Legal News

Breaking News: Mel Weiss Gets 30 Months in Prison

By Ashby Jones

The following was reported by the WSJ’s Rhonda Rundle in Los Angeles and Nathan Koppel in New York.

This just in: Melvyn Weiss, the plaintiffs’ lawyer who pioneered a controversial and lucrative area of law suing corporations on behalf of shareholders, was sentenced today in federal court in Los Angeles to 30 months in prison. Weiss pleaded guilty in March to racketeering conspiracy in connection with his former law firm’s alleged improper payments of kickbacks to class-action clients. Click here for the statement from the U.S. Attorney’s office; here for background on the Mel Weiss/Milberg case.

As the sentence was read, Weiss stood quietly with his hands clasped in front of him between his two attorneys. Prior to sentencing he stood before the court and said, in a clear voice, reading from a yellow legal sheet that he brought with him: “I stand before you very humbly to apologize to my family, my professional colleagues and people in the organization I built over 45 years. I also apologize to the court for my wrongful conduct,” which he said was beyond his ability to adequately explain. “My contrition is profound and genuine.”

The sentence marks an incredible end to Weiss’s legal career. The 72-year-old lawyer co-founded the law firm know now as Milberg LLP in 1965, helping build it for a time into a securities juggernaut that filed more class actions – and won more settlements – than any other firm. From 1983 to 2005, according to a government filing in the case, Weiss’s share of firm profits was about $209.9 million.

For awhile, it appeared as if Weiss might avoid the government’s clutches. His law firm was indicted in 2006, along with then-partners David Bershad and Steven Schulman, for their role in an alleged decades-long conspiracy to pay kickbacks to clients to serve as name plaintiffs in class actions. The scheme, prosecutors alleged, allowed Milberg to have a ready stable of plaintiffs that filed cases quickly, enabling the firm to become lead counsel in a case and claim a larger share of the fees.

But Weiss was not charged until 2007 and did not agree to plead guilty until this past March, well after other major individual defendants had cut plea deals. Mr. Weiss pleaded guilty to a federal racketeering conspiracy, admitting that he entered into “secret payment arrangements” with individuals who served as lead plaintiffs in class actions. He agreed to serve a sentence of 18 to 33 months and pay $10 million in fines and penalties.

In court papers filed last week, Mr. Weiss asked for leniency, requesting a sentence of no more than 18 months. The filing was accompanied by more than 275 letters attesting to his generosity and work on behalf of poor clients.

In the courtroom on Monday, Judge John Walter appeared to listen intently to the lengthy and impassioned plea for leniency made by Weiss’s attorney, Benjamin Brafman. At one point the judge interrupted Brafman to say, in reference to the 275 letters, “it was a showing that I don’t think I’ve ever seen” in the time that I’ve been on the bench.

Still, in handing down a sentence on the high end of the 18-33 month range in the plea agreement, the judge pointed to what he called the seriousness of the offense, which involved a “nationwide conspiracy that continued for decades.”

Full post as published by Law Blog - WSJ.com on June 02, 2008 (boomark / email).