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London Evening Standard: Top class action lawyers to face fraud trial in US

Top class action lawyers to face fraud trial in US
Bill Condie
Evening Standard – London: KRTBN; May 19, 2006

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Class action legal firm Milberg Weiss Bershad & Schulman, which has sued some the biggest US and UK companies, has been indicted on fraud, perjury and bribery, and accused of paying kickbacks to people who served as professional plaintiffs.

Milberg Weiss maintained a stable of paid plaintiffs who agreed to be named in lawsuits in exchange for a cut of the legal fees, prosecutors say.

The firm and the plaintiffs perjured themselves in each case, swearing they had not received any payment to serve as plaintiff, it is alleged. Prosecutors say the scam has been going on for 20 years and more than $11 million (GBP5.8 million) has been paid to professional plaintiffs.

Milberg Weiss has a string of high-profile scalps on its belt including Shell, Vodafone and KPMG. By its own estimates it has won more than $45 billion from corporations.

In 2004 it paid out $30 billion in settlements to investors in class actions, including $24.5 million from Vodafone. Last August it secured a $90 million settlement for pension savers in UK oil giant Shell in the oil reserves scandal, and in October it won $225 million from KPMG and a US law firm over tax schemes.

Partners David Bershad and Steven Schulman are also named personally in the indictment in Los Angeles.

The New York firm was so eager to pursue actions it even set up a system under which as soon as the stock price of a company falls more than a certain percentage in one day, a class action suit is automatically filed.

But this lawsuit could bring Milberg Weiss's high-flying days to an end, forcing it to step down as lead lawyer in some cases.

Milberg Weiss and the two named partners described the indictment as “unjust”, and the firm said it would vigorously defend itself against the charges. It said it was “particularly incensed” that the government chose to indict the firm, which includes 125 attorneys among its 365 employees.

Milberg Weiss said six months of settlement talks fell apart over the government's demand that the firm waive its attorney-client privilege and falsely accuse its own partners of crimes to avoid indictment.

But US Attorney Debra Wong Yang said prosecutors only turned to the courts after Milberg refused to take responsibility for its “illegal actions”.

“This indictment alleges a wholesale violation of this responsibility to tell the truth and disclose relevant information to the court,” Yang said.

Prosecutors finally took action against Milberg Weiss after one plaintiff, Howard Vogel, agreed recently to plead guilty to charges relating to the alleged scam and co-operate with prosecutors as part of a plea agreement.

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