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Friday January 25, 6:25 pm Eastern Time
Grand jury investigating Milberg Weiss - source
(UPDATE: Adds background on law, Milberg Weiss, byline)
By Doug Young
LOS ANGELES, Jan 25 (Reuters) - A federal grand jury is investigating Milberg Weiss Bershad Hynes & Lerach, a shareholder class action lawsuits specialist, over allegations the firm improperly gave money to plaintiffs to appear in its lawsuits, a source familiar with the matter said on Friday.
The source, who spoke on condition of anonymity, would not provide further details. But according to the Los Angeles Times, Steven Cooperman, a Beverly Hills eye surgeon convicted of faking the theft of two famous paintings, is assisting in the investigation.
Cooperman, who was convicted in 1999 of conspiracy, wire fraud and money laundering in that case, has been a plaintiff in more than 36 shareholder lawsuits, some of them filed by Milberg Weiss, according to the newspaper.
He was sentenced to 37 months in prison last July.
Investigators are looking into whether Cooperman and others may have received improper payments to appear in the lawsuits. The case is being investigated by a federal grand jury in Los Angeles.
A spokesman for the U.S. Attorney's Office had no comment on the matter, and Cooperman's lawyer was not immediately available for comment.
FRIVOLOUS LAWSUITS
A spokeswoman for Milberg Weiss said it was ``fully cooperating'' with all inquiries, but would not confirm or deny whether the firm was under investigation.
Legal experts said the investigation appears to stem from the Private Securities Litigation Reform Act of 1995, which was designed to cut down on frivolous shareholder lawsuits against public companies.
Under the law, plaintiffs in class action securities lawsuits cannot receive any compensation, other than expenses and other costs, from the law firm representing them until the case is settled or an award is made.
``Congress tried to remove the economic incentive for people to serve as straw men'' for the securities class action specialist law firms, said Henry Hu, a professor specializing in securities law at the University of Texas Law School. ``The whole idea is to limit the occupation of professional plaintiff.''
Milberg Weiss is famed for filing class action lawsuits on behalf of shareholders of publicly traded companies. The law firm has filed numerous recent lawsuits on behalf of shareholders of bankrupt energy trading firm Enron Corp. .
The law firm -- which was filing more than half of all shareholder class action lawsuits in the mid-1990s -- also has a reputation for going after high-tech firms.
The list of companies with pending Milberg Weiss litigation against them includes such high-tech giants as Apple Computer Inc. (NasdaqNM:AAPL - news), Cisco Systems Inc. (NasdaqNM:CSCO - news), Intel Corp. (NasdaqNM:INTC - news), Oracle Corp.(NasdaqNM:ORCL - news), PeopleSoft Inc. (NasdaqNM:PSFT - news) and Silicon Graphics Inc. (NYSE:SGI - news). |
