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It took six years and a detour through Beverly Hills, but on Friday, federal prosecutors in Los Angeles finally got their first guilty plea in the long-running investigation of the class action plaintiff firm Milberg Weiss Bershad & Schulman. And it looks to be a significant one: in saying that he and his family took nearly $2.5 million in illegal kickbacks from Milberg Weiss in exchange for serving as lead plaintiffs in several class actions, Howard Vogel fingered four partners at the New York firm and agreed to cooperate in the ongoing investigation. Vogel and Milberg � referred to as “the New York Law Firm” � “had an established pattern and practice that the New York Law Firm would secretly pay defendant Vogel a percentage of the attorneys’ fees that the New York Law Firm obtained in class actions and shareholder derivative actions,” prosecutors alleged in a document charging Vogel with a single count of making false statements in federal court. Plea documents also allege that a high-profile Denver criminal defense attorney and a small New York real estate firm passed Vogel payments from Milberg in cases stretching from 1991 to 2005. While no lawyers are named in the indictment, sources familiar with the case said the three Milberg partners with whom Vogel says he dealt are David Bershad, Steven Schulman and Robert Sugarman. Bershad and Schulman have been in the sights of L.A. federal prosecutors for several months, and lawyers close to the case said the main sticking point in their indictment has been prosecutors’ delay in deciding whether to indict their firm as well. Sugarman, who left Milberg in 1999, has been cooperating with prosecutors for some time, Edward Hayes, Schulman’s former lawyer, said last month. Hayes said Friday that he is no longer representing Schulman, and Schulman’s current lawyer, New Jersey-based Herbert Stern, did not respond to a phone call by press time. Sugarman couldn’t be reached by press time, and Andrew Lawler, a lawyer for Bershad, did not return calls seeking comment. The plea papers allege that in 1991, Vogel approached the firm hoping to file a securities class action, and to share in the profits if it was successful. Sugarman � referred to as “Partner E” � “confirmed that Vogel would be paid,” the papers allege. But “it was explained to Vogel that since he was a plaintiff, a possible conflict of interest arose from his receipt of payment from the New York Law Firm,” the documents allege. So Sugarman and Bershad � identified as “Partner C” � told him “that he needed to find a lawyer through whom the New York Law Firm would pay Vogel. Partner C and Partner E explained that this was an established practice of the New York Law Firm.” It would be illegal for a client to accept such fees because lead plaintiffs must represent other class members, and are required to sign papers saying their interests are in line with the rest of the class. Vogel’s plea relates to such a document. The lawyer Vogel found � identified in the indictment as “Intermediary A” � was Gary Lozow, said lawyers familiar with the case. Lozow is a well-known Denver lawyer who has recently represented a former Qwest Communications executive who pleaded guilty to wire fraud, in addition to the family of Dylan Klebold, one of two teenagers who killed 13 people in the 1999 Columbine High School shootings. Reached last month, Lozow would not comment on the Milberg case. Nor would Lawrence Drath, a partner at Holm & Drath, a small New York real estate firm identified as “Intermediary B” in court papers, beyond saying that he is representing his firm in the case. The government alleged that Holm & Drath accepted a single payment of about $44,000 from Milberg in 1997 and passed it on to Vogel, a Florida real estate developer. In another case, against Mercie Corp. in 1996, prosecutors allege Sugarman “handed Vogel an envelope constituting Vogel’s share of the attorneys’ fees. Partner E explained that the amount of cash being paid to Vogel was less than Vogel’s usual 14 percent share of attorneys’ fees because Vogel was being paid in cash, Vogel would not have to report the cash on his tax returns, and there were other plaintiffs in Mercer with respect to whom the New York Law Firm had financial obligations.” The issue of Vogel’s percentage came up again in 2003, the papers allege, when Lozow went to New York to discuss the matter with Partner A. Sources close to the case say Partner A is Melvyn Weiss, Milberg’s lead partner. Weiss’ attorney, Benjamin Brafman, didn’t return a phone call late Friday. But Weiss does not appear to be facing imminent indictment, and the Vogel plea papers say only that he discussed a fee to be paid to Lozow. In 2003, the papers allege, Vogel wanted to negotiate payment in a case where his stepson was lead plaintiff. Schulman, the documents allege, “instructed Vogel to have an intermediary lawyer contact another partner.” That partner � Partner A � is Weiss, said sources close to the case. He “refused to engage in substantive discussions with Vogel Intermediary A” � Lozow � “over the phone, but instead insisted on meeting with Vogel Intermediary A in person in New York.” Lozow allegedly met with Weiss that November, and Weiss “reaffirmed that the New York Law Firm would pay Vogel a percentage of its attorneys’ fees” in two cases. The scheme outlined in the Vogel plea is not new; in fact, it first came up in 2000 when a Beverly Hills eye doctor named Steven Cooperman, facing a lengthy prison sentence for insurance fraud, told prosecutors that as a former Milberg lead plaintiff, he accepted kickbacks from the firm paid via his personal attorney. The information provided by Cooperman and his circle is too old to be of much use to prosecutors, say sources familiar with the investigation. And Cooperman’s testimony is looked at with particular skepticism because his history as a fraudster won’t go over well with a jury. Cooperman’s allegations spawned a lengthy probe into some of the less savory elements of tony Brentwood and Beverly Hills, a circle of millionaires with a tenuous hold on their wealth who served repeatedly as lead plaintiffs. They include Cooperman, the pop psychologist Melvyn Kinder � who has immunity from prosecution � and Ron Fischman, a doctor who was O.J. Simpson’s next-door neighbor and an oft-mentioned figure in the civil litigation surrounding the death of Simpson’s wife. Fischman’s lawyer, Ronald Nessim, did not return calls by press time. Another Milberg client, Seymour Lazar, was indicted last year with his attorney, Paul Selzer, on similar charges. Lazar and Selzer have so far refused to cooperate, and are slated for trial this fall. Lawyers close to the case expect indictments of Bershad, Schulman and likely the Milberg Weiss firm to follow in coming weeks. But William Lerach � the star partner who split away to start his own firm, Lerach Coughlin Stoia Geller Rudman & Robbins � seems to be outside the prosecutors’ sights for the foreseeable future, they said.

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