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LOS ANGELES � A defense lawyer who helped craft a multimillion-dollar securities class action settlement in 2000 has raised questions about the validity of his opponent’s damages expert, John B. Torkelsen, who pleaded guilty to perjury last month in the federal government’s kickback case against Milberg Weiss. Martin Washton, of counsel at Los Angeles-based Towle, Denison, Smith & Tavera, who, while at Gibson, Dunn & Crutcher, settled a case that is now part of Torkelsen’s plea agreement, said he is reviewing options with his client in light of Torkelsen’s recent plea deal. “What they were doing was falsifying claims to reimbursement so as to further take money out of the settlement that then wasn’t available for distribution of the class,” he said. That behavior, he said, “calls into question whether or not their damages analysis was correct, since the damages analysis was performed by Torkelsen without disclosing that he was biased.” In the plea deal, prosecutors allege that the law firms that retained Torkelsen, primarily a “New York Law Firm,” told the court that Torkelsen was working as an independent expert, when, in fact, he was being paid on a contingency basis. The firms would hide his contingency status by requesting reimbursement for fees that were never paid to Torkelsen in order to make up for other cases in which he had not been paid. In Washton’s case, the “New York Law Firm” falsely told the court that it had paid Torkelsen $146,223.97 in expert fees, according to Torkelsen’s plea agreement. In re Stratosphere Corporation Securities Litigation, CV-S-9600708-PMP-(RLH) (D. Nev.). Washton, who represented the former owner of the Stratosphere hotel and casino in Las Vegas in that case, called the expert fees “a small amount,” compared to the settlement, which was about $10 million. He also acknowledged the limitations in vacating a settlement, and that re-opening the case would involve “a considerable amount of money,” but he left both options open. Torkelsen’s plea deal is part of an ongoing case in which prosecutors allege that Milberg Weiss and seven of its partners generated $250 million in attorney fees by paying kickbacks to name plaintiffs. Guy Iversen and Michael Schafler, federal public defenders in Los Angeles who represent Torkelsen, did not return calls for comment.

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