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New York Times Reports Class Action Law Firm And Lawyer Paid “Serial Plaintiff” $1 Million To Serve As Plaintiff

The news continues to go from bad to worse for class action law firm Milberg Weiss and its lawyers indicted on May 18, 2006, on charges that it paid more than $11 million in kickbacks to clients to serve as plaintiffs. According to Julie Creswell and Jonathan Glater of the New York Times, one such plaintiff, Howard J. Vogel, admits in a plea bargain with federal prosecutors that “he and relatives were linchpins in [a] long-running arrangement” that helped class action law firm Milberg Weiss “reap hundreds of millions of dollars as counsel in securities lawsuits.” Vogel reportedly received $1.1 million from the class action firm to serve as plaintiff in a class action against Oxford Health Plans, and served as plaintiff for Milberg Weiss in many other class actions, often illegally receiving up to 14% of the attorney fees awarded to the law firm.

But the proverbial plot thickens with Mr. Vogel’s purported admission that he actually purchased shares of stock in Oxford Health “on the belief that [the company] was on the verge of collapse.” Because a class action plaintiff must have claims that satisfy the commonality and typicality requirements of Rule 23, “speculative investments” – that is, stock purchased in the hope that the share price will fall so that one can sue the company alleging violations of state and federal securities laws – if discovered by the defense would seriously undermine the plaintiff’s ability to obtain certification of a class action.

The article by Creswell and Glater, “For Law Firm, Plaintiff Had Golden Touch,” may be found in the June 6, 2006, New York Times.