Attorney Orchestrated Firm’s Secret Kickback Scheme in Class Actions
LOS ANGELES – LAWFUEL – Lawyer News Announcement Service – Melvyn I. Weiss, a founding partner of the New York law firm now known as Milberg LLP, was sentenced this morning to 30 months in federal prison after admitting that he and others concealed secret payment arrangements that the firm had with named plaintiffs in class-action lawsuits.
Weiss, 72, who pleaded guilty on April 2 to a federal racketeering conspiracy charge, was sentenced by United States District Judge John F. Walter. In addition to the prison term, Judge Walter ordered Weiss to forfeit $9.75 million in ill-gotten gains derived from the criminal enterprise and to pay a criminal fine of $250,000.
Previously in this case, former Milberg Weiss partners William S. Lerach, David J. Bershad and Steven G. Schulman pleaded guilty, each admitting their role in the scheme that 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.
Weiss, a co-founder of the law firm commonly called Milberg Weiss, admitted in a plea agreement filed in March that he was part of a criminal enterprise involving senior members of the law firm and a stable of people who served, or caused 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 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.
“Over the course of 25 years, Melvyn Weiss and his co-conspirators compromised the justice system as they caused associates to lie to judges across the nation,” said United States Attorney Thomas P. O’Brien. “His prison term is warranted by the impact he and others had on the integrity of the courts and the interests of class members supposedly being represented by the law firm.”
With Weiss’ conviction, there are two defendants remaining in the case – the Milberg Weiss firm and attorney Paul T. Selzer – who are scheduled to go on trial in August.
Lerach, who pleaded guilty last year to a conspiracy charge, recently began serving a two-year federal prison sentence.
Schulman and Bershad are scheduled to be sentenced later this year.
The Milberg Weiss investigation was conducted by the United States Postal Inspection Service and IRS-Criminal Investigation.
CONTACT: Assistant United States Attorney Douglas A. Axel
Chief, Major Frauds Section
Assistant United States Attorney Richard E. Robinson
Major Frauds Section
Release No. 08-073