William S. Lerach, the securities lawyer whose multibillion-dollar recoveries on behalf of aggrieved shareholders made him a lightning rod, pleaded guilty Monday to a criminal charge that could send him to prison for up to two years.
Lerach, 61, entered the plea to one count of conspiracy as part of a deal with federal prosecutors, admitting to obstructing justice and making false statements in connection with a scheme to bribe people to be plaintiffs in class-action lawsuits.
The deal struck last month was something of a coup for Lerach. Although he will have to pay the government $8 million and will probably be disbarred, he wrung an agreement from the government to shield the San Diego firm he founded in 2004 from prosecution in the case. If U.S. District Judge John Walter refuses to honor the terms, Lerach can withdraw his plea.
The government has been investigating the New York firm where Lerach once worked -- Milberg Weiss -- for seven years. According to a 2006 indictment, the firm paid $11.3 million in kickbacks to plaintiffs in lawsuits targeting huge companies, including AT&T Inc., Lucent, WorldCom, Microsoft Corp. and Prudential Insurance.
Prosecutors contend that Milberg Weiss earned an estimated $250 million in legal fees by using paid plaintiffs.
Three former partners and the Milberg Weiss firm, along with a frequent firm plaintiff and his lawyer, have been indicted. In recent months, two of the partners and the former plaintiff have pleaded guilty. Firm co-founder Melvyn Weiss -- indicted last month -- and the firm itself have pleaded not guilty and await trial.
Lerach wasn't indicted but is widely believed to be one of the unnamed partners referred to frequently throughout the 20-count indictment.
His deal with the government ended his career as one of the country's most successful plaintiffs lawyers. Awards and settlements from the shareholder suits he launched proved so costly to corporations that disgruntled executives came to describe the process as being "Lerached." He was well known for his publicity stunts and expletive-laced tirades.
Shareholders and consumers applauded Lerach for his efforts to combat corporate fraud.
His San Diego practice -- he took many Milberg Weiss shareholder suits with him when he left that firm -- proved extraordinarily remunerative. Lerach won a record $7.1 billion on behalf of Enron Corp. investors and stands to earn $1 billion in fees for that work alone.
Dressed in a charcoal gray suit Monday, his trademark blond frizz cropped close, Lerach was uncharacteristically muted as he stood between his two lawyers during the plea hearing.
Asked by Walter how he would plead to the conspiracy charge, Lerach answered in a clear voice, "Guilty, your honor."
After the hearing, he shook hands with the three federal prosecutors who have been leading the Milberg Weiss investigation before leaving the courtroom with his wife and lawyers.
Once outside, Lerach and his attorney John Keker declined to comment.
Sentencing is scheduled for Jan. 14.