Attorney Faces up to 33 Months in Prison for Orchestrating Firm’s
Secret Kickback Scheme Involving Named Plaintiffs in Class Actions
LOS ANGELES – LAWFUEL – Becoming the fourth current or former partner of the law firm now known as Milberg Weiss to admit criminal conduct, Melvyn I. Weiss has agreed to plead guilty to a federal racketeering charge and acknowledge that he and others concealed secret payment arrangements that Milberg Weiss had with named plaintiffs in class-action lawsuits.
A plea agreement filed this morning calls for a sentence of between 18 months and 33 months, and the government expects that it will ask United States District Judge John F. Walter to impose the 33-month term after Weiss formally pleads guilty.
In the plea agreement, Weiss agrees to forfeit $9.75 million in ill-gotten gains derived from the criminal enterprise and to pay a criminal fine of $250,000.
Previously in this case, former Milberg Weiss partners William S. Lerach, David J. Bershad and Steven G. Schulman have pleaded guilty, all admitting their role in the scheme that paid millions of dollars in secret kickbacks to several individuals in exchange for them serving as named plaintiffs in more than 225 class-action and shareholder derivative-action lawsuits that were filed across the United States.
Weiss, a co-founder of the New York-based Milberg Weiss, admits in the plea agreement that he was part of a criminal enterprise involving senior members of the law firm and a stable of people who served, or caused friends and relatives to serve, as named plaintiffs in lawsuits filed by Milberg Weiss. To conceal the illegal kickback scheme from judges presiding over the lawsuits and other parties involved in the cases, participants in the conspiracy allegedly made false and misleading statements in court documents and in under-oath depositions. The illegal kickbacks were secretly paid by Milberg Weiss to the named plaintiffs in cash or through various intermediary law firms and lawyers selected by the paid plaintiffs.
“This kickback scheme lasted for more than 25 years and had a severely detrimental effect on the administration of justice across the nation as lies were routinely made to judges overseeing significant cases,” said United States Attorney Thomas P. O’Brien. “The scheme was based in greed and it affected the integrity of the courts and the interests of an untold number of absent class members.”
B. Bernard Ferguson, Inspector in Charge, Los Angeles Division of the U.S. Postal Inspection Service, stated: “The Melyvn Weiss plea agreement is a significant achievement for our justice system. Mel Weiss once stated, ‘I have said for decades that greed is a growth industry and it always will be.’ It is ironic that his own greed resulted in decades of lies to courts throughout the United States. Postal Inspectors traced those lies to over $250 million in attorney’s fees generated by Milberg Weiss. Melvyn Weiss has finally taken responsibility for his role in this scheme.”
With Weiss agreeing to plead guilty, there are two defendants remaining in the case – the Milberg Weiss firm and attorney Paul T. Selzer – who are scheduled to go on trial in August.
Learch, who pleaded guilty last year to a conspiracy charge, was sentenced last month to two years in federal prison.
Schulman and Bershad are scheduled to be sentenced later this year.
Weiss is expected to appear before Judge Walter in the coming weeks to enter his guilty plea to the racketeering conspiracy count. After Weiss pleads guilty, Judge Walter is expected to schedule a sentencing hearing.
The Milberg Weiss investigation was conducted by the United States Postal Inspection Service and IRS Criminal Investigation.
CONTACT: Assistant United States Attorney Douglas A. Axel
Chief, Major Frauds Section
(213) 894-0689
Assistant United States Attorney Richard E. Robinson
Major Frauds Section
(213) 894-0713
