[JURIST] Federal prosecutors on Thursday handed down an indictment accusing Milberg Weiss name partner Melvyn Weiss [firm profile] of conspiracy, racketeering, obstruction of justice and making false statements. The indictment stems from a long-running US Attorney investigation into allegations that Milberg Weiss [firm website] paid up to $11.3 million in illegal kickbacks since 1984 to individuals to serve as lead plaintiffs in class action and shareholder derivative lawsuits. On Wednesday, federal prosecutors announced that former Milberg Weiss partner William S. Lerach has agreed to plead guilty [press release; JURIST report] to conspiracy to obstruct justice and will forfeit $7.75 million to the government, pay a $250,000 fine, and will serve one to two years in prison.
According to a statement [text] issued by Milberg Weiss Thursday morning, Weiss will remain of counsel to the firm while he defends himself against the charges, but has relinquished his management duties. In May 2006, a federal grand jury indicted Milberg Weiss [PDF text; JURIST report] and two name partners, David J. Bershad and Steven G. Schulman, on charges of conspiracy to make false statements and obstructing justice. As part of the scheme, certain individuals who agreed to serve as class action representatives were promised 10 percent of the attorney fees eventually gathered by Milberg Weiss. This kickback was not revealed to the judge overseeing litigation, and the named plaintiffs who collected the kickback money made false statements under oath concerning the payments. Three individuals pleaded guilty [JURIST report] in connection with the scheme in May 2006, and former Milberg Weiss name partner David Bershad pleaded guilty [JURIST report] to conspiracy charges in July. Prosecutors said Thursday that Schulman has now also agreed to plead guilty to racketeering. As part of his plea agreement, Schulman will forfeit 1.85 million and pay a $250,000 fine. Reuters has more.