A former New York partner of Baker & McKenzie pleaded guilty yesterday in Brooklyn federal court to money laundering and conspiracy to commit securities fraud.

Martin Weisberg’s plea before Eastern District Judge Nicholas Garaufis came as jury selection was about to begin in a trial of one of two separate indictments against him. He pleaded guilty to one count from each of the indictments.

In the case that was to go to trial yesterday morning, Weisberg was accused of telling three clients—SIAM Capital Management and two affiliates, Regenmacher Holdings Limited and JMV Fixed Income Arbitrage Performance Partners—he would place $30 million in an escrow account for them but that the account would not earn interest for their benefit. He then deposited the money in an interest-bearing account that generated $1.6 million between August 2006 and October 2007. Prosecutors claim Mr. Weisberg stole $1.3 million.

The Eastern District U.S. Attorney’s Office contended that Weisberg compounded his wrongdoing by sending the clients letters on law firm letterhead reporting false account balances.

He was charged with 10 counts of wire fraud and one count of money laundering in a 2008 indictment in United States v. Weisberg, 08-cr-00347 (NYLJ, May 27, 2008).

The other case, indictment 07-cr-00641, centered on the secret issuance of discounted shares in two companies—Xybernaut Corporation, a Virginia-based maker of portable computer hardware, and Ramp Corporation, a New York company developing health care software—to two Israeli investors, Zev Saltsman and Menachem Eitan.

Weisberg was a partner with now-defunct Jenkens & Gilchrist for most of the duration of the alleged stock fraud scheme.

Ex-Xybernaut executives, who are scheduled to be tried in October, allegedly sold the shares and participated in the scheme to pay $1.7 million in kickbacks to Weisberg, who omitted required information from SEC filings. Weisberg was the outside counsel to Xybernaut and Ramp and a member of Xybernaut’s board.

In a 2007 indictment, United States v. Saltsman, 07-cr-00641, Weisberg was charged with conspiracy to commit securities fraud, securities fraud and money laundering (NYLJ, Oct. 22, 2007).

He faces up to 10 years of prison on the money laundering charge and five years on the securities fraud conspiracy charge.

Under the plea agreement discussed in court, prosecutors will seek an unspecified period of incarceration. Weisberg, in turn, will not appeal his sentence if it is below 97 months. Sentencing is scheduled for Sept. 14. Prosecutors estimated in court that the guidelines sentencing range could fall between 78 and 97 months.

“I deeply regret this action on my part,” Weisberg said while reading a statement regarding his money laundering guilty plea in front of the judge. Likewise, he expressed regret when pleading to the conspiracy charge.

“My actions were wrong and in violation of the law and again I deeply regret my actions,” he said, again reading from the statement.

Weisberg, 61, who remains free on bail pending sentencing, declined to comment after the proceeding. One of his attorneys, George Stamboulidis of Baker & Hostetler, declined to comment.

A Securities and Exchange Commission action filed in the Eastern District against Weisberg and the other defendants in the stock fraud scheme, SEC v. Saltsman, 07-cv-04370, is still pending.

When SIAM learned of the stock fraud indictment, it terminated Baker & McKenzie as counsel.

The alleged misuse of the escrow account was revealed after Weisberg’s earlier stock fraud indictment was announced, according to the Eastern District U.S. attorney.

According to court papers filed for Weisberg, he fully repaid the funds he took from the account and argued he had received verbal permission to borrow the interest on the funds.

Weisberg previously tried to have the money laundering count thrown out but Garaufis denied the motion in September 2011. Weisberg also previously contended the 10 wire fraud counts were faulty due to improper venue but subsequently withdrew the motion.

In 1991, Weisberg was one of seven defendants indicted by federal prosecutors in Texas for a currency-trading Ponzi scheme. But he was the only defendant acquitted in the ensuing trial (NYLJ, Oct. 23, 2007).

Weisberg and Baker & McKenzie were also sued in U.S. Bankruptcy Court in Delaware by Industrial Enterprises of America. The complaint, filed in April 2011, contended Weisberg and his former firm “created a legal structure that enabled an unlawful pump and dump scam, misleading or outright false NASDAQ and SEC filings, and participation in a host of internal corporate malfeasances designed to raid the company of its working capital.”

The parties reached a confidential settlement agreement that was filed in court earlier this month.

Weisberg, a 1975 graduate of Northwestern University Law School, joined Baker & McKenzie in 2005 from the New York offices of Atlanta’s Troutman Sanders. He resigned days after the stock fraud indictment was announced in October 2007.

A Baker & McKenzie spokesman did not immediately respond to a request for comment.

Lauren Resnick of Baker Hostetler also represented Weisberg on the escrow case.

Richard Albert of Morvillo, Abramowitz, Grand, Iason, Anello & Bohrer represented Weisberg on the stock fraud case.

Eastern District Assistant U.S. Attorneys Ilene Jaroslaw and John Nowak appeared for the government.