Posted on 09/19/2007 11:33:06 AM PDT by Uncle Miltie
The fall of San Diego trial lawyer William S. Lerach may end his reign as Wall Street's king of pain, but the class-action lawsuit industry he helped create has become an established reality for corporate America.
William S. Lerach: "I ... crossed a line and pushed too far.”
Lerach, 61, admitted in a plea agreement that prosecutors filed yesterday that he participated in a scheme that secretly paid kickbacks to recruit plaintiffs for more than 150 class-action lawsuits brought against U.S. companies. As part of the deal, Lerach agreed to forfeit $7.75 million in unlawful gains, pay a $250,000 fine and accept a prison sentence ranging between one and two years.
He will be arraigned at a later date, said Thom Mrozek, a spokesman for U.S. Attorney George Cardona in Los Angeles.
“From a historical perspective, this is the fall of a titan,” said Professor John Coffee of the Columbia University School of Law. “Bill Lerach did not invent the securities class-action lawsuit. But he converted it from being an irritant and a nuisance to public corporations to being a major threat.”
Stanford University law professor Joseph Grundfest agreed. He said Lerach was involved in setting many records, including a colossal $7.2 billion in settlements recovered from executives, accountants, attorneys and financial institutions involved in the Enron fraud.
“But many of those records will now have an asterisk,” Grundfest added, “because there is no doubt now that his record was not clean. There were cases in which the ball was juiced and the fix was in. And his legacy will always be marred by that fact.”
Grundfest and other experts doubted that Lerach's plea would have any broader effects, because class-action litigation has become institutionalized.
While Lerach “has been extraordinarily influential,” Georgetown University Law Center professor Donald Langevoort said, “it's a maturing industry, with plenty of talent and plenty of brainpower to carry on this work.”
Lerach struck the deal amid a seven-year federal investigation into allegations that his former Milberg Weiss law firm was paying certain clients to serve as “professional plaintiffs” in lawsuits against companies the firm had targeted.
The law firm typically paid these clients 10 percent of the attorneys fees that Milberg Weiss obtained to settle their suits, prosecutors said. The secret arrangements enabled the firm to maintain a stable of people who were ready to serve as lead plaintiffs in its class-action cases.
Prosecutors allege that the firm reaped more than $216 million in attorneys' fees from such compromised lawsuits, which spanned a 20-year period.
Under law, the lead plaintiff in a class-action shareholder suit must serve as a representative of the class and cannot have a special interest or hidden inducement beyond other shareholders in the case.
Prosecutors said that Lerach and others, by participating in the secret payment scheme, betrayed their fiduciary duties of loyalty, honesty and trust to their other clients. If the secret payments had been uncovered, prosecutors said, judges overseeing the cases could have disqualified the law firm from serving in the case.
“I have always fought for my clients aggressively and vigorously in order to hold powerful corporations responsible when their actions harmed people,” Lerach said in a statement. “However, I regrettably crossed a line and pushed too far.”
The lawyer's supporters said they were saddened by Lerach's plea.
“I've been a lawyer since 1970, and I never met a person who did more good for more people than Bill Lerach,” said Ben Stein, the financial commentator and erstwhile actor and game show host. “He genuinely cared about the little people getting screwed.”
Lerach also was a prominent friend to former President Bill Clinton and was an influential fundraiser for the Democratic Party. He contributed $1.28 million to federal campaigns since 1993 and has been a strong supporter of Democratic candidates for governor and other state offices.
Stein lamented that Lerach acted as a counterbalance to corporate power in many ways, and that executives and directors will only be emboldened with him gone.
Yet Georgetown's Langevoort said Lerach's plea in many ways harks back to an era that existed before 1995, when congressional legislation revised the laws governing class-action shareholder suits.
The changes curtailed the “rush to the courthouse” suits that typically enabled a small investor who filed the first lawsuit against a company to take control of the class-action case. Instead, the law directed judges to give preference to institutional investors, such as state employee pension funds, that had incurred the biggest dollar losses.
Whether any law firm will emerge from the post-Lerach era with the power that Milberg Weiss wielded is an open question, experts said.
Terms of Lerach's plea agreement stipulate that he is not required to cooperate with the government's continuing investigation of the Milberg Weiss firm and its key partners. Lerach split from Milberg Weiss in 2004 to form a new San Diego law firm, which is now known as Coughlin Stoia Geller Rudman & Robbins.
As part of the deal, the government exempted the Coughlin Stoia law firm from prosecution in its investigation, including, specifically, partners Patrick Coughlin and Keith Park.
Lerach retired from the firm last month.
Columbia's Coffee said, “This is a very attractive plea deal for (Lerach), both in the minimal 'taste of jail' sentence range, one to two years, and the fact that he does not need to cooperate with the prosecution as a condition of the plea.”
