Legal News

Casino Company Decides to Play Hardball With Milberg

By Nathan Koppel

Vestiges of the old Milberg criminal prosecution are back in the news. Lakes Entertainment, a casino company, has filed a fraud and RICO suit against Milberg in Minnesota federal court. Click here for a copy of the complaint.

The suit involves the law firm's use of John Torkelsen, one of its former go-to experts on damages, who pleaded guilty last year in the Milberg criminal case to perjury for failing to disclose that Milberg paid him on a contingency fee basis. Torkelsen got paid only if Milberg recovered damages in cases in which he served as an expert;a conflict, according to prosecutors, because it gave Torkelsen an incentive to trump up damages. Here's a WSJ Law Blog piece on Torkelsen.

Lakes Entertainment claims that Torkelsen was paid on a contingency basis in a 1997 Milberg securities case in which Torkelsen estimated that a predecessor to Lakes Entertainment had caused $165 million in damages. That damages estimate played a role in the securities suit settling for $18 million, according to the suit. Now, Lakes wants that money back. Here’s a report from the American Lawyer's Ben Hallman about the suit against Milberg.

Torkelsen once was one of the top damages experts in the securities-fraud field, used by many class-action firms. Milberg lawyers have said Torkelsen once hosted a party in his hometown of Princeton, N.J., that featured a live performance by Aretha Franklin. Guests were transported to the party in limousines, according to lawyers who attended the party. Click here for an earlier WSJ story on Torkelsen.

Milberg told American Lawyer: "This company's claim that our former West Coast partners 'extorted' settlement of a securities case in early 2000 is absurd on its face and will be vigorously defended." [End of post]

Full post as published by Law Blog - WSJ.com on March 26, 2009 (boomark / email).