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Plea Deal Says Law Firm Paid Kickbacks

April 29, 2006|From Bloomberg News

A retired real estate mortgage broker has agreed to plead guilty to a criminal charge related to claims that he took more than $2.4 million in kickbacks from Milberg Weiss Bershad & Schulman, a New York-based law firm, to be a plaintiff in securities-fraud cases.

Howard J. Vogel, 61, was paid a percentage of attorneys' fees obtained in class-action and shareholder derivative cases in which he or members of his family were the named plaintiffs, federal prosecutors said in documents filed in Los Angeles federal court Friday.

Vogel agreed to cooperate with prosecutors in the investigation of Milberg Weiss, according to the filing.

"This is a fairly significant development," said Brad Lewis, a former federal prosecutor and a partner at Fenwick & West in Mountain View, Calif. "Significant because they got an insider who knows what was happening at Milberg Weiss and significant because the firm is actually named in the plea agreement."

Prosecutors previously indicted two California lawyers in the probe into claims that Milberg Weiss paid kickbacks to plaintiffs in lawsuits. Two partners at the firm, Steven Schulman and David Bershad, were expected to be indicted, an attorney for Schulman said in February.

Vogel's lawyer, Mark Rochon, did not return a call to his office.

"The firm has not yet had an opportunity to review the filings concerning Howard J. Vogel," Milberg Weiss spokesman Jeff Ingram said in an e-mailed statement. "We continue to cooperate fully with the investigation."

Milberg Weiss was known as Milberg Weiss Bershad Hynes & Lerach before splitting in 2004. At the time of the breakup, the firm represented clients in half of all securities class actions filed in the last decade.

Melvyn Weiss, Milberg Weiss' lead partner, was told in February that prosecutors had no plans to charge him or William S. Lerach, Weiss' former partner who now heads San Diego-based Lerach Coughlin Stoia Geller Rudman & Robbins.

Vogel and members of his family served as plaintiffs for Milberg Weiss in about 40 cases from 1991 though 2005, prosecutors said.

Vogel agreed to plead guilty to making a false statement to the court in connection with a 1997 class-action lawsuit against Oxford Health Plans Inc. Vogel had lied about buying Oxford Health shares for the purpose of bringing a lawsuit and about receiving a cut of Milberg Weiss' fees, according to Friday's filings.

Through an intermediary, Vogel was paid $1.1 million for his part in the Oxford Health lawsuit, prosecutors said.

Prosecutors will recommend that Vogel serve less than the five-year maximum sentence for the crime if he fulfills the terms of the plea agreement. Vogel also agreed to forfeit $2 million.

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