Fortunes Darken for Lawyer Melvyn Weiss

The fortunes of a legendary leader of New York’s plaintiffs bar, Melvyn Weiss of Milberg Weiss LLP, are darkening further after his protégé and longtime partner, William Lerach, offered a guilty plea in connection with a federal investigation into secret payments to investors who helped the firm file securities cases.In a plea agreement filed yesterday in Los Angeles, Mr. Lerach, 61, admitted to a felony charge of conspiracy to obstruct justice. He also agreed to serve one to two years in prison and to pay $8 million in a fine and related forfeiture.A statement of facts Mr. Lerach accepted as part of the plea said that, for at least two decades, “certain senior Milberg Weiss partners agreed” to make the under-the-table payments and to conceal them from federal judges. The payments usually amounted to 10% of the legal fees awarded to Milberg Weiss, the court filing said.Mr. Lerach sought yesterday to portray his wrongdoing as the product of excessive zeal in a noble battle against corporate America.“I have always fought for my clients aggressively and vigorously in order to hold powerful corporations responsible when their actions harmed people, however, I regrettably crossed a line and pushed too far,” he said in a written statement. “For my actions, I apologize and accept full responsibility for my conduct.”Under the terms of the plea deal, the renowned attorney will not be required “to cooperate in any way” with prosecutors. In July, a former name partner at Milberg Weiss, David Bershad, pleaded guilty to a similar conspiracy charge. However, he agreed to cooperate and testify for the prosecution.While Mr. Lerach may not take the stand against his former colleagues, one legal analyst said the attorney’s guilty plea, coupled with Bershad’s plea and promise of cooperation, puts Mr. Weiss in a difficult spot.“It puts the squeeze more on Weiss,” a professor at Loyola Law School, Laurie Levenson, said. “Though it doesn’t give the prosecutors a star witness, I think it does boost the prosecution.”Mr. Weiss has not been charged with a crime. However, an indictment handed up last year charged his firm and alluded to him repeatedly using the pseudonym, “Partner A.” Even more worrisome for Mr. Weiss, prosecutors recently signaled to defense lawyers in the case that a superseding indictment might be filed before a status conference set to take place before Judge John Walter in Los Angeles on Friday.Another former Milberg Weiss partner, Steven Schulman, was named as a defendant in last year’s indictment and has pleaded not guilty.An attorney for Mr. Weiss, Benjamin Brafman, said he was aware of Mr. Lerach’s plea deal but had no comment on the development. The Milberg Weiss firm had no statement.“None of this is good for the firm. There is no way to spin it that way,” Ms. Levenson, a former federal prosecutor said. “In terms of any future work, this is devastating.”The plea agreement and related paperwork were filed this morning, but Mr. Lerach did not appear in court. He will be summoned to appear at a later date, a Justice Department spokesman said.A law professor at New York University, Stephen Gillers, said the proposed punishment represented an impressive negotiating effort by Mr. Lerach’s criminal defense lawyer, John Keker of San Francisco.“It’s a phenomenal deal,” Mr. Gillers said. “John Keker did a great job to get that deal. Two years maximum jail time and $8 million in fines, which for Lerach is hardly more than rounding error, is a remarkable accomplishment. … Lerach will be disbarred but he can live a good life.”Mr. Gillers called it a “wimpy result” for the government and suggested that prosecutors feared trouble if the case went to trial.A spokesman for prosecutors declined to comment for this article.If Judge Walter does not accept the recommended prison sentence, Mr. Lerach will be free to back out of the plea, await indictment, and demand a jury trial.Mr. Lerach split from Milberg Weiss in 2004 following a rift with Mr. Weiss. Last month, Mr. Lerach resigned from his new firm, Lerach Coughlin Stoia Geller Rudman & Robbins. The plea deal guarantees no charges against that firm and includes a provision that bars Mr. Lerach from being prosecuted for campaign donations funded by his misconduct.Federal records indicate that earlier this year Mr. Lerach gave the maximum $4,600 to a former senator seeking the Democratic presidential nomination, John Edwards, and a total of $2,700 to another presidential hopeful, Senator Biden of Delaware.“Today, we donated the money William Lerach contributed to our campaign to charity,” a spokeswoman for Mr. Edwards, Colleen Murray, said in response to a query from The New York Sun. An aide to Mr. Biden, Mark Paustenbach, said Mr. Lerach’s $2,700 was given to a prostate cancer charity “some time ago.”Senator Clinton’s presidential bid did not record any donations from Mr. Lerach. However, her Senate campaign, which bankrolled her presidential committee, logged $3,100 from Mr. Lerach last year. A spokesman for Mrs. Clinton did not respond to inquiries about the matter.

Fortunes Darken for Lawyer Melvyn Weiss

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