Class Action Attorney Gets Two Years in Jail
William Lerach, a former partner at a well-known New York law firm, was sentenced to two years in federal prison for his role in a lucrative kickback scheme involving class-action lawsuits against some of the nation's biggest corporations.
Lerach, 61, was also sentenced to two years probation, fined $250,000 and ordered to complete 1,000 hours of community service.
"This whole conspiracy corrupted the law firm and it corrupted it in the most evil way," U.S. District Judge John Walter said during the hearing.
Authorities said Lerach's former firm, now known as Milberg Weiss, made an estimated $250 million over two decades by filing legal actions on behalf of professional plaintiffs who received kickbacks.
The firm paid $11.3 million in kickbacks to people who became plaintiffs in lawsuits targeting companies such as AT&T, Lucent, WorldCom, Microsoft and Prudential Insurance, prosecutors said.
Seven people, including three former partners at the firm, have pleaded guilty in the case.
Lerach, whose high-profile legal victories included a $7 billion judgment against now-defunct energy giant Enron, pleaded guilty in October to one count of conspiracy to obstruct justice and make false statements.
"I pleaded guilty in this case because I was guilty," Lerach said before sentencing. "It was, as they say, felony stupid."
Prosecutors had recommended a two-year prison sentence along with two years probation and a $250,000 fine. Probation officials had proposed that he be imprisoned for 15 months.
The first person to be sentenced in the case was Seymour Lazar, a retired attorney who was sentenced last month to six months home detention and two years probation. He also was fined $600,000.
Federal prosecutors said Lazar, 80, was paid about $2.6 million to be a professional plaintiff and help the law firm, previously known as Milberg Weiss Bershad & Schulman, in its pursuit of the lawsuits.
Lazar pleaded guilty in October to obstruction of justice, subscribing to a false tax return and making a false declaration to the court.
The kickback scheme 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.
Along with Lerach, other former partners who have pleaded guilty were Steven Schulman and David Bershad.
Schulman pleaded guilty to a racketeering conspiracy charge. He agreed to forfeit $1.85 million to the government and to pay a $250,000 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.