Class-action law firm Milberg Weiss Bershad & Schulman
was charged Thursday with paying millions of dollars in kickbacks to plaintiffs in dozens of class-action and shareholder derivative-action lawsuits, The Wall Street Journal
Also named in the 20-count indictment were David Bershad
and Steven Schulman
, senior partners at the New York-based firm.
The indictment, unsealed in Los Angeles, alleged that partners in the firm conspired to pay clients who agreed to serve as lead plaintiffs. Milberg paid over $11 million in kickbacks, which were disguised as referral fees or other legitimate payments, according to prosecutors.
Charges include fraud, conspiracy, racketeering and money laundering.
"Class-action attorneys and named plaintiffs occupy positions of trust in which they assume responsibility to tell the truth and to disclose relevant information to the court," said Debra Wong Yang
, the U.S. Attorney in Los Angeles. "This indictment alleges a wholesale violation of this responsibility."
Milberg denied the charges. "We will vigorously defend ourselves and our partners against these charges, and we will be vindicated," said Melvyn Weiss
, the firm's co-founder.
Milberg and the governement had held talks about a deferred-prosecution agreement that would have avoided criminal charges, but the parties failed to reach an agreement on the government's demand of a waiver of attorney-client privilege and access to privileged internal records, according to The Journal
The indictment might dent the the law firm's ability to attract new clients, the report further stated.
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