicious, I suspect the government does not have much interest in using Lerach in the prosecution of Weiss and the firm, so prosecutors may well have been willing to drop any cooperation demand in the bargaining to get Lerach to plead guilty. It gives him a small point to argue in the future -- "I'm not a rat" -- at little cost to the government. Lerach as a witness against Weiss would bring significant baggage, mainly the negative relationship he has with Weiss that led to the breakup of Milberg Weiss in 2004. Moreover, I doubt prosecutors would trust having Lerach on the stand because he does not strike me as a witness who can be controlled or trusted to maintain his temper on cross-examination. The key to the case against Weiss is his former partner David Bershad, who was in charge of the firm's finances and paying the representative plaintiffs. Lerach would be more of a distraction at a trial, so garnering his cooperation would not be worth much while it could be foregone for other benefits during the negotiations.
Whether the sentence (and fine) is "light" or "harsh," the prosecution is a watershed because the government pursued a case against attorneys who sought to take advantage of the system through a long-term pattern of abuse. That said, not every case in which Milberg Weiss was counsel was tainted, and the firm remains in business. Lerach certainly should lose his law license, and I doubt many judges will ever welcome him into their courtrooms as a lawyer again. There's always a danger in asking how a symbol should be punished, and comparing one case with another risks overlooking important differences between them. (ph)
Wednesday, September 19, 2007
Fortune is reporting (here) that Melvyn Weiss, a name partner at Milberg Weiss, will be indicted shortly on charges related to secret payments to representative plaintiffs in class actions filed by the firm. Former partner William Lerach just entered a guilty plea to a conspiracy charge that will call for a one- to two-year sentence, while another former name partner, David Bershad, entered a guilty plea earlier that appears to have been the key breakthrough in the investigation. In addition, Steven Schulman, whose name was put on the firm more recently, reportedly will also enter a guilty plea after fighting the charges for over a year. The firm itself was also indicted in 2006, and it too is likely to plead guilty at some point. In its heyday, the firm was called Milberg Weiss Bershad Hynes & Lerach before the 2004 break-up, which means that three of the five "names" in the firm -- Schulman's was added after Lerach left -- will be involved in federal charges related to its conduct. Lawrence Milberg died in 1989, well before the practices at issue in the case occurred. (ph)
UPDATE: The Wall Street Journal Law Blog (here) quotes a press release issued by Milberg Weiss confirming that Melvyn Weiss and the firm will be the subject of charges issued in a superseding indictment by a Los Angeles grand jury:
Milberg Weiss understands that a second superseding indictment will be issued tomorrow that will include new charges against the Firm and also Melvyn Weiss. Mr. Weiss has decided to discontinue his participation in Firm management in order to focus on the defense of the charges against him. The Firm’s other partners, none of whom is alleged to have been involved in any wrongdoing, will be responsible for its management and litigation activities. Mr. Weiss will remain available to counsel clients and Firm attorneys. The Firm remains proud of Mr. Weiss’s and the Firm’s accomplishments over the years and will continue to fight for its clients and class members and to produce the excellent results for which it is known. We do not anticipate any interruption in our work and we look forward to putting this difficult period behind us.
