Federal prosecutors have been investigating one of the nation's prolific class-action law firms, Milberg Weiss Bershad & Schulman, for alleged fraud, conspiracy and kickbacks involving a slew of securities lawsuits, and may seek criminal charges against the firm and its senior partners, The Wall Street Journal reports.
The three-year probe centers on allegations that the New York law firm routinely made under-the-table payments to plaintiffs who appeared on securities class-action lawsuits brought by the firm, the Journal said, citing court documents and attorneys close to the case.
A grand jury in Los Angeles convened last October has been hearing evidence of alleged illegal payments in dozens of suits filed against oil, biotech and drug companies during the past 20 years, the lawyers told the Journal.
Milberg Weiss has brought hundreds of class-action lawsuits and won tens of billions of dollars in settlements and judgments against corporations. Recently, the firm has filed suit against mutual fund companies for allegedly defrauding investors by allowing preferred customers to engage in market timing and late trading.
Republicans in Washington have openly criticized the firm as part of its efforts to bring about tort reform, a high priority for the Bush administration.
Prosecutors offered a glimpse of the ongoing investigation in an indictment filed against Seymour M. Lazar, a retired Palm Springs, Calif., entertainment lawyer, the newspaper said. The indictment claims that Lazar or a member of his family appeared as a plaintiff in more than 50 Milberg Weiss securities cases between 1981 and 2004.
Lazar and his family have received more than $2.4 million in clandestine payments, the government charges. During this period, Milberg Weiss reportedly earned at least $44 million in legal fees from cases in which Lazar or a family member was a plaintiff, according to the indictment.
Milberg Weiss said it is cooperating fully with the U.S. attorney's office in Los Angeles but issued a statement characterizing the allegations as "baseless" and said the indictment "unfairly implicates the firm in the wrongdoing alleged against Mr. Lazar."
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.