William Lerach isn't the type of guy who brings out ambivalence in someone. People generally hold two views of the flamboyant, high-powered San Diego attorney who's made a mint representing investors in class-action suits against many of the nation's largest corporations.
The first view is that Lerach (pronounced LEER-ack) is a champion of wronged shareholders everywhere, holding reckless companies to account for acts of negligence and fraud. The second is that he's a power-mad trophy hunter who has undermined the reputations of countless companies whose only crime was to hit a stock price downturn. Those in the latter camp, understandably, are feeling pretty good lately.
On Monday, October 29, Lerach pleaded guilty in Los Angeles federal court to felony conspiracy in connection with a scheme that enriched himself and his former law firm, Milberg Weiss Bershad & Schulman, now known as Milberg Weiss. Lerach, now 61, admitted before U.S. District Judge John F. Walter that he helped provide $11.4 million in illegal kickbacks to parties agreeing to serve as lead plaintiffs in civil actions. The tactic generated an estimated $250 million in legal fees for about 25 years.
The punishment is anything but severe. Lerach, who acrimoniously left Milberg Weiss in 2004 to form Lerach Coughlin Stoia Geller Rudman & Robbins (from which he has left as well), faces only one to two years in prison. The $8 million he owes the government in penalties and fines pales before his more than $100 million in personal income over the years. What's more, he remains eligible to collect tens of millions more from the $7.2 billion settlement his new firm extracted from Citigroup, JPMorganChase, Canadian Imperial Bank of Commerce and other defendants for their roles in the Enron collapse. And once out of prison, he will be allowed to serve as a "non-legal consultant." All in all, it's a sweet deal.
Meanwhile, the dominoes are falling at Milberg Weiss. Lerach is merely the latest of more than a half-dozen people thus far to plead guilty in a case stemming from a federal investigation that began in 1999. Two of them were lead partners David Bershad and Steven Schulman, each indicted by a grand jury in May 2006. Firm co-founder Melvyn Weiss, 72, along with the firm itself, have pleaded not guilty and have rejected settlement overtures.
In his plea, Lerach admitted he "crossed a line and pushed too far." That operating style was a lifetime in the making.
Carl F. Horowitz is director of the Organized Labor Accountability Project of the National Legal and Policy Center, a Townhall.com Gold Partner organization dedicated to promoting ethics in American public life.
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