The recent indictment of two alleged participants in an illegal kickback scheme has added momentum to a three-year federal probe targeting the nation's top class-action law firm, according to legal observers.
Milberg Weiss Bershad & Schulman wasn't named in the charges unsealed June 23 against Seymour M. Lazar, a once-prominent entertainment lawyer from Palm Springs. But for many in the legal community, allegations detailed in the document make clear that the real targets are Milberg Weiss and former partner William S. Lerach, who heads a firm based in San Diego.
The 17-count indictment accused Lazar of receiving $2.4 million in "secret and illegal kickback payments" in exchange for serving -- or persuading his family members to serve -- as lead plaintiff in more than 50 class actions, most of them shareholder suits in the 1980s and 1990s. Also named as a defendant and co-conspirator was another lawyer, Paul T. Selzer, 64, who was accused of funneling the funds to Lazar.
Milberg Weiss has since confirmed that it is "the New York firm" accused throughout the document of participating in money laundering, tax evasion, conspiracy and mail fraud.
The firm has angrily denounced prosecutors, calling their allegations baseless and saying it has conducted itself properly. The class-action cases in which Lazar participated "resulted in many of the protections consumers enjoy today," the firm said.
A spokesman for Lerach's firm, Lerach Coughlin Stoia Geller Rudman & Robbins, declined to comment. Lawyers for Lazar and Selzer insist their clients have done nothing wrong.
The investigation began more than three years ago with information provided by Beverly Hills eye surgeon Steven G. Cooperman, who was lead plaintiff in many shareholder lawsuits Milberg Weiss filed. At the time, people close to the case said Cooperman tipped off authorities to get a more lenient sentence after he was convicted of staging the theft of a Picasso and Monet from his home to collect a multimillion-dollar insurance settlement. The investigation became public in 2002 but soon dropped out of public view.
"I had assumed that because nothing had happened for a couple of years ... they had lost confidence in Mr. Cooperman," said Columbia University law professor John Coffee, an expert in securities law. The June indictment, however, shows the case is "heating up."
