Posted Sep 21, 2007 02:08 am CDT
Updated: Indicted today after years of investigation, the 72-year-old co-founder of what was once unquestionably the nation’s most prominent plaintiffs securities firm is vowing to fight the federal case that has already felled three former rainmakers at Milberg Weiss and put the future of the firm at risk.
Melvyn Weiss is “facing up to 40 years in prison on counts including racketeering conspiracy, conspiracy and obstruction of justice” in the case, reports the New York Law Journal. Prosecutors claim the defendants—including the law firm itself—participated in a scheme to consistently win lead counsel status in securities class actions using illegal kickbacks to secure plaintiffs in time to be first to file.
However, Weiss will not only fight the charges filed against him today in Los Angeles in a superseding indictment but expects to win at trial, according to his attorney, Benjamin Brafman, who practices in New York. “Although this indictment is a bitter disappointment, Mr. Weiss intends to fight these charges with all of the energy and talent that has made him one of the most outstanding members of the bar for more than 40 years,” Brafman writes in an e-mail to Bloomberg. “We are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated.”
The government contends the alleged scheme earned $250 million for the firm and $41 million for Weiss individually in “tainted” attorney fees from cases involving kickbacks, according to the Wall Street Journal (sub. req.). The newspaper provides copies of the indictment (PDF) and a press release (PDF) from the U.S. Attorney’s Office for the Central District of California.
The new indictment filed today also charges Milberg Weiss with obstruction of justice. The New York City-based firm has denied previous charges, and says its active partners are not even accused of wrongdoing, as detailed in another ABAJournal.com post.
The new indictment did not include former name partner Steven Schulman, the New York Law Journal article notes, because he agreed to plead guilty in the case. (As discussed in the other ABAJournal.com post—which provides links to the filings—Schulman was charged with racketeering in a separate criminal information filed today along with his plea agreement.) Schulman’s lawyer, Herbert Stern of Roseland, N.J., didn’t return a call from the New York Law Journal.
Two other former rainmakers previously agreed to pleas. William Lerach, who headed the West Coast operations of Milberg Weiss before forming his own firm, and was at one time a name partner, agreed to plead guilty to conspiracy earlier this week, as discussed in another ABAJournal.com post.
Former name partner David Bershad pleaded guilty in July to conspiracy and agreed to cooperate with prosecutors, as the New York Times detailed in an article written at that time.
All three of these former partners have agreed to pay multimillion-dollar restitution. Lerach and Schulman are expected to be sentenced to prison terms of between one and three years, but it isn’t clear whether Bershad, who hasn’t yet been sentenced, will be required to serve time.
(Updated Sept. 21 at 1 a.m., CDT.)