Class-action lawyer pleads guilty
Former Milberg Weiss partner William Lerach faces up to two
years in prison for conspiracy in a scheme to bribe plaintiffs.
By Molly Selvin, Staff Writer
Tuesday, October 30, 2007
William S. Lerach, the securities lawyer whose
multibillion-dollar recoveries on behalf of aggrieved
shareholders made him a lightning rod, pleaded guilty Monday to
a criminal charge that could send him to prison for up to two
Lerach, 61, entered the plea to one count of conspiracy as part
of a deal with federal prosecutors, admitting to obstructing
justice and making false statements in connection with a scheme
to bribe people to be plaintiffs in class-action lawsuits.
The deal struck last month was something of a coup for Lerach.
Although he will have to pay the government $8 million and will
probably be disbarred, he wrung an agreement from the government
to shield the San Diego firm he founded in 2004 from
prosecution in the case. If U.S. District Judge John
Walter refuses to honor the terms, Lerach can withdraw his plea.
The government has been investigating the New York firm where Lerach once worked --
Milberg Weiss -- for seven years. According to a 2006
indictment, the firm paid $11.3 million in kickbacks to
plaintiffs in lawsuits targeting huge companies, including AT&T
Inc., Lucent, WorldCom, Microsoft Corp. and Prudential
Prosecutors contend that Milberg Weiss earned an estimated $250
million in legal fees by using paid plaintiffs.
Three former partners and the Milberg Weiss firm, along with a
frequent firm plaintiff and his lawyer, have been indicted. In
recent months, two of the partners and the former plaintiff have
pleaded guilty. Firm co-founder Melvyn Weiss -- indicted
last month -- and the firm itself have pleaded not guilty and
Lerach wasn't indicted but is widely believed to be one of the
unnamed partners referred to frequently throughout the 20-count
His deal with the government ended his career as one of the
country's most successful plaintiffs lawyers. Awards and
settlements from the shareholder suits he launched proved so
costly to corporations that disgruntled executives came to
describe the process as being "Lerached." He was well
known for his publicity stunts and expletive-laced tirades.
Shareholders and consumers applauded Lerach for his efforts to
combat corporate fraud.
His San Diego
practice -- he took many Milberg Weiss shareholder suits with
him when he left that firm -- proved extraordinarily
remunerative. Lerach won a record $7.1 billion on behalf
of Enron Corp. investors and stands to earn $1 billion in fees
for that work alone.
Dressed in a charcoal gray suit Monday, his trademark blond
frizz cropped close, Lerach was uncharacteristically muted as he
stood between his two lawyers during the plea hearing.
Asked by Walter how he would plead to the conspiracy charge,
Lerach answered in a clear voice, "Guilty, your honor."
After the hearing, he shook hands with the three federal
prosecutors who have been leading the Milberg Weiss
investigation before leaving the courtroom with his wife and
Once outside, Lerach and his attorney John Keker declined to
Sentencing is scheduled for Jan. 14.