Melvyn Weiss pleads guilty to racketeering; will pay $10M fine
Melvyn Weiss, the co-founding partner of Milberg Weiss, has agreed to plead guilty to a federal racketeering conspiracy charge and pay nearly $10 million to avoid going to trial this August in the federal government's kickback case. Under a binding plea deal, Weiss could serve 18 to 33 months in prison, with the option of home or community confinement for no more than half the sentence.
By Amanda Bronstad / Staff reporter|March 20, 2008 at 12:00 AM|The original version of this story was published on The National Law Journal
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LOS ANGELES � Melvyn Weiss, the co-founding partner of Milberg Weiss, has agreed to plead guilty to a federal racketeering conspiracy charge and pay nearly $10 million to avoid going to trial this August in the federal government’s kickback case. Under a binding plea deal, Weiss could serve 18 to 33 months in prison, with the option of home or community confinement for no more than half the sentence. “I deeply regret my conduct and apologize to all those who have been affected, including all of the wonderful and extremely talented lawyers and other employees of the Firm, none of whom had any involvement in any wrongdoing,” said Weiss, in a statement released by his lawyer, Benjamin Brafman, of Brafman & Associates in New York. “I believe that it is very important to preserve this unique legal resource for the benefit of victims of wrongdoing affecting the masses, who historically have been under-served in so many ways.” The plea deal comes after several victories for federal prosecutors in the case, which alleges that Milberg Weiss and seven of its lawyers, including Weiss, generated more than $250 million in attorney fees by paying $11 million in illegal kickbacks to lead plaintiffs. In a ruling last month, U.S. District Judge John Walter, for the Central District of California, refused to grant four out of the five dismissal motions. A ruling on the fifth count of money laundering was set for March 31. One day after the judge’s ruling, a former expert witness for Milberg Weiss, John B. Torkelsen, agreed to plead guilty to perjury, admitting he lied to a federal court judge in a securities class action case about how he was getting paid. Earlier last month, former Milberg Weiss partner William S. Lerach was sentenced to 24 months in prison, the maximum allowable under a plea agreement reached last year with prosecutors. Under the deal, Lerach agreed to plead guilty to one count of conspiracy. “I pleaded guilty in this case because I was guilty,” Lerach said in court during the sentencing hearing. “I did not have the strength of character and the strength of will to resist what was going on at our firm.” Walter called Lerach’s conduct “one of the most serious crimes to come before the court.” Lerach, who has agreed to pay nearly $8 million as part of the plea deal, is scheduled too surrender on April 21. Two other former Milberg Weiss partners, David Bershad and Steven Schulman, have pleaded guilty in the case. They are expected to be sentenced later this year. As part of the plea deal, Weiss agreed to forfeit $9.75 million in ill-gotten gains, $5 million of which should be turned over within seven days of sentencing and the remaining within 180 days of sentencing. He also agreed to pay a $250,000 criminal charge. Under the deal, he would serve three years of supervised release following his sentence. Weiss admitted to being part of a 25-year criminal enterprise, which lasted until about 2005 and involved senior members of Milberg Weiss and others, often friends and relatives, who served as plaintiffs in lawsuits filed by the firm. As part of the conspiracy, Weiss admitted to lying to judges and secretly paying kickbacks to the plaintiffs in cash or through intermediary law firms. In response, prosecutors agreed to drop all charges. They also agreed not to prosecute Weiss over his political contributions, investments in the Acorn Technology Fund and activities relating to payments to a “Princeton Expert” who served in Milberg Weiss cases. Torkelsen is serving a prison sentence for lying to the Small Business Administration about this investment fund, Acorn Technology Fund. The statutory maximum sentence for racketeering conspiracy is 20 years in federal prison. Weiss is expected to enter his guilty plea on April 2. “It is important for the public and legal community to note that despite his plea, Mr. Weiss provided access to the Courts for millions of victims of corporate wrongdoing,” said Brafman said in a prepared statement. “Accordingly, despite his participation in the criminal conduct he has today acknowledged, I am nevertheless hopeful and confident that the Court will recognize Mel Weiss to be one of the true legal giants of his generation and a consummate humanitarian whose contributions to the Bar and the world community have been nothing short of spectacular.” A Milberg Weiss spokeswoman, Marina Ein, did not respond to a request for comment. Milberg Weiss, which has changed its name to Milberg, and Paul Selzer, an attorney for one of the lead plaintiffs, are the remaining defendants in the case.
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