Milberg Weiss fraud case may grow
Federal prosecutors said Monday that they might expand their ongoing fraud investigation of class action law firm Milberg Weiss Bershad & Schulman.
The case may include “new crimes” that could involve the firm’s use of expert witnesses in hundreds of cases, prosecutors said. Government lawyers didn’t say what those crimes might be but a Milberg attorney said they might involve fraudulent billing.
With the judge pressuring prosecutors to wrap up their seven-year probe, Assistant U.S. Atty. Douglas Axel said no new defendants were expected to be added to the case.
The disclosures appear in documents prosecutors filed under seal with the court that were outlined during a lengthy trial-setting conference before U.S. District Judge John F. Walter in Los Angeles. The judge set a trial date of Jan. 8, 2008.
In May, government lawyers charged New York-based Milberg Weiss and two former partners with paying illegal kickbacks of at least $11.3 million over 25 years to clients who agreed to act as plaintiffs. The firm hid the payments by making them in cash or through intermediary law firms, the indictment said.
Founding partner Melvyn Weiss has denounced the indictment as “unjust” and “unprecedented” and vowed to vigorously defend the firm. Steven Schulman and David Bershad have pleaded not guilty.
Beginning in the 1980s, Milberg Weiss pioneered large-scale federal class actions, netting $45 billion in settlements on behalf of investors and consumers in fraud suits against Lincoln Savings & Loan, WorldCom Inc., Enron Corp. and a roster of other major corporations.
The May indictment caused the firm to shutter two of its four offices in the wake of attorney defections. Other plaintiffs’ firms have mounted legal challenges to Milberg’s status as lead counsel in ongoing class actions.
The charges also triggered persistent speculation that additional attorneys and others would be accused, speculation that Axel appeared to put to rest Monday.
New charges, if filed, could “alter the nature of the allegations” against the firm, Axel said. The move may be an effort by prosecutors to improve the chances for conviction in what has become a complex and wide-ranging case.
The government also indicated that possible new charges could center on allegedly false invoices submitted by expert witnesses for work that was not performed, said William Taylor III, a lawyer for Milberg Weiss.
Those allegations may resonate more with potential jurors.
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