With Weiss no longer taking an active management role at the firm, it may be that Milberg Weiss will seek to resolve the charges rather than continue to fight them. (ph)
Tuesday, September 18, 2007
Famed class action attorney William Lerach is set to plead guilty in Los Angeles to one count of conspiracy related to payments to representative plaintiffs in cases filed by his former firm, Milberg Weiss. The long-running investigation of the firm has picked up steam in the past few months as former name partner David Bershad entered a guilty plea that outlined how he maintained a cash fund drawn from contributions from other Milberg Weiss partners that was used to make secret payments to the plaintiffs. In late August, Lerach announced his retirement from his new firm, Lerach Coughlin, in which he acknowledged "my mistakes" and said that the investigation would end soon, which apparently it will for him (see earlier post here). According to a Bloomberg article (here), the plea agreement does not include a cooperation provision, which likely means Lerach will not be called on to testify against the firm or another former named partner who remain under indictment. The agreement calls for a prison sentence of one to two years and an $8 million fine. A key question now is whether prosecutors will bring a case against Melvyn Weiss, who along with Lerach has been the recent focus of the federal investigation. (ph)
Wednesday, August 29, 2007
Famed class action attorney William Lerach is stepping down from his firm as of August 31 in the midst of a drawn-out federal investigation of kickbacks paid to plaintiffs through his former firm, Milberg Weiss. Lerach broke away from Milberg Weiss in 2004 and moved to a new firm in which his name came first, at least until Labor Day when it will be become Coughlin Stoia Geller Rudman & Robbins. An e-mail to firm members, reprinted on the Wall Street Journal Law Blog (here), states in part:
As you know, I will be retiring in short order to resolve the investigation about alleged events at my former firm more than a decade ago – long before this firm was even a twinkle in the eye. Because the events in question do not involve this 3-year-old firm or any of you, my decision to step aside will ensure continuity and stability for the hundreds of clients who benefit from your stellar work. This will end the investigation. Despite my mistakes, I am immensely proud that together we built a firm without peer and never shied away from taking on the world’s most powerful and corrupt corporations. [Italics added]
That certainly sounds like someone who may be close to resolving the case by way of a plea bargain, which was offered by prosecutors a few months ago but turned down. References to moving on "to resolve the investigation," "end the investigation," and "my mistakes" convey a feeling of resignation that a conclusion to the criminal case is near. Lerach's purported rejection of the earlier plea offer came before another former Milberg Weiss partner, David Bershad, agreed to plead guilty and is cooperating in the government's investigation. That may impel Lerach to cut his own deal given the statement of facts in which Bershad admitted that Milberg Weiss partners contributed money and made secret cash payments to plaintiffs.
Lerach has not lost his edge, of course, beginning his e-mail by noting that "[n]ow that I have outlasted Karl Rove, John Ashcroft and Alberto Gonzalez, it is time for me to retire." I suspect this may be the first time we have seen Lerach's name linked to these three stalwarts of the Bush Administration. (ph)
Sunday, July 15, 2007
The cooperation of former Milberg Weiss partner David Bershad most likely will lead the firm to negotiate a quick resolution of the criminal charges, so the issue becomes whether any other current defendants will cooperate and if the case will be extended to others who worked at the firm, such as Melvyn Weiss and William Lerach. In filing a response to a motion to dismiss the honest services counts of the indictment filed by, among others, former name partner Steven Schulman, federal prosecutors included as an exhibit a short portion of the grand jury transcript of an unnamed broker. The broker testified that Schulman gave him cash payments to provide the names of clients who owned shares of companies Milberg Weiss was considering suing so they could act as lead plaintiffs. The payments, which consisted of packs of hundred dollar bills, were made in restaurants at a Howard Johnson or Holiday Inn in Newburgh, New York, by passing the money underneath the table -- I'd hate to think what else might be found under there.
It's not entirely clear what law Schulman might have broken in making the payments, although paying cash to a broker to obtain clients is questionable. It would not be a scheme to defraud the brokerage firm, nor would it be a fraud on the class of plaintiffs because the case had not been filed. It is certainly unethical to pay a person, particularly a non-lawyer, for clients. As with many other charges in the case, however, representations were made to the court about the representative plaintiff and the lawyer's role in the matter, so the payments could be part of a broader fraudulent scheme. Regardless of whether the payment is illegal in itself, it does not put Schulman in a very good light and is consistent with Bershad's plea agreement about the use of copious amounts of cash in connection with the class actions.
