Class action plaintiff firm Milberg Weiss Bershad & Schulman LLP and two of the firm’s top partners, David Bershad and Steven Schulman – indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs – entered pleas of not guilty in a California federal court yesterday. As explained by Molly Selvin of the Los Angeles Times, “Prosecutors said the ‘paid plaintiffs’ were recruited to buy stocks in anticipation that they would fall in value, positioning themselves and Milberg Weiss to take the lead in securities-fraud cases and collect extra fees.” Selvin also reports that, according to federal prosecutors, more indictments are likely to follow.
A New York Times article by Cindy Chang notes that two others tied to the alleged scheme – Seymour M. Lazar, “accused of serving as a paid plaintiff,” and Paul T. Selzer, a lawyer “accused of helping launder the payments” to the paid plaintiffs – also entered not guilty pleas. Chang notes that Milberg Weiss continues to lose lawyers “and has been removed as lead counsel by a handful of large institutional investors in high-profile cases.”
But Selvin reports that the news is not all bad for Milberg Weiss, as the class action plaintiffs’ law firm continues to secure appointments to serve as lead counsel in class action lawsuits, suggesting the firm “might survive its current legal troubles.” Molly Selvin’s article, entitled “Milberg Enters Not Guilty Plea,” may be found in the Business section of the July 18, 2006 edition of the Los Angeles Times. Cindy Chang’s article, entitled “Law Firm and 4 Figures in Payments Case Enter Pleas,” may be found in Section C. of the July 18, 2006 edition of the New York Times.