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Politics : Sioux Nation -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (157445)	1/5/2009 10:25:15 AM
From: stockman_scott	Respond to of 363473

Two-year sentence for Lerach _______________________________________________________________ The famed lawyer who admitted his role in a client kickback scheme says, 'I knew what I was doing was wrong.' By Molly Selvin Los Angeles Times Staff Writer February 12, 2008 William S. Lerach, once one of the nation's most successful attorneys, was sentenced to two years in prison Monday for his part in a kickback scheme involving class-action lawsuits against some of corporate America's biggest names. The 61-year-old San Diego resident, who had pleaded guilty to one count of conspiracy to obstruct justice and make false statements, also received two years' probation, was fined $250,000 and ordered to complete 1,000 hours of community service. U.S. District Judge John Walter said the kickback scheme had corrupted the law firm where Lerach practiced for 28 years "in the most evil way." Before the punishment was handed down, Lerach read a statement in the courtroom, which was packed with family, friends, former colleagues and plaintiffs. "I knew what I was doing was wrong," he said. His voice quavered as he continued. "My conduct was completely and absolutely unacceptable from anyone, and especially a lawyer." According to an indictment handed down earlier this year, the New York law firm now known as Milberg Weiss made an estimated $250 million in fees over two decades by filing class actions on behalf of ready-made plaintiffs who received kickbacks. The indictment claims the firm paid $11.3 million to people who agreed to be plaintiffs in suits against Xerox Corp., United Airlines, Beverly Hills Savings & Loan Assn. and dozens of other companies. Seven people, including the three former partners at the firm, have pleaded guilty in the case. The firm itself and co-founder Melvyn Weiss have pleaded not guilty and are scheduled to go on trial in Los Angeles in August. For Lerach, federal prosecutors had recommended a prison term of one to two years. His lawyer, John Keker, asked for six months behind bars and six months of home confinement, saying Lerach had accepted responsibility for his actions, apologized and suffered humiliation and the loss of a profession he loved. Walter rejected that request, saying Lerach "got a lot of forgiveness in the plea agreement" and that his crime deserved "significant punishment." Wearing a dark suit and his trademark white-frame glasses, Lerach sat quietly during the 2 1/2 -hour sentencing hearing, sometimes fidgeting with his watch and swiveling slowly in his chair. When the judge announced his sentence, Lerach stared at the table where he sat between his lawyers, his face flushed red. Lerach left Milberg Weiss in 2004 to found a San Diego class-action practice now called Coughlin Stoia Geller Rudman & Robbins. He resigned from that firm in October, days before his guilty plea, and will probably be disbarred. As part of his deal with prosecutors, Lerach was able to shield Coughlin Stoia from prosecution, and he won't have to testify in the upcoming trial. He also agreed to forfeit $7.75 million. The kickback case ended the career of a man that Keker called "a lion of the bar." Revered by his clients, including large pension funds, and reviled by many corporate executives, Lerach's explosive rants and courtroom prowess won him celebrated success and wealth. He extracted $7.2 billion in settlements from Enron on behalf of defrauded investors and employees. The victories secured him millions in legal fees that over the years paid for multiple houses, a private jet and original artwork. He was also a major Democratic Party donor. Lerach requested that he be allowed to serve his time at the federal prison in Lompoc and upon his release to be allowed to teach, for no salary, via teleconference at his alma mater, the University of Pittsburgh School of Law, on ethics and corporate governance. "I don't think the world has heard the last from Bill Lerach," said John Coffee, who teaches at Columbia Law School. He noted that Lerach had written a series of op-ed pieces in recent years and suggested he might profitably spend his time behind bars writing his autobiography "which . . . will be more interesting than any John Grisham novel." Scores of friends and former colleagues, clients and politicians wrote letters praising Lerach in what Walter called "a genuine outpouring" of support. Many of those letters were filed under seal, but at the start of Monday's hearing Walter approved a request by the Los Angeles Times and Bloomberg News to see the letters and ruled they be unsealed later this week. Lerach is expected to surrender to federal authorities in April.

To: Cactus Jack who wrote (157445)	1/5/2009 10:31:11 AM
From: stockman_scott	Read Replies (1) \| Respond to of 363473

