In Los Angeles on Monday, US District Judge John Walter sentenced the last two defendants in the long-running kickback scheme at the former Milberg Weiss law firm, now known as Milberg LLP. Former client Steven Cooperman, who acted as a lead plaintiff in some Milberg cases, was sentenced to four months in prison and two years of supervised release; Cooperman pleaded guilty to a conspiracy count last year. Paul Selzer, a former outside attorney who helped Milberg funnel kickbacks to clients, was sentenced to two years probation; Selzer pleaded guilty in July to a tax obstruction count (Reuters).
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In Los Angeles on Monday, US District Judge John Walter sentenced former Milberg Weiss partners David Bershad and Steven Schulman to six months in prison each for their roles in the long-running kickback scheme at the firm, now known as Milberg LLP. Bershad pleaded guilty in July 2007 to a one-count information charging him with obstruction and making false statements. He was the first partner to plead guilty and his cooperation helped the DOJ obtain guilty pleas from the firm and from principals Melvyn Weiss and Bill Lerach, who are currently serving 30- and 24-month prison sentences, respectively. But Walter rejected his plea for probation, calling him an architect of the scheme. Schulman pleaded guilty to a racketeering count in October 2007. Both men had already agreed to forfeit their gains — $7.75 million for Bershad, $1.85 million for Schulman (Bloomberg, Reuters).
In Los Angeles on Tuesday, US District Judge John Walter sentenced Howard Vogel to three months in prison for his role in the Milberg Weiss kickback scheme. Vogel pleaded guilty in in August 2006 to one count of making a false statement in federal court. He admitted acting as a paid plaintiff or having a relative act as a plaintiff in 40 different class action lawsuits brought by the firm over a 14 year period. As part of his plea agreement, Vogel forfeited $2 million and paid $550,000 in back taxes (National Law Journal).
Rejecting the government’s recommendation of probation (earlier), US District Judge John Walter on Monday sentenced Los Angeles attorney Richard Purtich to two months in prison and fined him $50,000 for his role in the Milberg Weiss kickback scheme. Purtich pleaded guilty in April 2006 to a tax charge for failing to report to the IRS about $900,000 in illegal kickback payments he accepted from Milberg and then funneled to Steve Cooperman, who acted as a lead plaintiff in some Milberg cases. Purtich cooperated with prosecutors in their investigation of Cooperman, who pleaded guilty to a conspiracy count last year. Purtich is expected to be disbarred; he currently works as a contract paralegal (KNBC).
In court documents filed last week in US District Court in Los Angeles, prosecutors recommended that Los Angeles attorney Richard Purtich be sentenced to one year of probation for his role in the Milberg Weiss kickback scheme. Guidelines called for a 21 to 27 months in prison but prosecutors cited his “substantial assistance” in the prosecution of Steve Cooperman, who acted as a lead plaintiff in some Milberg cases. Purtich pleaded guilty in April 2006 to a tax charge for failing to report to the IRS about $900,000 in payments he accepted from Milberg that he passed on to Cooperman, who pleaded guilty to a conspiracy count last year. Purtich will be sentenced on August 11 (National Law Journal).
Attorney Paul Seltzer on Monday became the final Milberg Weiss (now Milberg LLP) defendant to plead guilty in the racketeering and money laundering case against the firm and its former principals. Seltzer pleaded guilty before US District Judge John Walter in Los Angeles to one count of corruptly endeavoring to obstruct the IRS code. He admitted accepting almost $50,000 from the firm and failing to tell the IRS that he transferred $19,000 of it to Seymour Lazar, the convicted dummy plaintiff in many of Milberg’s class action shakedowns suits. Sentencing is scheduled for November 3. Seltzer faces a statutory maximum of three years in prison but prosecutors will recommend probation (AP/San Jose Mercury News).
The law firm now known as Milberg LLP reached a non-prosecution agreement on Monday with the DOJ which settles the criminal charges against the firm. The former Milberg Weiss Bershad & Schulman LLP was indicted in 2006 on counts including conspiracy, racketeering, mail fraud, money laundering and filing false tax returns. Milberg admitted wrongdoing by its former principals Melvyn Weiss, William Lerach, David Bershad and Steven Schulman involving illegal kickbacks paid to class action plaintiffs in 165 cases over 25 years and agreed to pay $75 million in fines. The government said it believed that no current partners engaged in or knew about the illegal scheme.
Milberg also admitted llegally paying class action expert witness John Torkelsen on a contingency basis and paying kickbacks to several stockbrokers who referred clients to serve as plaintiffs. The firm also agreed to compliance monitoring for two years (NY Law Journal, DOJ via LawFuel).
Melvyn Weiss, pioneer of shareholder class action lawsuits and former name partner of the firm now known as Milberg LLP, was sentenced today to 30 months in prison by US District Judge John Walter in Los Angeles. In March Weiss agreed to plead guilty to a single count of racketeering, admitting that he engaged in a pattern of racketeering activity covering the period of 1979 to 2005 by paying kickbacks to plaintiffs (earlier). He must report to prison by August 28 (Bloomberg, AP).
Melvyn Weiss has agreed to plead guilty to a single racketeering count, specifically that he engaged in a pattern of racketeering activity covering at least the period of 1979 to 2005. Weiss admits to multiple instances of kickbacks to plaintiffs and agrees to serve a sentence of 18 to 33 months in prison and to forfeit $10 million. He shortly will formally plead guilty before US District Judge John Walter in Los Angeles and prosecutors will ask for the 33-month maximum.
The firm, which will now be known as Milberg LLP, still faces criminal charges. The New York Times story here quotes from statements released by Weiss and the firm, and contains this observation from Stanford law professor Joseph Grundfest, a former SEC commissioner: “It’s a situation where it appears that there has been fraud in pursuit of fraud. And just like mom explained that two wrongs don’t make a right, it follows both that corporate executives shouldn’t lie and the lawyers suing them shouldn’t steal. What’s complicated about that?”