[MSN] US. Ex-law partner to plead guilty to kickback scheme

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Ex-law partner to plead guilty to kickback scheme

By Bloomberg News  |  July 10, 2007

LOS ANGELES -- Milberg Weiss ex-partner David Bershad agreed to plead guilty to charges related to a scheme to pay illegal kickbacks to plaintiffs in securities lawsuits, federal prosecutors said.

Bershad, 67, will plead guilty to one count of conspiracy, the US attorney's office in Los Angeles said yesterday . He'll forfeit $7.75 million, pay a $250,000 fine, and cooperate with the investigation, according to the plea deal. The conspiracy charge carries a maximum prison sentence of five years.

For more than seven years, prosecutors have been probing whether Milberg Weiss, which has recovered more than $45 billion for investors in securities-fraud litigation, paid kickbacks to clients in exchange for them signing on to lawsuits. Bershad's agreement may bring the government closer to charging other lawyers from the firm led by securities litigator Melvyn Weiss.

"This will shake up the investigation," said Laurie Levenson, a professor at Loyola Law School in Los Angeles and a former federal prosecutor. Bershad "certainly is an insider and he may be exactly what the prosecution needs."

Milberg Weiss "terminated" its relationship with Bershad, who had been on leave, according to a statement yesterday by firm spokesman Jeff Ingram. Bershad was indicted last year by a Los Angeles grand jury with ex-partner Steven Schulman and the law firm for making "secret and illegal payments" in cases for which the firm was paid $216 million.

The case is scheduled for trial in January in Los Angeles.

"I'm not going to say anything," Bershad said when asked about the plea deal.

The law firm and Schulman, 56, who quit in December, have denied the allegations. Weiss and William Lerach, a former partner who left in 2004 to form a San Diego law firm, rejected plea agreements that would have required they serve as much as four years in prison, according to people familiar with the case. Lerach will step down as head of his own firm, Lerach Coughlin Stoia Geller Rudman & Robbins, within 60 days, a person familiar with his plans said.

Weiss and Lerach haven't been indicted.

According to the indictment, between 1983 and 2005, Bershad owned between 10 percent and 18 percent of the firm and his share of Milberg Weiss's profits totaled approximately $160.9 million.

The government claimed the firm, by way of an intermediary, sent payments to plaintiffs including Steven Cooperman, a former Beverly Hills eye surgeon who first informed investigators of the alleged kickback scheme in exchange for leniency in a faked art-theft case.

Bershad's lawyer, Robert Luskin, didn't return a call.

Bershad is the fourth individual to strike a plea deal in the probe. In January, Cooperman agreed to plead guilty to taking more than $6.4 million in secret payments from Milberg on securities cases.

In April 2006, Howard Vogel, a retired mortgage broker who served as a plaintiff in Milberg securities-fraud cases filed in Delaware, agreed to plead guilty to accepting $1.1 million in payments. Also last year, a Los Angeles lawyer for Cooperman pleaded guilty to helping funnel Milberg payments to his client. 

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