Ex-Partners at Milberg Weiss Accused of Plundering Assets

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The New York Sun

Several former partners at the law firm Milberg Weiss already facing or serving jail time for their involvement in a scheme to pay secret kickbacks in securities lawsuits are now confronting the possibility of having their personal fortunes depleted by former colleagues, who contend the disgraced senior partners effectively plundered the firm’s assets by denying the charges for so long.

Two former partners in the antitrust practice at Milberg Weiss, Michael Buchman and John Richards, filed separate lawsuits in federal court in Manhattan yesterday against some or all of the partners who pleaded guilty in the federal investigation: Melvyn Weiss, Steven Schulman, David Bershad, and William Lerach.

The suits allege that the partners who pleaded guilty breached their fiduciary duties to the firm by asserting that the long-running federal investigation was politically motivated and without merit. “Defendants refused to acknowledge the truth and continued to misrepresent the facts to government authorities, thereby putting Milberg Weiss as a firm, and the financial and professional interests of Plaintiff and other Milberg Weiss partners, in grave jeopardy,” the complaint filed by Mr. Buchman argues.

Messrs. Buchman and Richards, who worked at Milberg Weiss between 2000 and 2007, are representing themselves in the lawsuits. The suits use similar wording, though Mr. Buchman’s is the only one that names Bershad as a defendant.

“This lawsuit is without merit,” Weiss’s attorney, Benjamin Brafman, wrote last night in an e-mailed statement responding to The New York Sun’s query about Mr. Richard’s case. “Instead of seeking to take unfair advantage of a difficult situation, Mr. Richards should take note of the extraordinary success he was able to enjoy and participate in, largely as a result of the genius and great legal skills of Mel Weiss.”

Both lawsuits were filed one day after federal prosecutors and Milberg Weiss, now known as Milberg LLP, filed an agreement to resolve federal criminal charges against the firm. The firm agreed to pay $75 million and to accept an outside lawyer to monitor its conduct for two years in exchange for dismissal of the charges.

Earlier this month, Weiss was sentenced to 30 months in prison and agreed to pay $10 million to the government. Lerach is serving a two-year sentence and relinquishing $8 million. Bershad and Schulman are awaiting sentencing.

Prosecutors alleged that the firm took in more than $250 million in legal fees in cases where kickbacks were paid. The firm said in a recent legal filing that much of that money was spent on legitimate expenses and overhead.


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