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Los Angeles insurance lawyer Richard Purtich’s specialty was bad faith. L.A. federal prosecutors say that’s not the case in a plea deal in which the lawyer has agreed to cooperate with the prosecution of securities class action firm Milberg Weiss Bershad & Schulman. In exchange for his cooperation, Purtich � despite the government’s contention that he faced several other types of criminal exposure � admitted to one tax-related felony charge that could allow him to avoid disbarment. In a plea agreement filed Monday, Purtich admits to taking payments from Milberg Weiss and passing them on to Steven Cooperman � the L.A. ophthalmologist and lead client in several Milberg Weiss securities class actions. In court papers, prosecutors say Purtich passed more than $3.5 million of Milberg fees on to Cooperman between 1992 and 1996. But he pleaded guilty only to receiving just under $900,000 in Cooperman income from Milberg that he did not report to the IRS. The Milberg investigation began in 1999, when Cooperman � attempting to lessen a prison sentence for insurance fraud � told prosecutors that he received kickbacks from Milberg Weiss. Complete coverage of the Milberg-Weiss investigation The case came to a head Thursday, when the firm and two of its name partners were indicted over an alleged scheme to funnel illegal kickbacks to lead plaintiffs. Since lead plaintiffs in class actions are required by law to have the same financial interests as the rest of the class, it is illegal for attorneys to pay a portion of their fees to clients. But because � prior to 1995 legislation � plaintiff lawyers stood to gain control of a case by being the first to file, there was an incentive to pay such kickbacks to keep potential plaintiffs on hand. Purtich is one of a handful of lawyers accused of passing such payments from Milberg on to clients. Investigation of former Milberg star partners William Lerach and Melvyn Weiss continues. Papers filed with the Purtich plea deal suggest the lawyer may have faced several types of criminal exposure from his relationship with Cooperman. Most significantly, Purtich admits to accepting and passing to Cooperman some of the attorney’s fees from Milberg class action settlements. The plea deal also says the Los Angeles U.S. attorney agrees “Not to prosecute defendant for any violation of federal criminal law arising out of defendant’s 1999 grand jury testimony in connection with the investigation of Cooperman.” In 1999, Cooperman was convicted of faking the theft of a Picasso and a Monet he owned. Purtich represented Cooperman in a related bad-faith insurance case and was apparently interviewed by a grand jury. Purtich’s lawyer, William Genego, said Purtich instructed him not to comment. Admitting to lying before a grand jury would probably have cost Purtich his bar card because it’s a crime of moral turpitude, said Doron Weinberg, a partner at Weinberg & Wilder in San Francisco who represents lawyers accused of misconduct. But, Weinberg said, the plea to a charge of “corrupt endeavor to obstruct due administration of the internal revenue code” leaves room for Purtich to keep his ability to practice, since it doesn’t clearly involve moral turpitude. “The charge itself appears to be ambiguous,” Weinberg said. In his plea, Purtich admits to passing money from Milberg to Cooperman, either directly or to cover part of the $4.7 million in legal fees that Cooperman owed Purtich. In papers filed in the indictment, prosecutors say Purtich and Cooperman dealt with David Bershad, one of the Milberg partners, and that Purtich overheard incriminating conversations between Cooperman and either Bershad or a Milberg lawyer identified as “Partner B” � Lerach, say sources familiar with the Milberg case. In addition to representing Cooperman, Purtich was the lawyer for Rex DeGeorge, one of California’s most notorious insurance fraudsters. The former Beverly Hills lawyer was convicted in 2002 of artificially inflating the value of his yacht before sinking it off the coast of Italy and blaming Russian pirates.

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