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Court Denies Billionaire's Request for Documents in Milberg Kickback Case
The National Law Journal
February 12, 2009
A federal judge in Los Angeles has refused to grant what prosecutors claim was an "unprecedented" request by Texas billionaire Sam Wyly to obtain protected documents in the government's criminal kickback case against Milberg LLP.
Wyly, who has filed a malpractice claim against the New York firm, was seeking to preserve documents related to the criminal case that are now under a protective order. In that case, prosecutors alleged that Milberg and several of its partners obtained more than $200 million in attorney fees by paying kickbacks to name plaintiffs. Four of the firm's former partners, including Melvyn Weiss and William Lerach, and several other defendants, have pleaded guilty to charges related to the case and are serving prison sentences.
Last year, Milberg agreed to pay $75 million to settle criminal charges in the case.
Wyly has filed a motion for relief from a prior class-action settlement involving shareholders of CA Inc. and a malpractice lawsuit against Milberg and the other law firms that negotiated the settlement. In a Jan. 20 motion to intervene in the government's criminal case against Milberg, Wyly said the firm and its co-counsel failed to reopen the settlement discussions after it was revealed that CA's most senior executives had covered up massive accounting fraud. As part of the settlement, Milberg had obtained the equivalent of $40 million in attorney fees, he said.
"The facts and circumstances in the CA matter are similar to those underlying the indictments and guilty please in this action, the Milberg criminal matter," he said in the motion. "Milberg appears to have used professional, paid plaintiffs in the CA matter as well," he added.
In his motion, Wyly sought to preserve documents under a protective order that Milberg is preparing to "return or destroy." Those documents include grand jury transcripts, grand jury exhibits, witness statements and other "confidential information," according to court papers.
Prosecutors responded that the documents Wyly sought are not relevant to his civil actions. Further, his request was based on a civil procedure that does not apply to criminal cases, said Assistant U.S. Attorney Richard Robinson of the Central District of California, lead prosecutor in the Milberg case. "We contend that it was unprecedented for a civil litigant to intervene in a criminal case to obtain criminal discovery that was protected and produced by a protective order for use in their civil litigation," he said.
U.S. District Judge John Walter of the Central District of California agreed, and denied the motion.
"Naturally, we are disappointed in the decision," said William A. Brewer III, a partner at Bickel & Brewer in Dallas, who represents Wyly. "However, we will proceed to secure access to those relevant documents in due course through all legal means necessary."
