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ReturnTop top top • Part
02 /
William
Lerach, in his own words: / 1991: "People try to
pretend the law is not a business. Baloney! It's a
big business." Top class-action
lawyer may plead guilty in kickbacks / William
Lerach won billions of dollars in judgments in
securities cases against major corporations. / By
Molly Selvin, Los Angeles Times Staff Writer /// _________ 5.
NBS100 Review WiFi / Land-lines More
Articles • Converging
News OCTOBER 2007 / TeleCom BuyOuts, Spinoffs and
Asset Seizure Boom Respectfully
Submitted • • 110 / HiTech • TVI
Magazine HOLLYWOOD
BEAT LookRadio AMAZON SoulFind NBS100 120 PIXELS 3
columns 40 40+110+570=720
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1.
Feature Story / The Los
Angeles Times report that Melvyn I. Weiss, one of
the nation's most powerful class-action lawyers,
expects to be indicted today in connection with the
government fraud case against the New York law firm
he helped found 42 years ago.
•••
The firm, Milberg Weiss, said in a statement that
it also would face new charges in an indictment to
be handed down in Los Angeles. The news of the
indictment was first reported on Fortune magazine's
website.
•••
Lawsuit king wins one on his way to prison
•••
The U.S. attorney's office in Los Angeles wouldn't
comment and Weiss declined to be interviewed.
•••
Milberg Weiss said in the statement that Weiss, 72,
had given up his management role in the firm to
focus on his defense.
•••
In the field of class-action securities law, Weiss
is "the big fish," said Laurie Levenson, a Loyola
Law School professor and former federal prosecutor,
"the one you want to have your picture taken
with."
•••
His former partner and onetime apprentice, William
S. Lerach -- at least as powerful as Weiss and
probably more feared by companies -- agreed Tuesday
to plead guilty to one count of conspiracy in the
Milberg Weiss case.
•••
Another former Milberg Weiss partner, Steven
Schulman, is nearing a deal that could also be
announced today, the Daily Journal said. He is
expected to plead to a single racketeering
conspiracy charge, according to Fortune, and will
agree to cooperate with prosecutors. His lawyer
didn't return phone calls.
•••
On top of the conspiracy, mail fraud and money
laundering charges against Milberg Weiss in an
indictment handed down last year, one more charge
-- obstruction of justice -- will be added today,
according to lawyers involved in the case.
•••
Prosecutors allege that Milberg Weiss secretly paid
more than $11 million in kickbacks to persuade
people to serve as plaintiffs in more than 150
class-action and shareholder lawsuits so that its
lawyers could be among the first to file
litigation, become lead plaintiffs' counsel and
receive a larger share of fees.
•••
Weiss has long insisted that his firm did nothing
wrong. He refused to make a deal with prosecutors
over the summer, these people said, even as former
partner David Bershad negotiated one. Bershad
pleaded guilty to conspiracy and agreed to
cooperate with the government.
•••
"Mel didn't get where he is by being a wimp," said
Stephen Gillers, a New York University law
professor who knows Weiss. "He got where he is by
staring people down."
•••
A New York native, Weiss began his career trying
personal injury and real estate cases before
teaming with Larry Milberg, a securities lawyer 22
years his senior. Milberg died in 1989.
•••
In 1966, a year after the two men founded the firm
that still bears their names, federal court rules
changed, permitting shareholders who believed they
had been bilked to sue as a class.
•••
It was a monumental change. The damage an
individual claimed was often too trivial to
interest a lawyer. But by joining thousands of
aggrieved shareholders together in a class action,
companies could be forced into settlements worth
hundreds of millions, even billions, with a third
of the total payout typically going to the
lawyers.
•••
Each victory helped the firm bankroll new
litigation and by the 1980s, Milberg Weiss had
vaulted into the top tier of plaintiff firms.
•••
During 47 years in practice, Weiss built a
significant record of pro bono work -- recovering
$5 billion from German banks for Holocaust victims,
underwriting scholarships for law students and
representing a group of Nigerian children who
claimed they were seriously injured by drugs
manufactured by Pfizer Inc.
•••
Weiss' indictment would effectively end the career
of what Gillers called "a lion" of the legal
profession. It would also raise questions about
whether his firm, which all but invented
shareholder class actions, can survive. It had 145
lawyers before the 2006 indictment; defections have
cut the number to 76.
