Tag: William Lerach

Invent a Confidential Witness and Sue? Judge Says Not This Time

The Wall Street Journal’s weekend edition (best newspaper read there is) ran a lead editorial praising Chicago-based U.S. District Court Judge Suzanne Conlon for dismissing a securities class action suit against Boeing by the city of Livonia’s retirement system, calling her ruling “the biggest plaintiff smackdown of the year.” As summarized in the editorial, “Boeing Beats the Trial Bar,”[subscription] the plaintiffs failed to survive Boeing’s original motion to dismiss for lack of sufficiently specific allegations of fraud or fraudulent intent, but the judge allowed them to refile.

Presto, they did. In their amended complaint, the plaintiffs claimed they had a confidential source, a former Boeing chief engineer, who had worked directly with the Dreamliner and had seen damning emails and files related to the flight delay.

On that basis, the judge allowed the case to go forward. Only problem, the plaintiffs had no such thing. When the motion to dismiss was denied, the plaintiffs revealed the source as Bishnujee Singh. Not only had the plaintiffs falsely identified him as a senior engineer with access to 787 records, he didn’t even work for Boeing. “In reality,” the judge wrote, “he was employed as a line engineer by an outside contractor doing work at Boeing three or four months after the events in issue.”

U.S. District Court Judge Suzanne Conlon’s order and memorandum in City of Livonia Employees’ Retirement System v. Boeing Company is available here. The shakedown suit came from the schemers at Robbins Geller, a successor law firm to Coughlin Stoia of Bill Lerach infamy.

More …

P.S. Not only did the judge get the ruling right, she also framed the case in a creative way. (continue reading…)

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Out of Prison, Bill Lerach Now Hangs Out with the ‘Progressives’

William Lerach, genius promoter of extortionate class-action litigation in the United States, spent two years in federal prison after he pleaded guilty to one felony count of conspiracy to obstruct justice and making false declarations under oath.

Now that he’s out of prison, Lerach seems to be trying to refurbish his reputation by casting his war against Wall Street as a progressive act. He speaks today at America’s Future Now! conference, a gathering of left-leaning activists organized by the Campaign for America’s Future.

From the agenda:

We know that self-styled progressives are all in favor of the redistribution of wealth, but do they really want to affiliate themselves with the class-action lawyer model of that redistribution?

From the list of bios of conference speakers :

William S. Lerach – lecturer, writer and investor advocate.

For decades, Mr. Lerach was one of the leading securities lawyers in the United States. He headed up the prosecution of hundreds of securities class and stockholder derivative actions which resulted in billions of dollars of recoveries for defrauded shareholders from Wall Street banks, big accounting firms, corporations and insurance companies. Mr. Lerach has been the subject of considerable media attention and is a frequent commentator on economic and political matters and securities and corporate law. His career was recently chronicled in the best-selling book “Circle of Greed.”

The subject of considerable media attention! How’s that for spin?

A reminder of his guilty plea and conspiratorial activities as a partner with Milberg Weiss, from the U.S. Attorney’s office a Sept. 18, 2007, news release, “WILLIAM LERACH, FORMER NAME PARTNER IN MILBERG WEISS, TO PLEAD GUILTY TO CONSPIRACY TO OBSTRUCT JUSTICE AND MAKE FALSE STATEMENTS TO FEDERAL JUDGES ACROSS U.S.“:

William S. Lerach, formerly a name partner in the law firm now known as Milberg Weiss, has agreed to plead guilty to a federal conspiracy charge and acknowledge that he and others agreed to conceal from judges in federal courts Milberg Weiss’ secret payment arrangements with named plaintiffs in class-action lawsuits.

Lerach, a 61-year-old resident of Rancho Santa Fe, California, was charged in a criminal information filed this morning in United States District Court with conspiring to obstruct justice and to make false statements under oath. In a plea agreement also filed this morning, Lerach agreed to plead guilty to the conspiracy charge, to forfeit $7.75 million to the government, to pay a $250,000 fine, and to accept a sentence ranging from one year to two years in federal prison.

The case against Lerach is part of an ongoing investigation that last year led to the indictment of Milberg Weiss and two of its name partners for allegedly participating in a scheme in which several individuals were paid millions of dollars in secret kickbacks in exchange for serving as named plaintiffs in more than 150 class-action and shareholder derivative-action lawsuits. The indictment alleges that the firm received well over $200 million in attorneys’ fees from these lawsuits over the past 20 years.

Here’s California Magazine’s article, “The Fall of Bill Lerach.” Earlier Shopfloor post on the America’s Future Now! conference, sort of a CPAC for the Left.

UPDATE: Ira Stoll reported this news first at Future of Capitalism.

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Congressional Oversight: Not for the Trial Bar

Congress is drawing to a close, and it’s doubtful many committee hearings will be called after Friday. And we’ve checked the hearing schedule for the week for the House Judiciary Committee, House Oversight and Government Reform, and the Senate Judiciary Committee.

