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Former doctor admits scheme with law firm

Indictments may be nearer for two Milberg Weiss heavyweights.

July 11, 2007|Molly Selvin | Times Staff Writer

A former Beverly Hills ophthalmologist whose decision to cooperate with prosecutors helped launch a federal investigation of class-action law firm Milberg Weiss pleaded guilty Tuesday to conspiracy and obstruction of justice.

Steven Cooperman's plea in federal court in Los Angeles came a day after David Bershad, a former partner at Milberg who was responsible for the firm's financial affairs, admitted guilt in the same probe. The back-to-back pleas intensify speculation that indictments are likely for former partner William Lerach and firm co-founder Melvyn Weiss, two of the nation's most successful class-action lawyers.

Bershad, former partner Steven Schulman and the firm itself were indicted last year, accused of paying clients to sue companies for securities fraud.

Schulman and the firm have denied the charges.

Cooperman ran a Beverly Hills ophthalmology practice during the 1980s that gave him the means to buy rare paintings, property in Brentwood and Palm Springs and letters signed by Johannes Brahms and Napoleon Bonaparte.

But by the early 1990s, Cooperman's fortunes had dramatically reversed after he let his medical license lapse amid complaints to the state Medical Board that he had fabricated records and performed unnecessary surgery.

Cooperman also suffered big stock losses, which, combined with his extravagant lifestyle, left him at least $4 million in debt. He tried to repair his finances by faking the heist of a Picasso and a Monet, collecting on a $12.5-million insurance policy.

Convicted of insurance, tax and wire fraud in 1999 and facing a likely prison term of seven to 10 years, Cooperman offered to tell federal prosecutors how Milberg Weiss became so successful -- by recruiting ready-made plaintiffs like himself, who received illegal kickbacks.

Tuesday he admitted that he and some of his relatives and associates agreed to serve as named plaintiffs in approximately 70 class actions Milberg Weiss filed. Cooperman's participation allowed the firm to file quickly, becoming the lead counsel in the cases and thus entitling it to larger legal fees.

In the plea agreement he signed, Cooperman also said he conspired with "Partner A" and "Partner B" at Milberg, as the indictment referred to them. The unnamed partners are widely believed to be Weiss and Lerach, respectively.

Lerach left the firm in 2004 to found his own San Diego-based practice, from which he reportedly plans to retire within two months.

Cooperman, who now lives in Connecticut, admitted that he received $6.1 million in secret payments in exchange for his participation in Milberg-filed class actions and made false statements under oath about that money.

Rewarded for his cooperation with a lighter sentence on the insurance fraud conviction, he served 21 months in federal prison.

U.S. District Judge John F. Walter on Tuesday set sentencing for Cooperman on the Milberg conspiracy charge for June 2008.

The length of his sentence, which by law could be as long as five years, will depend on his continued cooperation with prosecutors, including his willingness to testify at the trial of the remaining defendants, which is scheduled to begin Jan. 8.

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molly.selvin@latimes.com

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