•••
Loyola's Levenson said Weiss might feel pressure to
cut a deal.
•••
"It's a heck of a way to end your career," she
said. "But whatever years
•••
1995: "We like to think that as private enforcers
of the securities laws, we act as policemen in the
marketplace."
•••
2000: "I don't care what people say about me. I
care about what I think about myself."
•••
2002: "I really believe we're better than the
criminal justice system, better than the Securities
and Exchange Commission. Corporations fear us more
than they fear anything else."
•••
2007: "(When) you spend decades challenging
powerful interests, the powerful interests will
fight back with a vengeance. Sometimes when you
take the bull by the horns, you get gored &endash;
this is the business we've chosen. I have to live
with the world as it is &endash; not as I wish it
was." -- Compiled by Scott Wilson
•••
Lawsuit king wins one on his way to prison / By
Molly Selvin and Jessica Guynn, Los Angeles Times
Staff Writers
•••
September 20, 2007 / As he negotiated the deal that
would send him to prison and seal his disgrace, the
king of class actions was still working the
system.
•••
William S. Lerach, in agreeing to plead guilty to
one count of conspiracy in connection with a
kickback scheme that paid people to serve as
plaintiffs in lawsuits, insisted that the firm he
founded in San Diego in 2004 be shielded from
prosecution.
•••
reputation as a litigator of class-action suits
against what Lerach once called the "dishonorable
and despicable greed" of corporate America could be
preserved. Maybe a little of his own reputation
would be too.
•••
"He's falling on his sword," said David Lisi, a
corporate defense lawyer in Silicon Valley. "You
have to admire loyalty like that."
•••
Lerach has been more loathed than admired by
corporate executives. He was so effective at
shaking awards and settlements loose from companies
that he became a verb -- as in "getting
Lerached."
•••
T.J. Rodgers, chief executive of San Jose-based
Cypress Semiconductor, said he was celebrating that
"there is justice after all" with a bottle of
champagne. Lerach, he said, "took millions of
dollars under false pretenses from honest
people."
•••
He also made history, pioneering modern-day
securities class-action litigation with his former
partner Melvyn Weiss, who practically invented the
field in the 1960s.
•••
On Wednesday, Weiss' firm, Milberg Weiss in New
York, said that it expected to be indicted anew in
the kickback case and that Weiss would be indicted
too. Milberg Weiss already faces conspiracy, mail
fraud and money laundering charges leveled in a
2006 indictment that alleges the firm ran a
criminal kickback operation, paying people to sign
on as lead plaintiffs in more than 150
lawsuits.
•••
Another former partner of Lerach's, Steven
Schulman, has agreed to plead guilty, the Los
Angeles Daily Journal reported Wednesday. The
guilty pleas have piled up, amounting to five so
far -- with Lerach's the most recent.
•••
The rise and fall of the lawyer Wall Street loved
to hate, said Columbia Law School professor John
Coffee, "has the sense of a Greek tragedy."
•••
The woolly-haired, chubby-faced Lerach issued a
statement when his plea was filed Tuesday in Los
Angeles federal court, saying, "I have always
fought for my clients aggressively and vigorously
in order to hold powerful corporations responsible
when their actions harmed people. However, I
regrettably crossed a line and pushed too far."
•••
That contrition was a sobering contrast to Lerach
in his heyday. He was so successful that Congress
wrote a law that changed the rules for awarding
fees. He filed hundreds of lawsuits, suing at the
drop of a missed revenue projection or slipping
share price. Perhaps his most celebrated victory
was against Enron executives and others involved in
the fraud at the now-defunct company, defendants
from which the Lerach team has extracted
settlements of more than $7.2 billion.
•••
Some executives who faced him in court or at the
settlement table called him a brilliant strategist
and said his dogged advocacy of victims of
corporate avarice helped lead to reform. Some
called him a bully who intimidated defendants into
settlements and dispatched opponents with
obscenity-laced rants.
•••
Lerach was rich, with homes in Hawaii and Colorado
and a personal collection of Shona stone carvings
from Africa. He was famously flamboyant, hoisting
for television cameras at a Houston courthouse a
box of shredded Enron documents that he called "a
smoking howitzer."
•••
Democratic politicians counted him as a friend and
fundraiser. He slept in the Lincoln Bedroom in the
Clinton White House. On Wednesday, John Edwards'
presidential campaign said it had donated to
charity $4,600 in contributions from Lerach.
