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The gray-haired man in the black robe huffed. And he puffed. But in the end, Los Angeles federal judge John Walter didn’t blow up William Lerach’s plea deal. Walter did, however, sentence the former securities class action king Monday to two years in jail � the highest penalty allowed under Lerach’s agreement with the government. The conspiracy at Lerach’s former firm, Milberg Weiss, to kick back fees to class action name plaintiffs � and the lies told in court to cover it up � deprived other law firms “who played by the rules” a fair shot at lead counsel in securities cases, Walter said. Indeed, the lies formed the very bedrock of Milberg Weiss’s business model, allowing it to prosper and collect millions in fees over the years, the judge said, all based on falsely earned credibility. Such conduct stands in stark contrast to the generous and bright lawyer described in 159 letters submitted to the court (.pdf) on Lerach’s behalf, the judge said. “With all of his intelligence, I cannot imagine how Mr. Lerach lost his moral compass to become a key member of the conspiracy,” Walter said. Lerach, appearing in a black suit and a subdued blue tie that matched his tone, uttered just a few sentences to Walker, punctuated with pauses just long enough for the row of reporters to take down every word. “I pled guilty in this case because I was guilty. I knew what I was doing was wrong,” he said, halting. “It was, as they say, felony stupid.” Lerach apologized to his family, his former law firm, “and to the legal system I’ve abused.” He added: “The conduct was completely unacceptable. I guess all I can hope is that you won’t find it completely unforgivable.” Lerach, 61, pleaded guilty in September to conspiracy in connection with kickbacks paid to Daniel Cooperman, a former Beverly Hills doctor who fingered Lerach in exchange for leniency in an unrelated art fraud prosecution. The government indicted Lerach’s former firm, Milberg Weiss, in 2006, along with partners David Bershad and Steven Schulman. The indictments capped a seven-year investigation. Both Bershad and Schulman have pleaded guilty and agreed to cooperate. They await sentencing, which is scheduled for June. Melvyn Weiss, meanwhile, has pleaded not guilty and is currently scheduled for an August trial. Some defense lawyers involved in the case said before Lerach’s sentencing that if Walter took a harsh posture toward Lerach, it might make Weiss, 72, more likely to take his chances with a jury, figuring that the prospect of leniency before Walter would not be great. Given Weiss’ age, though, a conviction at trial could effectively mean a life sentence. Weiss’ lawyer, Benjamin Brafman, declined to comment. Other name plaintiffs involved in the scheme, Howard Vogel and Seymour Lazar, have already been sentenced. On Monday, Judge Walter did not seem in a forgiving mood. Walter told the full, but not packed, courtroom that but for the plea agreement, he would have sentenced Lerach to a prison term “substantially in excess” of 24 months. The government had asked for 24 months, while Lerach sought six months in jail and six months home confinement. Before ultimately accepting the deal, Walter interrogated federal prosecutors about their reasons for entering into it. This created a window into the negotiations between the government and Lerach’s lawyers, John Keker and Elliott Peters of Keker & Van Nest. Assistant U.S. Attorney Robert McGahan noted that Lerach came to the government to discuss a plea before Lerach had been notified he would be indicted. Jail time was on the table from the very start of negotiations, McGahan said. The prosecutor at one point described Lerach as a “volunteer” for entering into talks with the government. That set Walter off. “Mr. Lerach certainly was not a volunteer in terms of Mr. Lerach calling the government, knocking on their door and saying, ‘Here I am,’” the judge said. Walter noted that Lerach had been under investigation for years, undermining any claim that he suddenly “saw the light.” “That’s just not factually true,” Walter said. “Being a former federal prosecutor, I know that didn’t happen.” At that point McGahan expanded his answer, saying that although the government was confident in its analysis that the statute of limitations would not be an impediment to prosecuting Lerach, it was still a risk. On the defense side, Keker said he told the government in negotiations that Cooperman was a “defense lawyer’s dream” because of all of his shady behavior, and so would not be a credible witness. But Keker also noted that taking the case to a jury would have carried a big risk for Lerach as well, given the huge jail sentence that could follow a conviction.
Probing the Milberg Weiss Probe Federal prosecutors have it in for the ailing class action leviathan. Follow our complete coverage of the kickback investigation.

Ultimately, Walter said he respected the prosecutors and defense lawyers on the case, and that they were “assisted by a well-respected member of the court” who was a former federal prosecutor. Walter did not identify the mediator, but a lawyer familiar with the case said he believed it was Central District Judge A. Howard Matz, who had already presided over discovery issues in the Milberg Weiss prosecution. “I have a great deal of respect for my colleague’s judgment,” Walter said. Moreover, “judges should not intrude on charging decisions of prosecutors,” he added. Lerach will also be on supervised release for two years, pay a $250,000 fine, and disgorge nearly $8 million in fees. He also must complete 1,000 hours of community service. In 2004 Milberg Weiss Bershad Hynes & Lerach split into two firms: one then known as Lerach Coughlin Stoia Geller Rudman & Robbins in San Diego, and Milberg Weiss Bershad & Schulman in New York.

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