Class action king pleads guilty to racketeering
LOS ANGELES |
LOS ANGELES (Reuters) - Class-action lawsuit king Melvyn Weiss pleaded guilty on Wednesday to U.S. racketeering charges in connection with a scheme to pay kickbacks to plaintiffs, apologizing to his former law firm and saying he deeply regretted his conduct.
The Bronx-born Weiss, who pioneered high-stakes shareholder litigation in U.S. courts, pleaded guilty to a single count of racketeering conspiracy as part of an agreement with federal prosecutors.
As part of the plea deal the 72-year-old attorney, who landed some $1 billion in settlements for investors hurt by the Drexel Burnham Lambert junk bond scandal in the 1980s, faces between 18 and 33 months in federal prison at his June 2 sentencing.
He has also agreed to pay $10 million in fines and forfeiture.
"I deeply regret my conduct and apologize to all those who have been affected, including all of the wonderful and extremely talented lawyers and other employees of the Firm, none of whom had any involvement in any wrongdoing," Weiss said in a statement released after the plea hearing in Los Angeles.
Milberg Weiss, the New York law firm he co-founded and turned into the top U.S. shareholder firm, dropped his name in March after the plea deal was announced.
That agreement proposed a sentence and fines that are more onerous than for the other six other Milberg Weiss defendants who have pleaded guilty.
Weiss is the fourth lawyer from Milberg Weiss to plead guilty in what U.S. Attorney Thomas O'Brien called "a scheme based in greed (that) affected the integrity of the courts and the interests of an untold number of absent class members."
Weiss' plea follows that of his protege William Lerach, who pleaded guilty to a single count of conspiracy and was sentenced to two years in prison.
Milberg Weiss maintained a stable of clients with large stock portfolios who served or recruited family members or friends to serve as lead plaintiffs in its lawsuits in exchange for a share of the firm's legal fees.
The arrangement allowed Milberg Weiss to be first to file lawsuits and, before class action reforms stripped away the first-to-file advantage, to obtain lead counsel status and a larger share of fees.
The illegal kickbacks were paid to clients in cash, or through intermediary law firms, prosecutors said.
Three former Milberg Weiss clients also pleaded guilty in connection with the scheme, which prosecutors said stretched over 25 years and involved more than 225 lawsuits and more than $200 million in legal fees.
Weiss' former firm and outside attorney Paul Selzer, who is accused of funneling payments to clients, are the remaining defendants in the nearly 8-year-old case. Both have pleaded not guilty and are to go to trial in August.
(Editing by Richard Chang)
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