From an East Coast perspective, Coffee said, the most interesting question focuses on the fate of Milberg Weiss and co-founder Melvyn Weiss.
A federal grand jury indicted the Milberg Weiss law firm last year, along with partners David J. Bershad and Steven G. Schulman, for making “secret and illegal payments” to clients. Weiss has not been charged, but he is widely viewed as the unnamed “Partner A,” who is alleged in the indictment to be a participant in the scheme.
Bershad, 67, pleaded guilty in July to the same charge as Lerach – conspiring to obstruct justice and to make false statements under oath. Steven G. Cooperman, an eye surgeon who received improper payments to serve as a plaintiff, also pleaded guilty to a conspiracy charge.
The remaining defendants in the case – the Milberg Weiss firm, Schulman, plaintiff Seymour M. Lazar and lawyer Paul T. Selzer – are scheduled to go to trial in January.
Milberg Weiss, founded in New York in 1965, was among the first law firms to use class-action law in suits filed on behalf of investors and consumers. The firm boasts on its Web site that it has recovered more than $45 billion in settlements and judgments.
Lerach, who joined the firm in 1976 when he moved to San Diego, rose to nationwide prominence for his unrelenting ferocity and for the innovative legal strategies he devised. By the 1990s, Lerach and Milberg Weiss dominated the field, handling more than 50 percent of such litigation nationwide.
In high-profile cases, such as the demise of Lincoln Savings & Loan, Lerach cast himself as a legal champion for powerless victims who had lost their savings and investments to unscrupulous robber barons.
But glimpses of Lerach's hardball tactics emerged during a 1998 trial in Chicago, which was the culmination of a civil suit filed against Milberg Weiss by Dan Fischel, a prominent legal expert.
Fischel's lawyers argued that Milberg Weiss had used an abusive lawsuit to damage his reputation and harm Lexecon, his Chicago-based consulting business.
After jurors returned a judgment against Milberg Weiss, the firm settled the case for $50 million.
Alan Salpeter, a Chicago lawyer who represented Lexecon in the trial, said Lerach's plea agreement yesterday came as no surprise because Lerach doesn't believe the rules apply to him.
“To me, this is the ultimate justice,” Salpeter said. “It is even more justice than Lexecon vs. Milberg Weiss. That was a black eye. This is a knockout punch. He's finished.”
Question: Will Hillary et. al. return this admitted felon's money?
So do the clintons have more friends in jail or out of jail?
I am shocked!!!
Here are FEC records for “William Lerach.” Happy Hunting!
Non-Federal Receipts “Exempt From Limits”
DNC NON-FEDERAL UNINCORPORATED ASSOCIATION ACCOUNT
09/30/1998 100000.00 98033642072
DSCC NON-FEDERAL INDIVIDUALS
10/29/1998 20000.00 98020270679
DCCCE NON-FEDERAL ACCOUNT #5
06/16/1998 10000.00 98033384021
DNC-NON-FEDERAL INDIVIDUAL
03/10/1998 100000.00 98032921084
DNC NON-FEDERAL UNINCORPORATED ASSOCIATION ACCOUNT
01/15/1999 25000.00 99034664813
DNC - BUILDING FUND
09/25/2001 250000.00 22990293041
06/28/2002 250000.00 22991355578
Total Soft Money: 755000.00
Contributions to Political Committees
MADRID, PATRICIA A
VIA MADRID FOR CONGRESS
03/20/2006 2100.00 26960060253
03/20/2006 2100.00 26960060254
EDWARDS, JOHN
VIA JOHN EDWARDS FOR PRESIDENT
01/18/2007 2100.00 27930588805
03/31/2007 200.00 27930588851
03/31/2007 200.00 27930588850
03/31/2007 2100.00 27931004521
DNC SERVICES CORPORATION/DEMOCRATIC NATIONAL COMMITTEE
12/01/2004 -2205.00 25980422084
DAVIS, SUSAN A
VIA SUSAN DAVIS FOR CONGRESS