A post on the CAL LAW Legal Pad blog (here) speculates that prosecutors are looking into payments to an expert witness used by Milberg Weiss to establish damages from the alleged misconduct as a possible avenue for charging Lerach. The expert is in prison on an unrelated fraud charge, so he won't be an effective witness. But if the payments can be traced through others, or if Lerach made or authorized false statements to the court that the expert did not receive a contingency fee, which is prohibited, then a perjury or criminal contempt charge could be brought. (ph)
Monday, July 9, 2007
What had been rumored for a few weeks has finally come to pass -- former Milberg Weiss name partner David Bershad entered into a plea agreement with federal prosecutors and will cooperate in the investigation of the firm. According to a press release (available below) issued by the U.S. Attorney's Office for the Central District of California, Bershad will plead guilty to one count of conspiracy. The plea agreement requires him to forfeit $7.75 million and pay a $250,000 fine. The plea agreement (available below) puts the Sentencing Guidelines range at 27-33 months, but there is also a 5K1.1 provision allowing the government to move for a lower sentence based on Bershad's cooperation.
With Bershad's guilty plea, the law firm is likely to be the next defendant to settle because it has no real defense to the charges now that one of its partners admitted guilt. The key issue is whether former Milberg Weiss leaders Melvyn Weiss and William Lerach will be charged. The statement of facts (available below) filed with the plea agreement refers to Milberg Weiss partners A, B, E, F, and G being involved in the payments to class action plaintiffs -- presumably Bershad and co-defendant Steven Schulman were C and D on that list. Whether Weiss and Lerach are among the unidentified partners remains to be seen, but they are certainly targets of the investigation. Bershad played a major role in the firm's finances, and has extensive knowledge of how payments were structured and the involvement of other partners in the firm's class action cases. His cooperation may well be a key turning point in the case. (ph)
Friday, June 29, 2007
The Los Angeles Daily Journal is reporting that prosecutors offered a plea deal to leading class action attorneys Melvyn Weiss and William Lerach related to allegedly illegal kickbacks paid to representative plaintiffs. The report also indicates that former Milberg Weiss name partner David Bershad is cooperating in the investigation of his former firm, which was indicted along with him and another firm partner in 2006. The investigation of the firm has been tortuous, to say the least, having lasted now since about 2000. At one point, Weiss and Lerach were identified as targets, but then in February 2006 the U.S. Attorney's Office in Los Angeles apparently notified them they were no longer targets (see earlier post here). Now they may be back on the list, and indeed much more than mere targets but the principle focus of the case. If Bershad does plead guilty, there is little the firm can do to fight the charges, and it may be in the interest of the remaining partners to end the prosecution with some type of settlement agreement.
One hang-up with the reported plea offer is that it would have required Weiss and Lerach to serve a term in prison, which neither is amenable to at this point. When prosecutors make plea offers this far into an investigation after securing the cooperation of another defendant, it may well be a sign that the government will move against the two lawyers in the near future. A Reuters story (here) discusses the Daily Journal report (which is available only by subscription). (ph)
Saturday, June 2, 2007
There are indications that partners at Milberg Weiss are negotiating a plea deal with the government to put an end to the prosecution of the firm for making secret payments to named plaintiffs in class actions for which the firm was lead counsel. Recent reports that former name partner David Bershad is also negotiating to plead guilty for his role in the scheme (see earlier post here) means that any hope the firm had of defending itself on the charges goes down the tubes if Bershad admits to criminal conduct in the course of his work on behalf of Milberg Weiss clients. The criminal liability of organizations, such as law firm partnerships, is based on respondeat superior, so Bershad's conduct would be attributed to Milberg Weiss. An article in The Recorder (here) includes speculation that the firm may be required to pay a fine of $50 million to $100 million, a substantial amount of money.
For the firm, more important than the fine is avoiding having to enter a guilty plea, which would haunt it in the future as it tries to obtain appointments in securities class actions. I expect the government is willing to enter into a deferred prosecution agreement under which Milberg Weiss will admit to violations and agree to certain reforms in its operations and governance, and after a period of time the current charges will be dismissed. While not a pleasant outcome for the firm, it sure beats a criminal conviction by a jury, which would be a foregone conclusion if Bershad admits his own guilt. What reforms the government demands will be interesting -- might it seek the removal name partner Melvyn Weiss from his role at the firm he helped found and turn into a plaintiffs class action powerhouse? (ph)
Thursday, May 31, 2007
Two items in the news raise the question whether they are just a coincidence, or whether more is going on than meets the eye. A Wall Street Journal story (from the always-interesting and entertaining Law Blog here) states that former Milberg Weiss name partner David Bershad may be negotiating a guilty plea in the prosecution of the firm and another partner for paying secret kickbacks to lead plaintiffs in class actions. Bershad was responsible for the law firm's finances, and was accused of making cash payments from a safe hidden in a credenza in his office. If Bershad were to plead guilty and, more importantly, cooperate with the government, this would be a significant break in the case. For Milberg Weiss, any admission of criminal conduct by Bershad would be proof of the firm's liability, making it much more difficult, if not impossible, to defend against the charges.
