Spitzer Returning Funds to Firm
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ALBANY – Attorney General Eliot Spitzer is returning tens of thousands of dollars that his gubernatorial campaign accepted from a prominent class-action law firm that is being accused of conspiring to pay illegal kickbacks to plaintiffs, a campaign official said yesterday.
The indictment of Manhattan-based Milberg Weiss, Bershad & Schulman and two of its attorneys, David Bershad and Steven Schulman, has put a spotlight on donations that the firm and its partners have spread out to New York’s most powerful politicians, such as Mr. Spitzer, New York State’s comptroller, Alan Hevesi, and to a lesser extent Governor Pataki.
The firm and its senior attorneys, two of whom were charged with funneling millions of dollars to individuals to serve as named plaintiffs in more than 150 class-action shareholder lawsuits, have contributed more than $80,000 to Mr. Spitzer’s 2006 campaign, according to the most recent campaign finance records.
The attorneys that were indicted, Steven Schulman and David Bershad, have given a total of $11,000 to Mr. Spitzer’s governor’s race, while the firm’s lead attorney, Melvyn Weiss, who was not indicted, has contributed $35,000. Mr. Schulman and Mr. Bershad donated $21,000 to Mr. Spitzer’s 2002 attorney general race. In January, Mr. Spitzer reported that he had raised more than $19 million, by far the most of any candidate.
The firm and its attorneys also were a major donor to Mr. Hevesi’s hard-fought comptroller’s race in 2002, giving the candidate $137,000 days before the November general election. In 2002, Milberg Weiss also donated $5,000 to support Mr. Pataki’s 2002 third-term re-election bid. Spokesmen for Messrs. Hevesi and Pataki said their offices were reviewing the indictments, which were handed down late yesterday afternoon.
Unlike Mr. Spitzer, Mr. Hevesi has not received money from the firm or its senior partners this election cycle. But there may still be pressure on the comptroller to return the donations, which were among the largest accepted by his 2002 campaign, which narrowly defeated Republican John Faso, a former assemblyman. Months after the money was donated, Mr. Hevesi selected Milberg Weiss to represent the $105 billion state pension fund in a major shareholder lawsuit against a pharmaceutical company. As comptroller, Mr. Hevesi is the sole fiduciary of the fund and the largest single investor in the nation.
After the indictments were announced, a spokeswoman for Mr. Spitzer’s campaign, Christine Anderson, said, “We are returning the money,” though she could not immediately verify whether the campaign would give back all of the money Mr. Spitzer has received from the firm and the indicted partners or just money given to support his 2006 race.
Mr. Spitzer’s move will likely help protect him from criticism from political rivals who have accused him of being beholden to trial lawyers. Still, the attorney general could face questions about the level of scrutiny his office gave to the law firm. The 102-page indictment also accuses the firm of being in violation of New York State law.
Other state political groups that have received money from the firm include the New York Democratic State Committee and the New York State Senate Republican Campaign Committee. John Faso, who is seeking the Republican nomination for governor, received $2,000 from the firm in 2002 while opposing Mr. Hevesi in the comptroller’s race.
The class action lawsuit against Bayer AG, the German pharmaceutical company, is in the discovery phase and is the only case in which the firm is representing the state pension that isn’t settled. Bayer is being accused of making false statements about the safety of Baycol, a cholesterol-lowering drug that reportedly has been linked to the deaths of more than 100 patients. Mr. Hevesi became the lead plaintiff in the case in 2003.
A spokesman for Mr. Hevesi’s office would not comment on whether the comptroller would seek to replace Milberg Weiss as counsel or would hire the firm to handle shareholder litigation.
Mr. Hevesi’s office has strongly denied the donations made by the law firm influenced the decision to retain its services.