LOS ANGELES – LAWFUEL – The Legal Newswire – Melvyn I. Weiss, a co-founder of the New York-based Milberg Weiss law firm, was indicted today by a federal grand jury for allegedly participating in a scheme in which the firm paid millions of dollars in secret kickbacks to several individuals in exchange for them serving as named plaintiffs in more than 225 class-action and shareholder derivative-action lawsuits that were filed across the United States.
The second superseding indictment returned today adds Weiss as a defendant and expands the scope of the alleged criminal conduct. The new indictment now alleges that the firm received approximately $250 million in attorneys’ fees over the past 25 years in lawsuits in which it paid individuals to act as named plaintiffs.
“The indictment outlines a decades-long kickback scheme that was deliberately concealed from courts across the nation that were overseeing significant class-action cases,” said United States Attorney George S. Cardona. “The scheme furthered personal greed at the expense of the integrity of the courts and the interests of absent class members.”
In a related development in the Milberg Weiss case, a former senior partner at the firm, Steven G. Schulman, who had been indicted last year in the scheme, agreed today to plead guilty to a racketeering charge.
The second superseding indictment charges four defendants: Weiss, the Milberg Weiss firm, alleged paid plaintiff Seymour M. Lazar, and attorney Paul T. Selzer, who is alleged to have been one of the intermediary lawyers who laundered illegal kickback payments for the benefit of Lazar.
The indictment outlines a scheme in which seven senior Milberg Weiss partners allegedly joined together to form a conspiracy with several objectives, including obstructing justice, perjury, bribery and fraud. As part of the scheme, individuals received secret kickback payments to serve, or cause friends and relatives to serve, as named plaintiffs in lawsuits filed by Milberg Weiss. To conceal the illegal kickback scheme from judges presiding over the lawsuits and other parties involved in the cases, participants in the conspiracy allegedly made false and misleading statements in court documents and in under-oath depositions. The indictment further alleges that the illegal kickbacks were secretly paid by Milberg Weiss to the named plaintiffs in cash or through various intermediary law firms and lawyers selected by the paid plaintiffs. The indictment states three named plaintiffs received at least $11.3 million in illegal kickbacks, and several other paid plaintiffs received hundreds of thousands of dollars.
Previously in this case, several participants in the scheme have pleaded guilty, including David J. Bershad, a former managing partner at Milberg Weiss. Two days ago, prosecutors filed a plea agreement in which former name partner, William S. Lerach, agreed to plead guilty to a conspiracy charge.
The second superseding indictment returned today charges the Milberg Weiss law firm, Weiss and Lazar with one count of conspiring a) to obstruct justice, b) to make false declarations under oath in court proceedings, c) to travel in interstate commerce and use mail facilities to carry on commercial bribery, d) to commit mail and wire fraud, and e) to make illegal payments to a witness.
Weiss and Lazar are also charged with engaging in a conspiracy to commit racketeering activities.
The second superseding indictment also charges Milberg Weiss and Weiss with obstruction of justice and Weiss with making false statements in relation to documents that were the subject of a grand jury subpoena.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If convicted of the four counts in the second superseding indictment in which he is charged, Weiss faces a maximum statutory sentence of 40 years in federal prison.
Weiss will be summoned to make an initial appearance in United States District Court in Los Angeles on October 12, and he is expected to be arraigned on October 15.
Today’s indictment is the result of an ongoing investigation by the United States Postal Inspection Service and IRS Criminal Investigation Division.
“Today’s indictment is the culmination of a lengthy and intensive investigation,” said Inspector in Charge Pete Zegarac. “The perpetrators have violated the very laws they were sworn to uphold, and in doing so, compromised the integrity of the U.S. Mail. The United States Postal Inspection Service remains committed to our mission to protect our nation’s mail system from criminal misuse and bring the perpetrators to justice.”
CONTACT: Assistant United States Attorney Richard E. Robinson
Assistant United States Attorney Robert J. McGahan
Assistant United States Attorney Douglas A. Axel
Release No. 07-116