Prominent New York law firm Milberg Weiss Bershad & Schulman LLP was indicted last week, along with two if its partners, on criminal charges of paying illegal kickbacks to clients.
In a 20-count indictment by a federal grand jury in Los Angeles, federal prosecutors allege that Milberg Weiss and partners David Bershad and Steven Schulman paid at least $11.3 million over a 25-year period to clients. The indictment details a trio of paid plaintiffs who joined more than 150 class-action lawsuits and allegedly recruited friends and family members to serve in similar roles.
Bershad, 66, and Schulman, 54, both denied wrongdoing and said they would fight the charges, which include racketeering conspiracy, mail fraud, money laundering conspiracy and obstruction of justice.
According to the charges, prosecutors said that the firm also falsely accounted for the payments as referral fees or professional fees.
Shortly after the indictment was announced, the firm denied wrongdoing on a new Web site, www.milbergweissjustice.com.
"We will not allow the indictment today to deter us from our watchdog role," law firm co-founder Melvyn I. Weiss said, in a statement. "We will vigorously defend ourselves and our partners against these charges and we will be vindicated."
In a statement, the firm said that it was "particularly incensed that the prosecutors decided to indict the firm itself. The firm has 125 attorneys and another 240 employees who, even according to the government, did not participate in or know anything about the matters at issue. But they will inevitably suffer serious personal and professional harm as a result of the government's actions."
The indictment recalls the U.S. Justice Department's 2002 indictment of the Arthur Andersen. The Big Five accounting firm eventually went out of business, although its conviction was overturned by the Supreme Court in 2005.
The nation's leading class-action securities law firm, Milberg Weiss has helped investors recover more than $45 billion in corporate fraud cases. The indictment is the result of a seven-year investigation -- the lawsuits cited in the case span more than 20 years and generated approximately $216 million in legal fees for the firm.
Previously on WebCPA:
KPMG Makes Progress on Shelter Lawsuit (April 28, 2006)
Milberg Weiss Implicated in Kickback Case (June 28, 2005)
Industry Leaders: Melvyn I. Weiss (April 7, 2005)
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