Legal Ethics

Milberg Weiss Probe Touches Other Firms

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Federal prosecutors claim in court documents that several plaintiffs class action law firms secretly paid an expert witness on a contingency basis, giving him an incentive to inflate shareholders’ damages.

John B. Torkelsen, 62, agreed to plead guilty today in U.S. District Court in Philadelphia to a single count of perjury in connection with his representations made in 1999 in Provenz v. Miller, a California case. Milberg, Weiss, Bershad, Hynes & Lerach served as plaintiff’s counsel, according to the case docket.

As discussed in earlier ABAJournal.com posts, the Milberg firm and several of its current and former partners have been accused of making unauthorized payments to lead plaintiffs in securities class actions and misrepresenting to federal courts that no such payments had been made. The firm and name partner Melvyn Weiss have pleaded not guilty and are awaiting trial; others have accepted plea deals in the case.

Torkelsen was retained in multiple cases by “several different law firms” between 1993 and 1996, submitting bills totaling more than $60 million for cases he worked on, according to prosecutors. More “than $7 million of those fees were written off or adjusted when the firms did not prevail,” prosecutors claim.

Torkelsen also “fraudulently adjusted upward” his bills on other cases to make up for the $7 million he lost through these fee write-offs, prosecutors say. Torkelsen, who is currently serving time in federal prison for an unrelated conviction, faces up to five years in prison when he is sentenced in the perjury case.

Court documents do not say exactly how many firms hired Torkelsen, nor do the documents name them.

In 2006, the Wall Street Journal (sub. req.) reported federal prosecutors were investigating whether Milberg Weiss “improperly used money it recovered in legal cases to pay [Torkelsen] for work he performed in earlier suits.”

Calls to Milberg Weiss for comment were not immediately returned.

Assistant U.S. Attorney Richard E. Robinson of the Central District of California, who is handling the Milberg Weiss case, declined to say whether additional law firms will be investigated by federal prosecutors as a result of the plea deal.

Earlier coverage:

Los Angeles Times: “Class actions feel effects of Milberg case”

ABA Journal: “Milberg Weiss on the Hot Seat”

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