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The most conspicuous thing about John Torkelsen’s guilty plea was what it didn’t include: a clear agreement to cooperate in the ongoing criminal probe of defunct securities class action firm Milberg Weiss Bershad Hynes & Lerach and its former lawyers. At a hearing Thursday before Judge Reggie Walton in the U.S. District Court for the District of Columbia, Torkelsen, formerly a frequent expert witness for the firm, pleaded guilty to making false statements to the Small Business Administration. “He was in a position of trust . . . he abused that trust,” Assistant U.S. Attorney John Griffith told the judge. Ralph Caccia and William Crenshaw of Powell Goldstein represented Torkelsen. In exchange for the guilty plea, prosecutors recommended a 70-month prison term for Torkelsen for his attempt to divert $5 million of government money from a venture capital fund he operated. Many of the fund’s investors were lawyers for whom he served as a star witness. It’s long been thought that a plea deal might hinge on Torkelsen’s willingness to help Los Angeles prosecutors investigating whether Milberg Weiss and former top partner William Lerach paid illegal kickbacks to plaintiffs in class actions. A source familiar with Torkelsen’s case said last year that prosecutors were confident they could put him in prison for 10-15 years and that a deal for less could indicate he’s cooperating. “There is no way to determine from the language in this plea agreement whether he is or isn’t,” says Preston Burton, a former prosecutor and partner at D.C.-based Orrick, Herrington & Sutcliffe, which is not involved in the case. Plea deals based on cooperation usually make that requirement explicit, but sometimes prosecutors want to keep it quiet, sources say. There was no mention of cooperation at the hearing, where Walton warned Torkelsen — who has three prior DUI arrests — not to get into trouble before his Jan. 27 sentencing. “Because if you did, I would not go along with this agreement, and we’d be talking about a lot more time.” The reminder that Torkelsen faces 30 years for the charges prompted tears from his two daughters.
Sarah Kelley can be contacted at [email protected]. Justin Scheck is a reporter for The Recorder , an ALM publication.

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