US: Milberg Weiss Firm Was 'Racketeering Enterprise'
Updated: In a stunning series of body blows today in an ongoing battle between the government and one of the country’s most powerful plaintiff firms, federal prosecutors in California announced enhanced charges against the firm itself, the indictment of its co-founding partner and the latest plea deal with a former name partner. The case concerns an alleged scheme by the preeminent plaintiff securities firm to pay secret illegal kickbacks to clients in order to secure lucrative lead counsel status in class actions.
Saying, in a press release (PDF), that “Milberg Weiss was the racketeering enterprise,” the U.S. Attorney’s office for the Central District of California announced the filing of a criminal information (PDF) charging former name partner Steven Schulman with racketeering–and his agreement to accept a plea deal.
In the plea agreement (PDF), Schulman agrees, as the press release puts it, to “forfeit $1.85 million in ill-gotten gains to the government and to pay a $250,000 fine.” The agreement “contemplates,” the press release points out, a prison sentence of between 27 and 33 months.
Meanwhile, in a separate superseding indictment, the Los Angeles office for the first time charged the firm’s 72-year-old co-founding partner, Melvyn Weiss. He is accused of conspiracy, racketeering, obstruction of justice and making false statements to a grand jury, reports the New York Times. If convicted, he could potentially face a 40-year prison sentence. (Weiss, however, vows to fight–and win–the case at trial, according to his lawyer, as discussed in an ABAJournal.com post about him and the other individual defendants in the case.)
The superseding indictment (PDF), which is provided by the Wall Street Journal, also ratchets up the case against the New York City-based firm, which is now charged with obstruction of justice. As the Times puts it, “prosecutors also broadened existing charges against Milberg Weiss, alleging that it had received some $250 million in legal fees over the past 25 years from class-action cases in which it had paid kickbacks to individuals who had served as named, or lead, plaintiffs.”
The firm denies the charges, the Times notes.
As discussed in an earlier ABAJournal.com post, Milberg Weiss announced yesterday that it expected the superseding indictment and said Weiss “has decided to discontinue his participation in firm management in order to focus on the defense of the charges against him.”
In a three-sentence post today on a firm Web site, Milberg Weiss emphasized that the firm is still an ongoing law practice whose “active” partners are not accused of any wrongdoing:
“Despite the government’s announcement today we will continue to fight for our clients and class members and to achieve the record recoveries for which our firm has long been known,” the Milberg Weiss post states. “The firm’s active partners, none of whom is alleged to have been involved in any wrongdoing, will maintain responsibility for the firm’s management and litigation activities. We will not be deterred from our work and will persevere throughout this difficult period.”
(Updated at 11:30 p.m., CDT.)
