Melvyn Weiss to Plead Guilty; His Ex-Firm Changes Its Name

Law Firms

Melvyn Weiss to Plead Guilty; His Ex-Firm Changes Its Name

Posted Mar 20, 2008, 04:39 am CST
By Debra Cassens Weiss

Melvyn Weiss. Photo by Chris Crisman.

Updated: Pioneering securities class-action lawyer Melvyn Weiss has agreed to pay $10 million in fines and penalties and to serve up to 33 months in prison to resolve charges that he paid kickbacks to lead plaintiffs.

Weiss' lawyer, Benjamin Brafman, announced details of the agreement today in a press release.

The agreement (PDF) calls for a sentence of 18 to 33 months in prison and gives U.S. District Judge John Walter the option to allow Weiss to serve half of the time in home confinement or community service. He will plead guilty to a single count of racketeering, Reuters reports.

Weiss will resign from the law firm he founded, Milberg Weiss, and it will change its name to Milberg LLP, according to a separate press release. The firm, which was also indicted, is seeking "a fair and appropriate resolution of remaining issues" and hopes to rebuild, according to the release issued by Sanford Dumain, a member of the firm's executive committee.

U.S. Attorney Thomas O'Brien said in a press release (PDF) that the kickback scheme lasted for more than 25 years. The release noted that the law firm remains as a defendant and is scheduled to go on trial in August.

Weiss issued this statement: "I deeply regret my conduct and apologize to all those who have been affected, including all of the wonderful and extremely talented lawyers and other employees of the firm, none of whom had any involvement in any wrongdoing. I believe that it is very important to preserve this unique legal resource for the benefit of victims of wrongdoing affecting the masses, who historically have been under-served in so many ways."

The Wall Street Journal (sub. req.) first reported that Weiss had reached the plea deal in a story published early this morning, but it did not have any details.

The newspaper said a guilty plea by Weiss could pave the way for a deal with the indicted firm since three other former top lawyers there have already pleaded guilty.

William Lerach, who at one time led the firm's West Coast operations, had pleaded guilty and received a two-year prison sentence last month, the maximum under the plea agreement. The high sentence and the judge’s harsh words may have persuaded Weiss he should enter a plea rather than risk a trial and a long sentence.

Milberg Weiss was linked to a separate criminal case earlier this month when an expert witness pleaded guilty to perjury to settle charges that he was paid on a contingency basis in a 1999 case handled by the law firm. The contingency fee would have given the witness an incentive to inflate his estimations of shareholder damages. Milberg Weiss was not charged in connection with that case.

Despite the pending kickback charges, Milberg Weiss managed to secure $3.8 billion in settlements for securities plaintiffs last year, making it the top-ranked class-action law firm. The ABA Journal profiled the law firm and the indictment in a December 2006 story.

Brafman said in a statement that he hoped the judge would recognize that Weiss is "one of the true legal giants of his generation and a consummate humanitarian whose contributions to the bar and the world community have been nothing short of spectacular." Brafman said Weiss provided access to the courts for million of victims of corporate wrongdoing and also participated in important pro bono and humanitarian projects.

Updated several times between 11:16 a.m. and 11:45 a.m. to include details of plea agreement, the firm's reaction and a Reuters story. Updated again at 12:12 p.m. to add documents provided by the U.S. Attorney's office.

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Posted by msg - 8 months, 2 days, 11 hours, 22 minutes ago

What a scum bag this guy and his partners who participated in this scam are! I hope they all go down and the firm too! Although I feel bad for the innocent associates. Associates - get out now while you can!
Posted by Rick - 8 months, 1 day, 10 hours, 7 minutes ago

“one of the true legal giants of his generation” - huh?
Posted by R - 8 months, 1 day, 9 hours, 22 minutes ago

First Spitzer, and now this: Wall Street must be doing backflips. How come the market hasn’t hit 14,000?
Posted by Mindy - 8 months, 1 day, 8 hours, 15 minutes ago

He’s a licensed criminal—that’s all he is. He is a disgrace to his profession. The law should become monitored by an outside group and stop with this we’re a “self-governing body” bull shit.
Posted by Karen Hawkins - 8 months, 1 day, 5 hours, 3 minutes ago

The Greeks had a word for it centuries ago: “Hubris” and it has been the downfall of many who forget that they are mere mortals serving at the pleasure of the gods. I’ve never seen a class action that benefitted the victims as well as it benefitted the bottom feeders who bring the lawsuits. We are supposed to have federal agencies that monitor what these guys make millions for- the whole system is broken.
Posted by Tony - 8 months, 1 day, 50 minutes ago

These guys are looked down on by both the public and their peers in the practice of law. They frequently argue that they serve an important regulatory function by keeping businesses honest through the fear of significant litigation. However, the cases typically seem to result in soft-ball settlements accompanied by huge fee awards.

No class members I’ve ever spoken with found that they felt any sense of satisfaction from a coupon on your next purchase from the offending business and a $10MM legal fee. Moreover, in the securities cases these guys have been noted for, I don’t see how taking another $50MM from a company that is struggling to survive furthers the interests of its share holders at all. Such firms’ motives seem self-serving and their defense of what they do is disingenuous. As an attorney, I don’t think my conscious would allow me to file a lawsuit, and THEN go looking for a plaintiff to go along with it. As long as the courts and the legislature think this is an acceptable practice, Weiss’ crimes don’t really seem to be that bad. All he did was actually share some of the proceeds of one of his cases with a member of the class. From that standpoint, he’s probably more generous than most such firms, and a lot less hypocritical. If money is all that is necessary to help him sleep at night . . . then he (and his peers) are beyond being insulted.
Posted by Rich - 8 months, 2 hours, 59 minutes ago

My dictionary defines “humanitarian” as “one who is devoted to the promotion of human welfare and the advancement of social reforms; a philanthropist.“ A couple years ago Bill Lerach was accorded demigod status by my alma mater (U of Pittsburgh Law School); I haven’t seen any follow up, i.e. retraction, by Pitt. I think I received about $12.00 once in a class action. We really should thank Mr. Weiss he has proven that most of these guys care only about filling their own pockets.

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