07/17/2000 -1000.00 20036103085
DNC SERVICES CORPORATION/DEMOCRATIC NATIONAL COMMITTEE
09/10/1997 -20000.00 98032674036
DAVIS, SUSAN A
VIA SUSAN DAVIS FOR CONGRESS
07/14/2000 1000.00 20036103023
07/14/2000 1000.00 20036103023
NELSON, BILL
VIA BILL NELSON FOR U S SENATE
03/31/2005 234.00 25020153329
KENNEDY, JOHN NEELY
VIA JOHN KENNEDY FOR US SENATE INC
07/15/2004 2000.00 24020592430
07/15/2004 2000.00 24020592430
DORGAN, BYRON L
VIA FRIENDS OF BYRON DORGAN
12/31/1997 750.00 98020051450
LEAHY, PATRICK
VIA LEAHY FOR U.S. SENATOR COMMITTEE
03/28/2003 1000.00 23020201395
SPECTER, ARLEN
VIA CITIZENS FOR ARLEN SPECTER
03/27/2002 1000.00 22020540607
03/27/2002 1000.00 22020540607
EMANUEL, RAHM
VIA FRIENDS OF RAHM EMANUEL
11/01/2001 1000.00 22990368612
EFFECTIVE GOVERNMENT COMMITTEE
11/19/1997 4000.00 97032534812
NATIONAL ASSOCIATION OF SHAREHOLDERS & CONSUMER ATTORNEYS PAC
06/21/2002 1666.00 22991342763
SCHIFF, ADAM
VIA SCHIFF FOR CONGRESS
07/14/2000 1000.00 20036223282
BAYH, EVAN
VIA EVAN BAYH COMMITTEE
06/18/1997 1000.00 97020090608
BAYH, EVAN
VIA EVAN BAYH COMMITTEE
05/19/1998 1000.00 98020152088
CLINTON, HILLARY RODHAM
VIA FRIENDS OF HILLARY
05/18/2006 1000.00 26020481887
CLINTON, HILLARY RODHAM
VIA FRIENDS OF HILLARY
07/14/2006 1100.00 26020631437
BIDEN, JOSEPH R JR
VIA BIDEN FOR PRESIDENT INC
05/11/2007 400.00 27990242105
05/11/2007 2300.00 27990242105
MCNERNEY, JERRY
VIA MCNERNEY FOR CONGRESS
11/04/2006 2000.00 27950085025
CLINTON, HILLARY RODHAM
VIA FRIENDS OF HILLARY
10/11/2006 1000.00 26020941692
CARTER, JOHN WILLIAM
VIA CARTER FOR SENATE COMMITTEE
06/19/2006 2100.00 26020430763
06/19/2006 2100.00 26020430763
CASEY, ROBERT P JR
VIA BOB CASEY FOR PENNSYLVANIA COMMITTEE
10/17/2006 2100.00 26020902201
BUSBY, FRANCINE P
VIA FRANCINE BUSBY FOR CONGRESS
04/11/2006 2100.00 26930157560
05/16/2006 2100.00 26930157561
05/16/2006 2100.00 26930157561
ROVNER, BOB
VIA BOB ROVNER FOR US SENATE—2000
04/07/2000 500.00 20020150518
04/07/2000 2000.00 20020150518
KENNEDY, EDWARD MOORE SENATOR
VIA KENNEDY FOR SENATE 2012
02/17/2005 2000.00 25020142432
02/17/2005 2000.00 25020142432
CIRESI, MICHAEL V
VIA CIRESI FOR SENATE
01/18/2000 1000.00 20020130038
NELSON, BILL
VIA BILL NELSON FOR U S SENATE
09/09/2003 2000.00 23020421072
GEPHARDT, RICHARD A
VIA GEPHARDT FOR PRESIDENT INC.
12/11/2003 2000.00 24990360714
FILNER, BOB
VIA BOB FILNER FOR CONGRESS
02/23/2004 2000.00 24991028094
BIDEN, JOSEPH R JR
VIA CITIZENS FOR BIDEN
06/17/2002 1000.00 22020442879
06/17/2002 1000.00 22020442879
DEMOCRATIC EXECUTIVE COMMITTEE OF FLORIDA
10/27/2004 10000.00 26950550786
10/27/2004 10000.00 26930415441
BLUE, DANIEL JR
VIA DAN BLUE SENATE COMMITTEE
03/31/2003 -1000.00 23020331654
BOXER, BARBARA
VIA FRIENDS OF BARBARA BOXER
11/20/2004 -1000.00 24021131400
UNKNOWN (C00332338)
02/10/1998 5000.00 98020070206
KEHOE, CHRISTINE
VIA CHRISTINE KEHOE FOR CONGRESS ‘98
05/13/1998 1000.00 98033103347
05/13/1998 1000.00 98033103347
FILNER, BOB
VIA BOB FILNER FOR CONGRESS
03/01/2005 2000.00 25991020684
03/01/2005 2000.00 25991020684
DEMOCRATIC CONGRESSIONAL CAMPAIGN COMMITTEE
08/31/2006 5000.00 26940350633
10/11/2006 3750.00 26930551537
BLUE, DANIEL JR
VIA DAN BLUE SENATE COMMITTEE
10/25/2001 1000.00 22020121541
10/25/2001 1000.00 22020121540
HOLLINGS, ERNEST F
VIA HOLLINGS FOR SENATE
09/29/1997 1000.00 98020032816
WEYGAND, ROBERT A
VIA WEYGAND COMMITTEE
12/08/1999 1000.00 20020080631
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE
11/11/2003 3875.00 23020501458
UNKNOWN (C00336032)
06/24/1998 1000.00 98020133354
06/24/1998 1000.00 98020133354
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE
01/03/1997 20000.00 97020040565
SPECTER, ARLEN
VIA CITIZENS FOR ARLEN SPECTER
12/09/1997 1000.00 98020030888
12/09/1997 1000.00 98020030888
WEINBERG, LOIS COMBS
VIA LOIS 2002 US SENATE COMMITTEE
02/14/2002 1000.00 22020232589
HOEFFEL, JOSEPH M
VIA HOEFFEL FOR CONGRESS COMMITTEE
09/15/1998 1000.00 98033724547
BOXER, BARBARA
VIA FRIENDS OF BARBARA BOXER
05/20/2002 1000.00 22020581535
05/20/2002 1000.00 22020581535
10/13/2004 2000.00 24020942535
LEVIN, CARL
VIA FRIENDS OF SENATOR CARL LEVIN
02/26/2001 1000.00 21020181552
DEMOCRATIC CONGRESSIONAL CAMPAIGN COMMITTEE
12/31/2003 775.00 24961535133
DNC SERVICES CORPORATION/DEMOCRATIC NATIONAL COMMITTEE
10/26/2004 25000.00 24981640674
PROGRESSIVE UNITY VOTER FUND
10/19/2004 5000.00 24981726267
MAINSTREAM AMERICA POLITICAL ACTION COMMITTEE
12/31/2001 5000.00 22990083405
GORE, AL
VIA GORE 2000 INC
12/23/1999 1000.00 20990028347
FEINGOLD, RUSSELL D
VIA FEINGOLD SENATE COMMITTEE
06/26/1997 1000.00 97020101748
FEINGOLD, RUSSELL D
VIA FEINGOLD SENATE COMMITTEE
06/26/1997 1000.00 97020101748
Total Contributions: 156545.00
Joint Fundraising Contributions
These are contributions to committees who are raising funds to be distributed to other committees. The breakdown of these contributions to their final recipients may appear below
NEW YORK SENATE 2000
10/12/2000 5000.00 20020370147
VICTORY IN NEW YORK
10/31/1998 2000.00 98020270888
DASCHLE-LEAHY VICTORY FUND
12/22/2003 1240.00 24020051151
Total Joint Fundraising: 8240.00
Recipient of Joint Fundraiser Contributions
These are the Final Recipients of Joint Fundraising Contributions
CLINTON, HILLARY RODHAM
VIA HILLARY RODHAM CLINTON FOR US SENATE COMMITTEE INC
10/12/2000 1000.00 20020372523
LEAHY, PATRICK
VIA LEAHY FOR U.S. SENATOR COMMITTEE
09/30/2004 310.00 24020832201
12/22/2004 310.00 24020832201
SCHUMER, CHARLES E
VIA SCHUMER ‘98
10/30/1998 1000.00 98020290493
MCCAIN, JOHN S
VIA MCCAIN FOR SENATE ‘98
06/24/1998 1000.00 98020152485
06/24/1998 1000.00 98020152485
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE
02/10/1998 5000.00 98020070290
Recipient of Joint Fundraiser Contributions
These are the Final Recipients of Joint Fundraising Contributions
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE
10/31/1998 1000.00 98020270460
DASCHLE, THOMAS ANDREW
VIA NEW LEADERSHIP FOR AMERICA PAC
12/22/2003 310.00 24020882274
12/22/2003 310.00 24020882271
DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE
10/12/2000 4000.00 20020370694
Recipient Total: 15240.00
Over here! Hsu x 2.
I count $911,545, almost all of it to Democrats.
How do we light a fire under this one?
Can we ask the Clinton Campaign whether they are going to spend ill-gotten gains?
What Prosecutor agreed to this condition? Whoever it was needs to be fired and this deal repudiated.
L
Look like more donations are headed to liberal causes.
I have always said that. How many CLOSE friends do you have that have committed felonies, have died under mysterious circumstances, or had to plead the 5th?
It seems everyone of their “associates” is in one of those catagories.
vaudine
I pinged Taranto at WSJ Opinion Journal.
The hits just keep coming!
Looks like the big money went to the DNC and the DSSC.
Will the Democrat party keep over $750,000 of money that may have been illegally coerced by an admitted felon trial lawyer from small investors?
If only the dead could give money also.
...Ben Stein?! What are you thinking, man - Lerach is pure evil in my books. He raped and pillaged his way through the U.S. economy and paid off Democrats to keep his piracy legal.
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