The High Costs of Milberg Weiss’ Plaintiff Payments dealbook.blogs.nytimes.com May 30, 2008 From Jonathan D. Glater, a DealBook colleague: So maybe there really is a reason lawyers are not supposed to make secret deals to share fees with their clients. That is the conclusion of research by Michael A. Perino, a law professor at St. John’s University who decided to investigate the impact of hidden fee-sharing deals that put William S. Lerach, top contender for title of shareholder lawyer best known and most-hated by corporate America, in prison and forced his former partner, Melvyn I. Weiss, into a plea deal with federal prosecutors. Federal prosecutors charged that the secret payments were part of a conspiracy by Mr. Lerach, Mr. Weiss and others to enable them to file shareholder lawsuits. (You can read Mr. Lerach’s plea agreement as a PDF here). The goal of the payments was to reward what prosecutors called a “stable” of people ready to serve on short notice as lead plaintiffs in shareholder suits. Mr. Perino, whose article is available online here, set out to discover whether those secret payments led to inflated legal fees. If the lawyers charged more in cases where they made the payments, then members of the class not in on the scheme got less than they would have otherwise. On the other hand, if the lawyers did not raise their fees but simply accepted lower profits, so that members of the class did as well as they would have in the absence of the conspiracy, then Mr. Lerach and Mr. Weiss could claim, as Mr. Perino puts in the title of his paper, “No harm, no foul.” “There was a correlation with fee requests,” Mr. Perino told DealBook in a telephone interview. “It’s consistent with the government’s theory.” More specifically, after analyzing 700 shareholder lawsuits, including those cited by prosecutors, Mr. Perino found three things: “First, average fee requests in the indictment cases (31.83 percent) were significantly higher than average fee requests in the nonindictment cases (29.29 percent). Second, Milberg Weiss’ average fee requests (30.02 percent) were significantly higher than the fee requests of other plaintiffs’ law firms (28.82 percent). Third, within the subset of Milberg Weiss cases, the firm on average asked for significantly higher fees in the indictment cases (31.83 percent) than in the non-indictment cases (29.83 percent).” Higher fees to the lawyers meant less money to share among members of the class, so the scheme charged by prosecutors did in fact have costs, Mr. Perino said. There are other reasons that secret payments to plaintiffs are a bad idea. For one thing, rules of professional conduct generally prohibit them. In New York, it is simple: “A lawyer or law firm shall not share legal fees with a non-lawyer.” (The whole code is available as a PDF here.) The danger is that fee sharing may lead non-lawyers – like, say, lead plaintiffs receiving kickbacks – may be helped to practice law themselves, and if there is one thing lawyers disapprove of, it is legal practice by anyone unburdened by law school. But in the class action context, there is also the possibility of conflicts of interest dividing lead plaintiffs from the regular members of the class whom they are supposed to represent. “The lead plaintiff is supposed to be watching over the lawyer to make sure that the lawyer is acting in the best interests of the class,” Mr. Perino said – for example, by not charging too high a fee. “Here, obviously, we’ve got a big a conflict of interest.”

To: Cactus Jack who wrote (157445)	1/9/2009 11:05:52 AM
From: stockman_scott	Respond to of 363473

Fairfield Greenwich Fund Sued by Investors Over Madoff Losses By Erik Larson Jan. 9 (Bloomberg) -- Walter Noel’s Fairfield Greenwich Group, the hedge-fund firm that had $7.5 billion invested with alleged fraudster Bernard Madoff, was again sued by investors over claims it failed to protect their assets. Fairfield Greenwich should return at least $1 billion in fees it wrongfully accepted from investors, according to a proposed class-action, or group, lawsuit filed yesterday in Manhattan federal court by a Los Angeles-based retirement trust. Pacific West Health Medical Center Inc. Employees Retirement Trust claims that Fairfield Greenwich failed to act on warnings found in news reports and in meetings with Madoff, who was arrested on Dec. 11 after allegedly admitting he ran a $50 billion Ponzi scheme. Fairfield “claimed to be caught unaware of this massive Ponzi scheme,” the trust alleged. “Had the defendants properly performed the necessary due diligence, red flag warnings would have alerted them to this scheme much earlier.” Fairfield founding partners Noel, Andres Piedrahita and Jeffrey Tucker are accused of breach of fiduciary duty, negligence, unjust enrichment and breach of contract, as are other executives including Brian Francouer and Amit Vijayvergiya of FG Bermuda, a Noel affiliate. “The fees were inappropriately paid because they were based on assets and performance that didn’t exist,” the trust’s lawyer, Robert Finkel of the firm Wolf Popper in New York, said yesterday in a phone interview. “They didn’t actually earn that money and they’re obligated to return it to investors.” ‘Due Diligence’ “The company did indeed perform extensive due diligence,” Fairfield Greenwich spokesman Thomas Mulligan said yesterday in a phone interview. Fairfield was first sued Dec. 19 in Manhattan state court by investors seeking class-action status. Investors in that case also claim Noel and his fund jeopardized their assets by ignoring red flags about Madoff. Madoff, 70, was charged with one count of securities fraud for allegedly using billions of dollars from new investors to pay off older ones. Madoff told authorities that investors may have lost $50 billion, prosecutors said. Madoff has been restricted to his Upper East Side home on $10 million bond that the government agreed to after Madoff’s arrest. He faces as long as 20 years in prison as well as a $5 million fine if convicted. Madoff’s assets were frozen in a related civil lawsuit brought by the Securities and Exchange Commission. A judge will decide soon whether to revoke Madoff’s bail and send him to jail based on a government claim that he mailed jewelry and other items in violation of a court order in a parallel case. The case is Pacific West Health Medical Center Inc. Employees Retirement Trust v. Fairfield Greenwich Group, 09-cv- 00134, U.S. District Court, Southern District of New York (Manhattan). To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net. Last Updated: January 9, 2009 00:01 EST