•••
The deal Lerach made would send him to prison for a
one-to-two-year term. He will pay the government $8
million and will probably be disbarred.
•••
The 2006 indictment against Milberg Weiss, two
former partners, a frequent plaintiff and that
plaintiff's lawyer referred to "Partner A" and
"Partner B" -- widely believed to be Lerach and
Weiss -- as it laid out the allegations that
Milberg Weiss made $11.3 million in payments over
many years to people who agreed to be lead
plaintiffs in class actions and allowed the firm to
be the first to sue an accused company.
•••
Before Congress passed the 1995 law, lawyers who
filed first, not necessarily those representing
clients with the most at stake, could claim a
bigger cut of legal fees.
•••
With a law degree from the University of
Pittsburgh, Lerach, who began as a corporate
defense lawyer, joined Milberg Weiss in 1976,
signing on as the bull market and the biotech boom
began to gather steam. The Securities and Exchange
Commission during Ronald Reagan's presidency was
cutting back on staff, enforcement and disclosure
rules, creating a perfect storm for securities
lawyers that generated waves of new business.
•••
Shareholder suits rely on a section of the 1934
Securities and Exchange Act requiring full and
accurate disclosure of events that could affect
stock prices. Executives have complained that Weiss
and Lerach took advantage of the provision,
deliberately blurring the line between fraud and
the inherent ups and downs of running a
business.
•••
Their lawsuits targeted some of the largest U.S.
corporations, including AT&T; Lucent; WorldCom;
Sears, Roebuck & Co.; and Microsoft.
•••
Lerach was Weiss' disciple, initially in awe of the
senior man's smarts and courtroom bravado. The
student eventually outshone his teacher, racking up
billions in jury awards and settlements.
•••
Companies and executives so feared him that they
often settled rather than took on the risk and
expense of going to trial. It was such a shrewd,
efficient, high-volume strategy that settling such
cases became the cost of doing business in Silicon
Valley.
•••
Norman Blears, a Menlo Park, Calif., lawyer, said
his clients took the Lerach factor seriously.
•••
"For those of us who represented corporations and
directors, we would get questions phrased not in
terms of, 'Is this going to be a problem with the
SEC?,' or, 'Is this going to be a technical
violation of the law?,' but, 'If we do this, is it
going to end up on Lerach's radar screen?' " Blears
said. "I remember him telling people that this
wasn't just some corporate issue that was going to
go away. He was going to cause them to feel
personal pain."
•••
The late Al Shugart, a co-founder of Seagate
Technology in Scotts Valley, Calif., and a
defendant in four Lerach suits, declared war on him
in the 1990s, taking out a full-page ad on the back
cover of a technology magazine: "Enough is enough.
Are securities lawyers holding your company
ransom?" Shugart asked executives to send him their
business cards. He received a couple of dozen,
among them one from Lerach, which read, "Dear Al:
More is coming."
•••
The shareholders he helped remember a different
Lerach. Charlie Prestwood, an Enron employee who
lost his pension and life savings worth $1.3
million when the company disintegrated, praised
Lerach for helping him recoup $53,000 and said he
was "a super-nice person."
•••
Christopher Patti, an attorney with the University
of California, which received $250 million from a
Lerach-filed suit against what was then AOL Time
Warner and stands to recover a large sum from the
Enron settlement, called Lerach "an incredibly
talented, tenacious and very, very smart lawyer"
who played "a very important role in eliminating
abusive practices and in keeping the securities
markets free from fraud and abuse."
•••
At Milberg Weiss, the competitive instincts that
served Lerach and Weiss so well in court ultimately
ruined their friendship. Lerach left in 2004 and
built his San Diego firm into a 180-lawyer
powerhouse with outposts in nine cities. The
headquarters, to which Lerach's Chihuahua, Tommy,
was a frequent visitor, boasts a grand view of the
bay. He resigned from what is now called Coughlin
Stoia Geller Rudman & Robbins last month, and
his name was removed from the door. -
•••
September 18, 2007 / Celebrated securities lawyer
William S. Lerach, who recouped billions of dollars
for defrauded shareholders and collected billions
in legal fees, has agreed to plead guilty to one
count of conspiracy in an alleged kickback scheme
and could serve as long as two years in prison,
people familiar with the situation said Monday.
