The Feds Close in on a Toxic Factory

By July 21, 2005Briefly Legal

Here’s a story that’s largely been under the radar, in spite of some prominent mention in the Wall Street Journal front page article and editorial and story in Sunday’s New York Times. It involves some alleged funny business surrounding a factory that cranks out some of the most toxic stuff known to mankind, capable of choking entire businesses with one fell swoop. Yet you’ll never hear the environmentalists make so much as a peep, nor hear nary a word from organized labor. The factory is known as Milberg Weiss and what they manufacture are lawsuits, specifically class-action lawsuits. In the process, partners have made untold amounts of money, far surpassing the highest paid CEO that the press loves to crow about. In the process, these guys put no value back into the system.

As the Wall Street Journal first reported in a front page story a few weeks back, the Justice Department has indicted two California attorneys, charging them with conspiracy, fraud, money laundering, obstruction of justice – in short, everything but jaywalking. DOJ charges in the indictment that “a New York law firm” made illegal payments to these two lawyers for agreeing to serve as plaintiffs in class action cases. Paying plaintiffs merely to serve as plaintiffs is, shall we say, “frowned on,” as in “illegal.” One of the targets of the DOJ action, is Seymour Lazar. He and various family members served as named plaintiffs in more than 50 class action and shareholder derivative suits brought by Milberg, Weiss. Nobody has luck this rotten. For its part, Milberg, Weiss has admitted it is the “New York law firm alluded to in the DOJ indictments. At the moment, they are not indicted themselves, but it sure doesn’t look good for the boys down at the class action corral. The Journal followed this up with an excellent editorial last week titled, “The Trial Lawyer’s Enron.”

For too long this law firm and a handful of others have filed class action suits as a business model, in the process sucking billions of dollars of investment and wages from law-abiding companies and workers. It is the national scandal that no one likes to talk about. Bravo to the Justice Department for beginning to crack down on this long-running scam and to The Wall Street Journal for bringing it to light.

If Lou Dobbs is looking for a scandal that costs jobs, he oughta take a gander across town at Milberg, Weiss.