Now for the coincidence. A Washington Post story (here) indicates that William Lerach, formerly with Milberg Weiss before a nasty break-up of the firm, is planning to leave his new law firm, Lerach Coughlin. Both Lerach and Melvyn Weiss were rumored to be involved in the federal criminal investigation, although both received letters from prosecutors at one point stating they were not targets of the investigation. Lerach has been a leading advocate for shareholder class actions in the securities field, and it is unlikely he will leave the scene completely. The timing of his decision, coming at the same time as news of Bershad's possible cooperation, is certainly interesting. Then again, I've never been much of a conspiracy theorist, so it may just be a coincidence. (ph)
Monday, May 21, 2007
Plaintiffs class action attorney Louis Robles is in jail pending acceptance of a plea agreement to charges that he stole over $13 million from asbestos clients because he may be a flight risk. An article in the Daily Business Review (here) notes that Robles' $1 million bail has been revoked because his girlfriend told a probation officer that Robles had discussed with her obtaining false passports for himself and his grandson. Perhaps more importantly, the government has been able to locate only $1 million, and the article reports concerns that Robles may have moved money off-shore. As discussed in an earlier post (here), Robles had agreed to plead guilty to fraud charges and faces a ten-year prison term. It looks like he may get an early jump on the sentence. (ph)
Friday, April 20, 2007
Former Miami plaintiffs class action attorney Louis S. Robles will enter a guilty plea to mail fraud charges for defrauding asbestos clients out of over $13 million that will result in a ten-year prison sentence, according to a Daily Business Review article (here). At one time, Robles represented over 7,000 asbestos clients, and according to a press release issued by the U.S. Attorney's Office for the Southern District of Florida at the time of his indictment in May 2006 (here), he was accused of using money from his firm's lawyer's trust account for "financing his movie production and waste management companies, leasing apartments in New York and Los Angeles, making mortgage payments of up to $101,000 per month on four different properties, including a 9,000 square-foot waterfront mansion in Key Biscayne, and paying his ex-wife’s alimony, as well as payments to other clients." While the court will doubtlessly require Robles to pay restitution to his numerous former clients, whether they ever see any money is an open question. This type of case imposes a particularly difficult burden on the victims because they lost their chance at obtaining some compensation for a debilitating disease. (ph)
Friday, February 2, 2007
The prosecution of plaintiffs class action firm Milberg Weiss and two of its partners took another turn when Steven Cooperman admitted to accepting payments from the firm for serving as the representative plaintiff in class actions. His guilty plea includes an admission to accepting $175,000 from "Partner B," widely speculated to be former Milberg Weiss partner William Lerach, who split away from the firm in 2004 to form Lerach Coughlin. It has been noted that Cooperman is an eminently impeachable witness, having served time for insurance fraud and then prosecuted for breaching his plea agreement by conducting another fraud (involving forged doctors signatures on health insurance forms) while in prison -- how often will he be asked "Which time were you lying?" on cross-examination? Moreover, his guilty plea in the Milberg Weiss case effectively admits that he lied to the courts about not receiving any remuneration for serving as the representative plaintiff. A story in The Recorder (here) has a telling quote from Cooperman's attorney, who asserts that his client has "been 100 percent truthful with the government as to Milberg Weiss." Not much of an endorsement.