•••
Lerach, who resigned last month from the San Diego
law firm that he founded in 2004, will pay a fine
of several million dollars under the terms of the
deal he made with federal prosecutors in Los
Angeles, these people said.
•••
They said that he had refused to cooperate with the
government in its case against Milberg Weiss, the
firm where he made his name, but that he could be
called to testify at a trial scheduled to begin in
January.
•••
If the agreement, which was first reported on the
Wall Street Journal website, is filed today as
planned, Lerach's guilty plea will be the fifth in
the case against the New York firm that was
indicted last year in connection with the alleged
payment of $11.3 million in illegal payments to
clients who agreed to act as plaintiffs in
class-action lawsuits.
•••
Neither Lerach nor the firm's co-founder, Melvyn
Weiss, were named in the 20-count indictment but
are widely believed to be the "Partner A" and
"Partner B" referred to throughout the document,
which claims that the firm paid clients kickbacks
so it could become the leads in class-action
litigation and therefore win a larger share of
legal fees.
•••
Neither Lerach nor Weiss returned phone calls.
•••
Laurie Levenson, a former federal prosecutor who
teaches at Loyola Law School, said the deal with
Lerach indicated that "prosecutors are clearing the
underbrush to ensure that he can't at least support
the other side."
•••
Lerach, 61, has been viewed as perhaps the most
successful and certainly one of the most outspoken
plaintiff lawyers in the country. While at Milberg
Weiss, he and Weiss targeted some of the largest
U.S. companies, including AT&T; Lucent;
WorldCom; Sears, Roebuck; Microsoft; Prudential
Insurance; and Lincoln Savings & Loan.
•••
When he left, Lerach took much of Milberg Weiss'
securities litigation with him, including
shareholder suits against Enron -- eventually
winning a record $7.1 billion on behalf of Enron
investors. His Enron fees alone could total $1
billion.
•••
As the federal investigation into his actions at
Milberg Weiss heated up, Lerach resigned from what
is now called Coughlin Stoia Geller Rudman &
Robbins, saying he wanted to work on "putting the
matter behind me once and for all."
•••
The deal he struck shields that firm from being
charged in the Milberg Weiss case, according to
several people.
•••
His resignation was triggered by a plea agreement
made in July by David Bershad, who was named in the
indictment. The former Milberg Weiss partner -- who
pleaded guilty to conspiracy and agreed to
cooperate with prosecutors -- admitted that as the
partner primarily responsible for overseeing
Milberg Weiss' financial affairs, he kept track of
illegal cash payments to clients, helped conceal
them from the state and federal judges responsible
for approving the firm's class-action fee awards
and caused the firm to provide false and misleading
tax information to the Internal Revenue
Service.
•••
Another defendant, former Beverly Hills
ophthalmologist Steven Cooperman, pleaded guilty to
conspiracy and obstruction of justice, saying that
he and some of his relatives and associates had
agreed to serve as named plaintiffs in
approximately 70 class actions Milberg Weiss filed.
In the plea agreement he signed, Cooperman also
said he conspired with "Partner A" and "Partner
B."
•••
The firm itself and three other defendants --
former partner Steven Schulman, frequent plaintiff
Seymour Lazar and Lazar's lawyer Paul Setzer --
have pleaded not guilty.
•••
Last month, a federal judge denied motions to
dismiss charges against those defendants, rejecting
arguments that payments lawyers at Milberg Weiss
made weren't illegal kickbacks.
•••
One defense lawyer argued that the alleged
kickbacks were compensatory payments to the named
plaintiffs in suits that eventually won
class-action status. Those plaintiffs have more
responsibilities than others, performing such tasks
as giving depositions and appearing in court.
•••
Since the indictment was handed down last year,
dozens of lawyers have defected from the firm.
•••
Lerach has been a generous Democratic donor and
hasn't been shy about trying to leverage that
largess, aggressively lobbying President Clinton in
1996 to veto a measure that would have made it
harder to file shareholder suits. Clinton
acquiesced but Congress overrode his veto.
•••
In the last decade, Lerach has given almost $1
million to federal campaigns and candidates,
including President Clinton, and far more to
California campaigns. Earlier this year, Lerach and
his former law firm partners in San Diego gave
Democratic presidential hopeful John Edwards more
than $80,000.
•••
molly.selvin@latimes.com
NBS100
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