Federal prosecutors may be closer to a possible indictment of renowned class-action lawyer William S. Lerach, attorneys said Thursday.
A possible guilty plea from a major defendant in the fraud probe of class-action law firm Milberg Weiss & Bershad could signal that prosecutors may be closing in on founding partner Melvyn Weiss as well as Lerach, a former Milberg partner long regarded as one of its marquee attorneys.
Lerach reportedly told clients and others this week that he was leaving the San Diego plaintiffs' law firm he founded three years ago after parting ways with Milberg Weiss. His departure may indicate that he expects to be indicted soon and doesn't want to damage the firm, lawyers familiar with the case said.
If Lerach is leaving, it means "that he wants to separate himself from the firm or the firm wants to separate from him," said Laurie Levenson, a former federal prosecutor who teaches at Loyola Law School. The fingerpointing could be beginning in earnest, she said.
Milberg Weiss and two of its partners were indicted last year as part of an eight-year investigation of alleged kickbacks and money laundering.
David Bershad, the Milberg Weiss attorney prosecutors said was primarily responsible for overseeing the firm's financial affairs, faces a deadline today to file a motion to dismiss the fraud and conspiracy charges filed against him last year.
Steven Schulman, the other Milberg partner indicted last year, filed a dismissal motion last month.
"Not filing a motion to dismiss ... means [Bershad] is in the process of settling," said John Coffee, a Columbia Law School professor who studies class actions.
Bershad's possible willingness to plead guilty could also mean that "Lerach's feeling the pressure," Levenson said. Bershad could produce evidence implicating Lerach, attorneys said.
The plea talks were first reported in the Wall Street Journal on Thursday.
Milberg Weiss pioneered large-scale federal class actions beginning in the 1980s, netting $45 billion in settlements on behalf of investors and consumers in fraud suits against Lincoln Savings & Loan, WorldCom Inc. and Enron Corp. among other major corporations.
The 20-count indictment accuses Bershad, Schulman and the law firm of paying at least $11.3 million in kickbacks over a 25-year period to clients who agreed to act as plaintiffs.
