Lazar, the named plaintiff in many of the securities class action cases brought by prominent plaintiff firm Milber Weiss has been under investigation for some time for alledgedly taking kickbacks from the law firm in exchange for his role in their cases.
Lazar, 78, is still awaiting trial, but has won his freedom from the house arrest to which he had been confined for months. Check out this New York Sun article for the full and up-to-date details on the status of California prosecutors' case against Milberg Weiss and former Milberg attorney Bill Lerach.
Via the New York Sun:
Man Faces Trial for Taking Payments To Serve as Class Action Suit Plaintiff
By Josh Gerstein
Staff Reporter of the Sun
New York Sun
January 13, 2006
A man awaiting trial on charges that he received illegal payments for serving as a plaintiff in more than a dozen class action securities lawsuits was released from house arrest yesterday by a federal judge.
During a hearing in federal court, Seymour Lazar, 78, sat in a wheelchair at the defense table, as his lawyers argued that his age and ill health made the home confinement unnecessary and cruel.
In court papers, Mr. Lazar's attorney, Thomas Bienert Jr., wrote that forcing Mr. Lazar to stay at home pending trial was "likely the equivalent of a life sentence."
Mr. Lazar and his longtime personal attorney, Paul Selzer, were charged in June with operating an illegal scheme under which Mr. Lazar received more than $44 million in exchange for serving as a named plaintiff in class action lawsuits, and for arranging for his family members to bring such suits. The indictment refers to a "New York law firm" that paid Mr. Lazar "millions of dollars in secret and illegal kickbacks through various intermediary law firms and lawyers."
The prosecution has drawn close attention in legal circles because the "New York law firm" was one of the most successful and most feared firms in the class action plaintiffs' bar, Milberg, Weiss, Bershad, Hynes & Lerach. In 2004, the firm split up. Most of the East Coast lawyers stayed on at a firm that kept most of the Milberg Weiss name and is headed by a legendary trial lawyer, Melvyn Weiss. The West Coast attorneys formed a new firm, Lerach, Coughlin, Stoia, Geller, Rudman & Robbins, under the direction of a renowned plaintiff's lawyer, William Lerach.
Mr. Lerach and others involved with Milberg Weiss have acknowledged that a grand jury was investigating the firm. However, no charges related to the alleged kickback scheme have been filed publicly against anyone other than Messrs. Lazar and Selzer.
Prosecutors, who have been investigating the case for several years, reportedly have testimony from insiders at Milberg Weiss about how the alleged kickbacks were paid, but little or none of that evidence has been made public. However, late last month, prosecutors filed a memorandum with the court indicating that a colleague of Mr. Selzer had concerns about the financial arrangement with Mr. Lazar as early as 1994.
The memo from the law firm where Mr. Selzer was a partner at the time, Best, Best & Krieger of Southern California, said that Mr. Lazar wanted fees a class action law firm in New York was paying to Mr. Selzer's firm used to offset Mr. Lazar's other legal bills at the firm. In some instances, Mr. Lazar wanted the California firm to make car lease payments or charitable donations at his direction. Under the law, law firms can receive referral fees but cannot share them with clients.
"We have indicated to him on several occasions our concern over participating in some type of conspiracy to defraud the Internal Revenue Service or to otherwise violate the laws prohibiting plaintiffs in class actions from receiving fee splits," the February 9, 1994, memo said. "To us it just smells bad, and probably would to an investigator."
The name of the author of the two page memo, addressed to the "file," was blacked out from the copy the government filed with the court. Mr. Selzer left Best, Best & Krieger in 1995. Lawyers at the firm did not return calls seeking comment yesterday. Earlier this month, a partner at the firm told a legal newspaper, the Recorder, that the firm was neither a subject nor a target of the government's probe.
Mr. Bienert, Mr. Lazar's criminal attorney, said after yesterday's court hearing that the 1994 memo supports his client's defense. "It's significant because it shows Best, Best & Krieger, who are not charged in this case were giving consideration to the legal ramifications of what could and could not be done with this money," Mr. Bienert said.
Mr. Bienert said he would argue that Mr. Lazar had advice from many attorneys that the financial arrangements were legal and he also assumed prestigious lawyers would not take part if the financial dealings broke the law. "There are going to be many, many lawyers who figure into this and I suspect that the government will not accuse them of committing any crime," the defense lawyer said. "That is a huge issue at trial."
In the legal community, there have been years of speculation that the government wanted Mr. Lazar or Mr. Selzer to make a deal with prosecutors and testify against top lawyers at Milberg Weiss. So far, there is no sign that either man will do so.
One problem for the government is that Mr. Lazar is so old and infirm that prosecutors lack the leverage over him that they have over most defendants. According to court filings, the retired entertainment lawyer suffers from congestive heart failure, diabetes, lymphoma, and at least half a dozen other serious health problems.
For a time last summer, Mr. Lazar was required by the court to wear an anklet that was linked to a satellite and would inform authorities if he ventured out. However, in August, the device was removed so Mr. Lazar could undergo openheart surgery.
A trial date is set in April, but Mr. Bienert told reporters yesterday that he doubted Mr.Lazar will be up to it. "There will be a serious issue of how able Mr. Lazar is to actively participate and sit through a trial," the defense lawyer said.
During the hearing, Judge Dean Pregerson seemed irked that the two sides could not work out the conditions of Mr. Lazar's pre-trial release. The judge noted that Mr. Lazar was already essentially on his honor not to leave home. "He could leave if he really wanted to anyway," the judge said.
In exchange for lifting the home confinement, Judge Pregerson doubled Mr. Lazar's bond from $5 million to $10 million. A prosecutor, Robert McGahan, said Mr. Lazar owns between $45 million and $60 million in property. The prosecution has accused Mr. Lazar of not disclosing all of his assets and of refusing to repatriate money he sent abroad.
Prosecutors also argued to Judge Pregerson yesterday that Mr. Bienert has a conflict of interest because he represented both Messrs. Lazar and Selzer earlier in the probe. The judge said Mr. Lazar has the right to choose his lawyers, as long as he understands the potential conflict.
Mr. Lazar, who used special headphones due to a hearing impairment, said somewhat cantankerously that he knew what he was doing. "Can I point out that I was a lawyer for 30 years or 40 years, a practicing lawyer?" he told the judge. "I'm conscious of the fact that I can fire my lawyer, and can waive the conflict."
The original article appears here
Labels: Melvyn Weiss, Milberg Weiss