Two-Year Term Sought for Lawyer in Milberg Conspiracy

Federal prosecutors are seeking a two-year prison term for one of the nation's most successful class-action attorneys, William Lerach.

Lerach, 61, a longtime partner at the Milberg Weiss law firm before his departure in 2004, pled guilty in October to a felony charge of conspiring to obstruct justice and to submit false court declarations. Prosecutors contend that Milberg Weiss secretly paid investors to serve as plaintiffs or to arrange for others to serve as plaintiffs in more than 200 securities lawsuits which brought the firm about $250 million in legal fees.

"This Court should sentence defendant to a term of twenty-four months of incarceration to properly deter other attorneys from repeating defendant's criminal misconduct, to engender proper regard for the law, and to provide for adequate punishment of defendant," prosecutors wrote in papers filed yesterday with Judge John Walter. "The conduct at issue amounted to a systematic effort to obstruct and undermine the lawful functioning of the judicial system in hundreds of lawsuits brought in federal and state courts throughout the United States."

The prosecution also said that through the secret deals Lerach breached his obligations to stockholders who were represented in the lawsuits. "In purporting to represent absent class members, defendant served in a position of 'public trust'… yet he thoroughly betrayed that trust through his own criminal conduct," the government lawyers wrote.

Prosecutors said federal guidelines call for a sentence somewhat longer than 24 months, but that the term would be sufficient for Lerach in light of the harm done to his reputation. He has resigned from the law firm at which he worked most recently. His bar license has been suspended and is almost certain to be revoked.

Lerach "stands in disgrace before the profession of which he considered himself a national leader," prosecutors said. They did give Lerach credit for coming forward on his own initiative with an offer to plead guilty and for having no direct involvement in the alleged conspiracy "for a considerable time."

Lerach's defense team has also weighed in on the sentence and is presumably seeking the minimum prison term under the plea agreement, 12 months. However, the defense's precise position is unknown because it has asked that all its papers relating to sentencing, including letters testifying to Lerach's character, be placed under seal. The grounds are unknown, though prosecutors filed more limited materials under seal. Judge Walter will ultimately decide whether the records are made public.

Other developments in the case suggest that Lerach will face an uphill battle in his plea for leniency.

Yesterday, Judge Walter sentenced an ailing entertainment lawyer, Seymour Lazar, 80, to six months of home detention and a $600,000 fine for acting as a secretly-paid plaintiff in suits filed by Milberg Weiss.

The judge called Lazar's actions the "absolute height of arrogance" and said he would have sent Lazar to prison but for his age and ill health, the Associated Press reported.
The words bode ill for Lerach since he has admitted to, in essence, directing the payment scheme as a named partner at Milberg Weiss.

Two former Milberg Weiss partners, Steven Schulman and David Bershad, have also pled guilty in the case, while the firm itself and one of its founders, Melvyn Weiss, are fighting the criminal indictment. Mr. Weiss and the firm face trial later this year on conspiracy, obstruction of justice, fraud, and other charges.