Once a class-action legal juggernaut, the law firm now known as Milberg Weiss suffered more body blows today as federal prosecutors indicted its co-founder Melvyn I. Weiss and secured a plea deal with yet another former partner.
In a new, superseding indictment, prosecutors in Los Angeles charged Mr. Weiss, one of the architects of class-action securities lawsuits, with conspiracy, racketeering, obstruction of justice and making false statements to a grand jury. If convicted of the charges at trial, the 72-year-old lawyer, who has also been a major figure in New York Democratic politics, faces a sentence of 40 years in prison.
Meanwhile, 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, initially indicted in June, has denied the charges.
“Although this indictment is a bitter disappointment, Mr. Weiss intends to fight these charges,” his lawyer, Benjamin Brafman, said in a prepared statement today. “We are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated.”
In a related development, Steven G. Schulman, a former named partner at Milberg Weiss, agreed to plead guilty to a conspiracy charge in connection the plaintiff kickback scheme.
Mr. Schulman, who will cooperate with prosecutors, also agreed to disgorge $1.85 million in profits, pay a $250,000 fine and accept a likely prison sentence of 27 to 33 months, according to court papers.
In announcing the charges against Mr. Weiss, George S. Cardona, the United States attorney in Los Angeles, said, “The indictment outlines a decades-long kickback scheme that was deliberately concealed from courts that were overseeing significant class-action cases.”