Quite a few hearings on an array of topics ranging from human rights and minerals extraction in Africa, the visa waiver program, a contempt of Congress resolution against Attorney General Mukasey, and how information policy affects “competitive viability” in minority contracting, etc.

But no hearings on trial lawyers.

Last October we commented in a post, “We Await the Congressional Oversight Hearings, after the former Milberg Weiss legal titan/criminal William Lerach pleaded guilty to paying kickbacks to plaintiffs who filed class-action lawsuits against American companies:

It is time for high-profile investigations and oversight hearings from Congress into the lawsuit industry, demanding accountability from these spoilers. Let’s investigate their impact on the economy, the abusive model that Milberg-Weiss established, and the harm their predations do to the children. Make the witnesses take the Fifth, if it comes to that. At the very least, the public shaming will serve an educational and deterrent effect.What a tremendous opportunity for the chairmen of the respective committees. Surely oversight hearings are just around the corner.

This call for accountability was shared by The Examiner’s editorial page — “Who’s watching the trial lawyers?“, and later, “Milberg settlement should be only the beginning” — and the American Tort Reform Association, “Why Won’t Congress Scrutinize ‘Criminal Lawyers’?

House Minority Leader John Boehner and Rep. Lamar Smith (R-TX) also wrote House Judiciary Chairman John Conyers, asking him to call an oversight hearing on Milberg Weiss for May 19th, the day Lerach was to report to prison. Since then, Mississippi legal eminence Richard “Dickie” Scruggs has pleaded guilty in an unrelated judicial bribery scheme, heading off to federal prison as well.

A whole year gone with congressional committees holding no hearings, demanding no explanations, publicizing no wrongdoings committed in some of the decade’s highest profile criminal cases involving the legal profession.

Accountability to the public? Not in this case, not for the nation’s most prominent trial lawyers, and apparently not for this Congress either.

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The First Presidential Debate and Legal Reform

The first presidential debate takes place Friday in Oxford, Mississippi.

Oxford…Oxford…Oxford…Now whom is it we associate, lately, with Oxford, Mississippi?

Right. It’s the home of Richard “Dickie” Scruggs, the giant among trial lawyers. Or at least it was until July.

What a perfect venue to debate the merits of tort reform and the economic damages caused by the plaintiff’s bar, kicked off with a discussion of the criminal excesses of Milberg Weiss, Bill Lerach, and Dickie Scruggs. Oxford would be a great setting to detail the differences between the presidential candidates on the causes and cures for the nation’s tort burden, one that costs a family of four nearly $9,000 a year. (From the Pacific Research Institute’s “Jackpot Justice” study.) 

The “Mississippi Miracle,” i.e., reforms of the state’s once egregious legal climate, would also be a fruitful  area to explore.

Unfortunately, the emphasis of this first debate between Senator McCain and Senator Obama is foreign policy, and it would abuse the format to argue the predations of the trial bar. It’s not completely off topic: U.S. attorneys looking for a big payday have supported an anti-American government in Equador and damaged  U.S.-Equador relations through abusive litigation against Chevron, and U.S. foreign policy has been undermined by suits against U.S. companies that did legitimate business in apartheid-era South Africa. But with Iraq and Afghanistan and trade and Russia’s international aggressiveness all making headlines, it’s unlikely moderators will ask questions drawing from the crimes of Oxford’s Dickie Scruggs.

However, domestic policy is on the table during the October 15th debate at Hofstra. The public should demand that candidates address tort reform as one of the evening’s issues.

 

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Class Action Lawsuits and Bill Lerach, a Debriefing

The Examiner newspaper’s new Sunday edition has a package on William Lerach, the trial lawyer extraordinaire now imprisoned for the Milberg Weiss class-action fraud.

Perhaps the most important story is the one that makes it clear that class-action lawsuits — in this case, ginned-up, conspiratorial class-action lawsuits — impose major costs on businesses and investors.

From Who lost when Lerach won?

One of Lerach’s biggest paydays will come as he sits in the federal penitentiary when he collects his ample portion of the $688 million in attorneys’ fees in $7.2 billion settlements with banks he sued in the Enron scandal.

But Texas Attorney General Greg Abbott, who earlier had supported Lerach’s legal claims in the Enron cases, has since challenged the $688 million, arguing that such generosity would be a “windfall” for Lerach and other lawyers.

The Enron settlement demonstrates how class-action securities plaintiffs lawyers can walk away with millions, while the shareholders they represent get only a few dollars per share they own.

Lerach, for example, won a $5 million settlement against Seagate Technologies. The $5 million was split among 17,000 Seagate shareholders, or about $294 per shareholder, compared with Lerach’s fees of approximately $1.5 million.

