Judge Sentences Milberg Weiss Lawyer for Class-Action Kickbacks

January 31, 2008

A retired attorney who pleaded guilty in a lucrative kickback scheme involving class-action lawsuits against some of America’s largest corporations was sentenced this week in Los Angeles to six months home detention and two years probation.

Federal prosecutors have said 80-year-old Seymour Lazar was paid about $2.6 million (euro1.76 million) to be a professional plaintiff and help the prestigious law firm now known as Milberg Weiss in its pursuit of the lawsuits.

Authorities said the firm made an estimated $250 million (euro169.43 million) over two decades by filing such legal actions.

Seven people, including three former partners at the firm, have pleaded guilty in the case. Lazar was the first to be sentenced. He also was fined $600,000. (euro406,642).

U.S. District Judge John F. Walter said he was outraged that a former attorney could “flatly lie” as part of legal proceedings.

The lack of respect for the legal system amounted to the “absolute height of arrogance,” the judge said, adding that he would not have hesitated to send Lazar to prison if not for his age and deteriorating health. Lazar could have faced up to 18 years in federal prison.

Wearing a dark blue suit with a knitted sweater draped across his shoulders, presumably for extra warmth, the frail-sounding Lazar said he understood Walter’s concerns but felt he had already been punished for his wrongdoing.

“I have been under investigation for seven or eight years and it has been seven or eight years of hard time,” Lazar said. “That’s all I can say.”

With the judge’s consent, Lazar remained seated throughout the hearing.

Lazar pleaded guilty in October to obstruction of justice, subscribing to a false tax return and making a false declaration to the court.

Walter said he spent the weekend thinking about a suitable sentence for Lazar, worrying that a noncustodial term would send a message that wealthy defendants can buy their way out of confinement.

But ultimately, Walter said Lazar’s infirmity made him unsuitable for prison.

Lazar thanked the judge after the sentencing.

“Good luck to you,” the judge replied.

Lazar then left the courtroom and was greeted by members of his family.

Lazar has already repaid $1.5 million (euro1 million) of the money prosecutors said he was paid as part of the scheme.

The law firm, previously known as Milberg Weiss Bershad & Schulman, paid $11.3 million (euro7.66 million) in kickbacks to people who became plaintiffs in class-action lawsuits against companies such as AT&T Inc., Lucent, WorldCom, Microsoft Corp. and Prudential Insurance, prosecutors said.

The tactic allowed the firm’s attorneys to be among the first to file litigation and secure the lucrative position as lead plaintiffs’ counsel, according to court documents.

The firm dominated the industry in securities class-action lawsuits, which involve shareholders who claim they suffered losses because executives misled them about a company’s financial condition.

The three former partners who have pleaded guilty are William Lerach, Steven Schulman and David Bershad.

Lerach’s high-profile legal victories included a $7 billion (euro4.74 billion) judgment against now-defunct energy giant Enron Corp. He pleaded guilty as part of a deal to conspiracy to obstruct justice and make false statements.

Schulman pleaded guilty to a racketeering conspiracy charge. He agreed to forfeit $1.85 million (euro1.25 million) to the government and to pay a $250,000 (euro169,435) fine.

Bershad pleaded guilty to conspiracy and agreed to cooperate with the government.

Firm co-founder Melvyn Weiss has pleaded not guilty to one count each of conspiracy, mail fraud, money laundering and obstruction of justice in a revised indictment.

The Milberg Weiss firm itself has pleaded not guilty to two counts of conspiracy and one count each of obstruction of justice and making false statements.

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