New York’s most celebrated and feared class action attorney, Melvyn Weiss, is facing the most daunting legal challenge of his career after being indicted on conspiracy, racketeering, obstruction of justice, and false statement charges.

The indictment, returned yesterday by a federal grand jury in Los Angeles, represents the culmination of a seven-year investigation into secret payments Mr. Weiss’s law firm, Milberg Weiss LLP, allegedly made to investors who helped the firm file securities lawsuits.

Prosecutors painted Mr. Weiss, 72, as a particularly brazen conspirator who continued to make payoffs long after he knew the federal investigation was under way. The government also accused Mr. Weiss of flouting a grand jury subpoena by hiding a fax detailing some of the off-the-books payments.

“The indictment outlines a decades-long kickback scheme that was deliberately concealed from courts across the nation that were overseeing significant class-action cases,” the U.S. attorney for central California, George Cardona, said in a written statement. “The scheme furthered personal greed at the expense of the integrity of the courts and the interests of absent class members.”

Mr. Weiss’s attorney, Benjamin Brafman, promised a vigorous defense. “Although this indictment is a bitter disappointment, Mr. Weiss intends to fight these charges with all of the energy and talent that has made him one of the most outstanding members of the bar for more than 40 years,” Mr. Brafman said. “We are confident that when the evidence is carefully reviewed at a trial … Mr. Weiss will be fully exonerated.”

The defiant tone from Mr. Weiss’s attorney echoed that of statements two other Milberg partners, David Bershad and Steven Schulman, made when they and the Milberg Weiss firm were indicted last year. However, in July, Bershad pleaded guilty to involvement in the scheme and agreed to cooperate with prosecutors. Yesterday, Mr. Schulman also offered a guilty plea and promised to testify, if called.

As the case built to a crescendo this week, prosecutors also scored another important victory when a lawyer who helped Mr. Weiss build Milberg Weiss’s national reputation, William Lerach, agreed to plead guilty to a conspiracy charge and serve up to two years in prison. Mr. Lerach’s plea deal does not require him to testify against his former colleagues.

Legal analysts said the array of potential prosecution witnesses, who include several former Milberg Weiss partners, a firm consultant, recipients of the alleged payoffs, and outside lawyers who allegedly laundered the money, puts Mr. Weiss in a difficult predicament.

“I think it becomes insurmountable at some point, to take them all on,” a law professor at the University of Richmond, Carl Tobias, said. “If the government has what they think they have and all the cooperating witnesses cooperate, it’s very difficult to do anything else other than plead.”

With the long-running investigation at its apparent conclusion, Mr. Weiss now has little leverage to strike a deal with prosecutors. “Everybody else at the top, the principals, pled and he’s the last to be indicted and the last, ostensibly, to plead, if he does. He will get the least good deal,” Mr. Tobias said. If convicted on all charges, Mr. Weiss faces a maximum possible sentence of 40 years, though his actual sentence would almost certainly be far shorter.

Mr. Weiss was not in court yesterday. A statement from prosecutors said he would make his first court appearance on the charges on October 12.

The broad outlines of the alleged scheme were first made public in 2005, when a grand jury indicted a serial Milberg Weiss plaintiff, Seymour Lazar, and his personal attorney Paul Selzer. More details emerged last year when Milberg Weiss was charged along with Bershad and Mr. Schulman.

The latest indictment alleges that the securities lawsuits in which plaintiffs were paid by Milberg Weiss brought the firm more than a quarter of a billion dollars in legal fees over 25 years. Mr. Weiss’s share of those fees amounted to almost $42 million, the indictment claims.

The first fruit of the prosecutors’ plea deal with Bershad may be the new indictment’s claim that Mr. Weiss took from Bershad a fax he found while searching for documents responsive to a grand jury subpoena. Prosecutors contend Mr. Weiss hid the fax for a year and a half before turning it over in 2003 along with a false story about having just discovered it in his safe.

Mr. Weiss and others associated with his firm gave generously to Democratic causes, though the giving slowed down as the investigation heated up. This year, Mr. Weiss gave the maximum $4,600 donation to Senator Clinton’s presidential bid and to the re-election campaign of Rep. Charles Rangel of Manhattan. Neither campaign responded to inquiries about whether they planned to keep the donations.

Mr. Weiss, who lives in Oyster Bay, was also generous to charitable and Jewish causes. According to a biography on his firm’s Web site, Mr. Weiss is on the executive committee of the Israel Policy Forum, the world council of the American Jewish Congress, and the boards of the Lawyers Committee for Civil Rights Under Law.