 

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Issues Congress Can Examine in Trial Lawyer Hearings

Another good editorial in The Examiner calling for congressional hearings into the predations of the trial bar, focusing on but not limited to the crimes of Milberg Weiss. One issue that Congress could consider, they suggest in the editorial, “Milberg settlement should only be the beginning“:

One former Milberg Weiss partner who left the firm after the firm’s federal indictment in 2007 has sued disgraced former partners Lerach, Melvyn Weiss and Steven Schulman. What about the defendants in the 165 cases prosecutors identified as involving Milberg Weiss corruption? Do those defendants now have grounds for damage suits against the firm and its former partners?

Looks like it. Or at least somebody is suing. From the Wall Street Journal’s Law Blog:

Earlier this week, two former Milberg antitrust partners, Douglas Richards and Michael Buchman, filed suits against Milberg founder Mel Weiss and the three other former firm leaders — Bill Lerach, David Bershad and Steven Schulman — recently convicted of participating in a scheme that paid kickbacks to class-action plaintiffs, claiming their illegal conduct constituted a breach of their fiduciary duty to their fellow Milberg partners. Click here for an NYLJ story from Tony Lin; here for Richards’s suit; and here for Buchman’s suit. In an email to the NYLJ, Richards, one of the two ex-partners to sue, wrote: “Private litigation by those injured by the misconduct is just beginning.”

Reap, sow, live sword, die.

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New York Times Wakes Up on Milberg

When Mel Weiss was sentenced to 30 months in prison for his decades-long conspiracy to corrupt the judicial system with manufactured class-action lawsuits, The New York Times buried the story on page C3. As Walter Olson of the Manhattan Institute observed at Point of Law.com:

The problem is not with the story itself, by reporter Jonathan Glater, or its related item on the Times’s DealBook, both of which are fine. But in relegating the coverage to a snoozy inglenook deep inside the paper the Times’ editors again reinforce the impression — as we noted two years ago — that they view the giant Milberg scandal as an embarrassment they wish would just go away. Nor are we going to hold our breath waiting for the editorial — any more than for the (still-nonexistent) one about the Scruggs scandal. More: some funny observations from Larry Ribstein.

The power of shaming! Today the Times runs the news about the Milberg law firm’s settlement with prosecutors on page A1. The story, “Big Penalty Set for Law Firm, But Not a Trial“ is a basic but fair-enough recap of the issues in the case and the repercussions for the legal profession and the economy. And there’s this nice paragraph:

Now increasingly conservative courts impose tougher standards on shareholder claims. The reputation of the lawyers who file such suits has suffered. The image of Mr. Lerach brandishing shredded documents from Enron, taking a stand against corporate corruption, has been eclipsed by sordid revelations of these lawyers’ conspiracies to fool the courts and by confessions of criminal misconduct.

The Times also notes the call by House Republican Leader John Boehner for congressional investigations. Good idea, we think.

UPDATE (11:20 a.m.): More commentary from Walter Olson at Point of Law and Ted Frank at Overlawyered.

 

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Feds Settle With Milberg, Now Let’s Have the Hearings

So the decks are cleared, mostly. Federal prosecutors have reached an agreement with Milberg LLC, the New York-based law firm that served as the base of operations for Mel Weiss, Bill Lerach and the others conspirators who dreamed up lucrative class-action lawsuits against companies. From AP:

LOS ANGELES (AP) — The Milberg law firm will pay $75 million to settle a federal kickback case involving class-action lawsuits against some of the nation’s biggest corporations.

The New York firm said in a prepared statement Monday the deal called for the government to dismiss all charges against it.

The U.S. attorney’s office in Los Angeles, which is handling the case, declined immediate comment.

The firm was accused of making $250 million over two decades by filing legal actions on behalf of professional plaintiffs who received $11.3 million in kickbacks.

Milberg’s statement is available here.

Sanford Dumain, a member of the firm’s Executive Committee, stated: “We are pleased that the government specifically recognizes that none of the lawyers now at the firm was involved in any of the misconduct, and that in fact our former partners who were prosecuted were deliberately concealing their illegal activities from us. This favorable outcome now allows us to put a painful chapter behind us so that we can resume building one of the best known plaintiffs firms in the country.”

“This settlement enables us to move forward with our continuing representation of investors and consumers in class actions and other important lawsuits, and allows us to capitalize on the tremendous talents of the lawyers at the firm,” he continued.

Yes, the lawsuits continue, taking money out of the pockets of one group of shareholders and putting it in the pockets of others, with the attorneys taking their cut off the top. But that’s all legal, as far as it goes…

With Weiss sentenced and Lerach in prison, only a few of the lesser players remain to be sentenced. In short, guilt has been determined and the possibility of future incriminations rendered unlikely.

So freed from those encumbrances, now is the appropriate time for the Senate and House Judiciary Committees to undertake full-scale oversight hearings into the predations of the plaintiff’s bar, its abuse of the legal process and powerful political manipulations. Right?

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