Posted on 07/18/2006 5:22:37 AM PDT by Brilliant
LOS ANGELES (AP) -- A top class-action law firm and two of its partners pleaded not guilty to charges of secretly paying more than $11 million in kickbacks to get people to take part in shareholder lawsuits. At the second of two hearings Monday, Prosecutor Douglas Axel said there is a "significant possibility" of a future superseding indictment being filed, which may add additional claims and parties.
Also pleading not guilty Monday in federal court were Seymour M. Lazar, who is accused of acting as a paid plaintiff in some of the firm's cases, and Paul T. Selzer, who is charged with laundering money on Lazar's behalf.
In a 20-count indictment handed down in May, prosecutors alleged that Milberg Weiss Bershad & Schulman, along with partners David J. Bershad and Steven G. Schulman, secretly paid Lazar and others since 1984 to act as plaintiffs in class-action suits against major corporations.
Federal prosecutors alleged that secret kickback arrangements allowed the firm to be among the first to file lawsuits on behalf of shareholders and secure the lucrative position as lead plaintiffs' counsel.
The indictment also alleged that "the paid plaintiffs purchased the securities at issue anticipating that the securities would decline in value, in order to position themselves to be named plaintiffs in securities fraud class actions and to obtain kickbacks" from the firm and others.
All the individual defendants were in court to enter their pleas except Lazar, who was unable to attend for medical reasons.
Bershad and Schulman are on leave from the firm.
The case, which is the result of an ongoing federal investigation, has already resulted in plea deals with two people allegedly involved in the payoff schemes.
Retired real estate mortgage broker Howard Vogel agreed in April to plead guilty to one count of making a false declaration before a court and admitted to receiving $2.5 million in kickbacks from Milberg Weiss in connection with class actions in which he was the plaintiff.
Los Angeles attorney Richard Purtich agreed in May to plead guilty to a federal tax offense by acting as an intermediary through which Milberg Weiss paid his former client Steven G. Cooperman more than $2.5 million in fees for acting as plaintiff in several class actions. Cooperman has not been charged in the case.
The firm denies any wrongdoing. In statements released after Monday's arraignment, Bershad's attorney, Robert Luskin, said the indictment "is a disgrace and the charges are utterly baseless," and the firm said it is "confident that we will be fully vindicated."
Over the years, Milberg Weiss has gone against a virtual roster of household-name companies, including Standard Oil, JP Morgan Chase, Citigroup and Krispy Kreme.
The firm claims to have recovered more than $45 billion on behalf of defrauded investors.
In the 10-year period ending in 2005, the firm was either lead counsel or co-lead counsel in almost half of the nation's securities class-action settlements, said Lisa Rickard, president of the U.S. Chamber of Commerce's Institute for Legal Reform, shortly after the indictment was returned. Those cases netted $1.7 billion in legal fees and costs, she added.
But the 20-count indictment has tarnished the firm's reputation in the bare knuckles world of class-action litigation and made some of its clients nervous.
One day after the indictment was handed down, the attorney general of Ohio, Jim Petro, removed Milberg Weiss from representing the Ohio Tuition Trust Authority, the state's college savings plan, in 300 lawsuits against Putnam American Government Income Fund, which is run by Putnam Investments.
WE should do more in going after these scum bag lawyers...
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