For a man who gives millions to charity, Melvyn Weiss is hated by a lot of people. Once he was the most feared man in corporate America, making a fortune by chasing companies accused of ripping off investors and winning billions in settlement. Now it’s Weiss’s turn in the dock.
After years of digging, American prosecutors have brought charges against Weiss, 72, head of the New York law firm Milberg Weiss. They could put him behind bars for the rest of his life.
The government alleges that Weiss, a leading figure on the New York charity circuit and donor to the Democratic party, paid people to act as injured shareholders in class-action lawsuits against companies, earning $250m (£125m) in the process.
The investigation has shone a harsh light on the world of class-action lawsuits but it has also thrown up accusations of political motivation and revenge from corporate bosses who have been beaten up by Weiss’s firm.
It has been a tough week for the country’s formerly most feared class-action lawyers. Weiss’s old partner William Lerach, who won billions for Enron’s shareholders, pleaded guilty to a felony conspiracy charge. Under the agreement, Lerach will serve up to two years in prison and pay $8m to the government. Former Milberg Weiss partner Steven Schulman also pleaded guilty last week and said he would cooperate with the Los Angeles-based prosecution. David Bershad, another former partner, pleaded guilty in July.
Weiss and Lerach were the biggest names in shareholder lawsuits. Weiss landed more than $1 billion in settlements for investors hit by the Drexel Burnham Lambert junk-bond scandal in the 1980s and Lerach led the charge against Enron.
The 72-page indictment of Weiss depicts him as the architect of a conspiracy dating back to 1979. He is alleged to have paid $11.3m to maintain a stable of plaintiffs who could be used to swiftly bring a claim on behalf of shareholders. Until the law changed in 1995 the first law firm to file such an action could count on winning coveted lead-counsel status, and get the largest share of legal fees in a case.
According to the indictment, Weiss personally transported thousands of dollars in cash from New York to Florida to make payments to plaintiffs.
The charges follow a long investigation into Milberg Weiss and Lerach, who left in 2004 to set up his own firm after a bitter split with Weiss.