t the end of the week Malcolm Wittenberg, the Crosby, Heafey, Roach & May partner accused of insider trading, will be off the firm's payroll, the firm's managing partner said Tuesday.
The news comes as Wittenberg's lawyer acknowledged that the attorney would plead guilty to one count of insider trading -- a felony charge that carries a maximum 10-year prison sentence and could end his legal career.
"Mal is leaving completely at the end of August," said Kurt Peterson, Crosby, Heafey's managing partner. "He has resigned."
Meanwhile, attorneys for Wittenberg are hoping language in the plea deal will allow Wittenberg to escape disbarment. It looks as if Wittenberg will try to walk a fine line between staying out of jail and saving his bar card.
Although sentencing recommendations are not part of the plea agreement, Wittenberg's lawyer said Tuesday jail time was not necessarily in order.
"I'm hoping not," said Douglas Young of Farella Braun & Martel. However, that remains for U.S. District Judge William Alsup to decide after Wittenberg enters his change of plea on Sept. 4. Young said he was prepared to ask the court for downward departures.
Young didn't specifically say concerns over Wittenberg's Bar status factored into the plea negotiations. "We're aware that there is a State Bar concern," he said.
The Bar opened a file on Wittenberg as a matter of routine following his indictment in April on two counts of insider trading. It will not say whether any investigation is ongoing.
The criminal charges stem from the merger of Forte Software Inc. and Sun Microsystems Inc. At the time, Wittenberg was Forte's patent attorney.
The indictment alleges that after learning of the impending merger, Wittenberg bought 2,000 shares in the company, which he sold once the deal was completed. He allegedly profited $14,000.
Similar charges by the Securities and Exchange Commission were settled without an admission of wrongdoing.
Wittenberg has hired separate representation in an effort to save his legal practice. Doron Weinberg of Weinberg & Wilder, who has represented lawyers before the State Bar before, is serving as co-counsel with Young and was familiar with the plea agreement.
Weinberg said admitting to felony insider trading does not necessarily mean Wittenberg will be summarily disbarred.
State law calls for summary disbarment of lawyers found guilty of felonies involving either moral turpitude or a specific intent to defraud or deceive.
The plea deal, Weinberg said, contains language that Wittenberg acted recklessly, rather than with intent. For that reason, Weinberg hopes to win Wittenberg a hearing before a State Bar court.
"My feeling is that his offense does not warrant disbarment," but should warrant discipline, perhaps serious discipline, Weinberg said.
A call to Wittenberg at his Corte Madera home was not returned.
If Wittenberg is jailed, any Bar hearing would wait until after his release.
Wittenberg didn't lead Crosby, Heafey's intellectual practice group, but was a key member and a sought-after mentor, Peterson said. Wittenberg's clients have been assigned to other attorneys throughout the firm.
Wittenberg resigned as a firm director when it became clear that he would be indicted, Peterson said. Directors are equity firm partners.
Since then, he has been on leave. The attorney told firm leaders that he will leave by Aug. 31.
Wittenberg's colleagues at Crosby, Heafey are stunned that the longtime attorney will face such stiff criminal penalties.
"Does the punishment fit the crime?" Peterson asked. "It's not for us to look into the fairness of this."
Peterson says that he doesn't anticipate the episode will leave a lasting mark on the Oakland-based firm.
"Other firms have been there," he said, adding, "not that you want to be part of the club."
"Needless to say, in law all you have is your reputation," said Peterson, who works in the firm's Century City office. "People know that this is a firm that has been around for 100 years that has 250 attorneys."
During his 30-year career, Wittenberg has represented Coca-Cola Co., Levi Strauss & Co., Visa International and Wells Fargo Bank. Peterson was not aware of any clients who have left the firm since Wittenberg's indictment.
"It's probably a testament to the quality of his work," he said.
