$75M settlement meant to punish Milberg law firm
Headline News
The Milberg law firm has admitted former partners paid about $11.3 million in kickbacks to professional plaintiffs in class-action cases that brought it roughly $239 million in legal fees, the U.S. attorney's office said.
The admission came as part of a $75 million settlement in a case involving more than 165 lawsuits filed against some of the nation's largest corporations from the 1970s through 2005, prosecutors said in a statement released late Monday.
Then known as Milberg Weiss, the firm dominated the field of securities class-action lawsuits involving shareholders who claim they suffered losses because executives misled them about a company's financial condition. Milberg's lawsuits targeted AT&T Inc., Lucent, WorldCom, Microsoft Corp., Prudential Insurance and other companies.
As part of the settlement, prosecutors will not pursue criminal charges against Milberg, which has retained a compliance monitor.
U.S. Attorney Thomas P. O'Brien said the settlement reflects the seriousness of what was probably the longest-running scheme ever conducted by a law firm.
"The monetary payment will punish the firm for allowing this conduct to occur, and the compliance monitor should ensure that Milberg will not again lie to judges presiding over cases it is litigating." O'Brien said.
The deal was initially disclosed Monday by Sanford Dumain, a member of Milberg's executive committee. If the criminal case had gone forward, the firm risked having to pay forfeitures and penalties of hundreds of millions of dollars, he said.
The firm was charged with aiding and abetting mail fraud and with money-laundering conspiracy. A trial had been expected to start in August.
A seven-year investigation has resulted in guilty pleas by three former partners.
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