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House hearing on legal scandal sought

May 03, 2008|From Reuters

Two Republican lawmakers demanded Friday that Congress hold a hearing on a scandal involving plaintiffs' lawyers who admitted paying kickbacks to clients in corporate fraud lawsuits.

A long-running federal probe has led to the guilty pleas of attorneys Melvyn I. Weiss and William S. Lerach and other former lawyers at law firm Milberg LLP. Weiss and Lerach were known for bringing shareholder lawsuits against large corporations, drawing scorn from pro-business advocates who said the cases were frivolous and a big distraction to companies.

The Milberg scandal should be further investigated by the House Judiciary Committee to determine the extent of illegal payments to plaintiffs, said House Republican Leader John A. Boehner of Ohio and Lamar Smith of Texas, the top Republican on the committee.

"The Republican-led Congress responded aggressively to the Enron and WorldCom scandals earlier this decade," the two lawmakers wrote in a letter to Rep. John Conyers Jr., a Michigan Democrat who chairs the Judiciary Committee. "Now the Democrat-led Congress needs to do its job and examine the scandal at Milberg Weiss, which potentially has deeper and more far-reaching implications."

Milberg was known as Milberg Weiss before Weiss, the New York-based firm's co-founder, admitted to participating in the kickback scheme. He pleaded guilty April 2 to racketeering and faces as much as 33 months in prison.

Lerach, best known for winning billions in legal settlements for Enron Corp. investors, was sentenced in February to two years in prison. He left Milberg in 2004 to form his own San Diego-based law practice and has since retired.

The Milberg firm has pleaded not guilty to criminal charges and is scheduled to go on trial in August.

A representative for Conyers had no immediate comment.

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