While there is considerable speculation that prosecutors may be "closing in" on Lerach and his former partner, Mel Weiss, who has been identified as "Partner A" in other plea documents, it is hard to conceive the government building a case around the testimony of the defendants who have entered guilty pleas already, all of whom have a checkered past, particularly Cooperman. I suspect that, unless the government can obtain incriminating information from someone inside Milberg Weiss, or cooperation from one of the firm's former partners charged in the indictment, it will be difficult to think that a breakthrough will occur that leads to charges against Lerach and Weiss after nearly seven years of investigation. (ph)
Tuesday, January 2, 2007
Yet another voice critiques the McNulty Memo. This time it comes from Kaye Scholer White Collar Litigation and Internal Investigations Group Update. Their take on the memo - Download white_collar_update_jan_2007.pdf like so many others, finds flaws in the latest Justice Department attempt to keep Congress from intervening. Unlike some others, they are not as optimistic on whether Congress will intervene. Other comments can be found here, here, here, and here. One thing is certain, and that is that Larry Thompson owes a thank you to McNulty for taking his name off of the revised Holder Memo.
Tuesday, December 19, 2006
The McNulty memo, discussed here, here, here, and here, is clearly controversial. Another voice can be added to those proclaiming that the memo is deficient as not going far enough. This time it is William Sullivan of Winston & Strawn. Last March, Sullivan, a former prosecutor, testified before the House. He appeared along with Tom Donahue, former Attorney General Thornburgh, and former Associate Attorney General Robert McCallum. William Sullivan now provides a detailed release Download Untitled.pdf that states is part:
"Ultimately, the Memorandum's piecemeal revisions may in the short term appease some critics and forestall imminent judicial and congressional action, but they do not demonstrate an earnest re-evaluation of Department policies regarding corporate criminal enforcement, and fail to provide meaningful procedural change."
Wednesday, December 13, 2006
Focusing on Four Things -
1. In analyzing the McNulty Memo, there are several interesting points to note within the initial parts of the document. In going from the Holder Memo to the Thompson Memo, Larry Thompson outlined in the initial paragraphs the main reason for revisions - "increased emphasis on and scrutiny of the authenticity of a corporation's cooperation." He also noted that "[f]urther experience with these principles may lead to additional adjustments." These lines are omitted in the McNulty Memo. In its place one finds some interesting language that demonstrates the motivation of DOJ in presenting this revised memo. For example, in Part I of the Memo there are several references to "perception." Clearly the DOJ has been bombarded with criticisms for its actions regarding attorney-client privilege waivers. This recognition of how their actions "impact public perception" is noteworthy. This very long new Memo by DOJ, with clear emphasis on combating corporate crime, is clearly an attempt to keep as much as possible of existing rules in place, but also change the perception of the DOJ from being called the ones who are destroying the attorney-client privilege to the ones who are fighting corporate crime.
2. The problem with the DOJ categorization of materials, is that we see an executive agency legislating. They are creating rules that they can or cannot follow in their deciding when to violate the longstanding attorney-client privilege. The most important aspect here is that they are not only the ones who are deciding what the rules will be, but also how they will be interpreted, and what happens if they are not followed.
3. In Part II of the Memo it states - "an indictment often provides a unique opportunity for deterrence on a massive scale. In addition, a corporate indictment may result in specific deterrence by changing the culture of the indicted corporation and the behavior of its employees."
Since when is deterrence supposed to be forthcoming from an indictment? Shouldn't we have a trial first? And more importantly, shouldn't we first have a conviction?
4. So why does the Specter legislation provide a better alternative? The main reason is that it keeps within the executive branch - the executive functions. It allows the judiciary to provide the proper oversight and thus promotes a system with proper checks and balances.
5. Finally, back to the discussion with my co-blogger. The Specter bill does not explicitly have language for a remedy when there is a violation. This is no different from the McDade Amendment. A remedy was unnecessary there, as none is necessary here. Judges need to have discretion to provide for an appropriate remedy depending upon the circumstances. Judges, through caselaw, will interpret the statute to let prosecutors know what is proper and what is not. Who knows, maybe they will have a Leon type of an exception that allows the conduct to stand when the prosecutor acts in good faith.