Original defendant pleads guilty in Milberg case

LOS ANGELES (Reuters) - An elderly California man who acted as a plaintiff in Milberg Weiss LLP class action lawsuits spanning two decades pleaded guilty on Thursday to three charges stemming from a federal probe into a secret kickback scheme by the law firm.

At a hearing in Los Angeles, Seymour Lazar, a Palm Springs investor who along with family members acted as a plaintiff in numerous Milberg Weiss lawsuits against corporations, agreed to forfeit $1.5 million and pay a fine of up to $600,000 as part of a plea agreement.

Lazar pleaded guilty to perjury, making false statements on a tax return, and obstructing a grand jury investigation by ordering his accountant to destroy records he knew would be relevant to the investigation.

Prosecutors recommended that Lazar be sentenced to home detention and probation rather than a federal prison term of up to 18 years because he is 80 years old and in poor health.

U.S. District Judge John Walter set sentencing for January 28.

Outside court, Lazar's attorney, Thomas Bienert, said his frail client was "extremely glad to have this behind him."

"He does take full responsibility for his actions but because of his age and condition his ability to address these issues was diminished," Bienert said.

Lazar became the seventh defendant in the seven-year probe to plead guilty in connection with the scheme by Milberg partners to pay secret kickbacks to clients with large stock portfolios who agreed to let the firm name them as plaintiffs in its class action lawsuits.

The arrangement often allowed Milberg Weiss to be first to file its lawsuits and to have an edge over other firms in obtaining lead counsel status and higher legal fees.

Assistant U.S. Attorney Richard Robinson told the court that the government was prepared to try Lazar for arranging with Milberg co-founder Melvyn Weiss and partner David Bershad to receive a 10 percent cut of the firm's legal fees in cases in which he or family members served as plaintiffs.

Lazar admitted in court to funneling those funds, which prosecutors said totaled $2.4 million between 1984 and 2001, through third-party law firms. The funds were generally disguised as referral fees.

Prosecutors have said they were in serious negotiations with attorney Paul Selzer, who is accused of funneling Milberg payments to Lazar. Lazar and Selzer were the first two defendants indicted by a Los Angeles grand jury in June of 2005.

Three former Milberg Weiss partners, including ex-senior partner Bill Lerach, two former clients and an outside attorney have pleaded guilty or agreed to plead guilty in the case.

Trial is set for August of 2008 for the remaining defendants, Weiss, Selzer and the firm itself.