The Daily Caveat has been following this story for as long as this blog has been around. Government investigators have been probing noted securities plaintiff firm Milber Weiss for more than five years now looking for improprieties in the way the firm handles the management of the large class action cases that often fall under its care. To a lesser extent, also in the cross-hairs was Bill Lerach, a former Milberg partner who, after a falling out with Milberg top-dog Melvyn Weiss, opted to leave the firm has open up his own shop.

Things really started to heat up in the seemingly aimless investigation last summer with the indictment of two Palm Springs, California attorneys who alledgedly participated in a scheme of kickback payments from Milberg to individuals serving as lead plaintiffs for the firm. Seymour Lazar, a movie industry lawyer who once dated Maya Angelou was indicted on charges of receiving kickbacks from Milberg Weiss and Paul Selzer, a real estate lawyer was accused of helping to launder the payments. In the indictment against Lazar and Selzer, as much as $44 million alledgely passed through their hands in illegal kickbacks from Milberg Weiss.

The roots of the Lazar indictment lie in part with art dealer and convicted insurance fraudster, Steven Cooperman. Cooperman was in seven kinds of legal trouble and facing a ten-year sentence when he offered federal prosecutor inside knowledge on Milberg's practices based on his own experience serving some 60 times as a lead plaintiff for the firm. A great deal of information was also gleaned from the briefs filed in Cooperman's nasty divorce. According to testimony by Cooperman in the divorce case, between 1988 and 1997 he received about $5 million from his arrangement with Milberg Weiss.

While Lazar has all along fought the charges against him and refused to roll on Milberg, another former lead plaintiff, Howard J. Vogel, signed a plea deal with prosecutors and, in exchange for avoiding prosecution himself, has offered up his knowledge of the firm. Vogel and members of his family have served as plaintiffs as many as 40 Milberg receiving approximately $2.5 million in illegal kickbacks.

Subsequently we also learned that former Milberg partner, Alan Schulman, who is now a partner at rival firm, Bernstein Litowitz cooperated with the California Grand Jury investigating Milber Weiss. There was apparently no love lost between Schulman and his former firm, and he was all too happy to dish on what he saw as imappropriate tactics used by his former employer.

Midweek-last week saw two Milberg executive partners take a not expected leave of absence. David Bershad and Steven Schulman, both of whom had been courteously informed a few months back that they should keep their dancecards open for the Feds, departed Milberg for the time being to face pending indictments against each of them in relation to the kickback investigation.

The question is, will they have a firm to return to?

Before The Daily Caveat could even get a weekend to catch its breath the California Grand Jury handed down a 20-count indictment against Milberg Weiss based on allegations that, from 1981 to 2005 , in the course of their management of plaintiff class action cases, the firm paid kickbacks to lead plaintiffs and other facillitators. Clearly for Milberg and the prosecutors who have been giving chase for the last several years, the past is prologue and the real story has only just begun.

-- MDT

Labels: Bernstein Litowitz and Berger, Howard Vogel, HP, Melvyn Weiss, Milberg, Milberg Weiss