Lawyer Tried to Hide Payments, Prosecutors Say

A California lawyer charged with taking kickbacks from one of the nation’s most powerful securities-law firms, Milberg Weiss Bershad & Schulman, tried to hide the payments in the accounts of a second firm, prosecutors said in court documents filed this week.

The filing in Los Angeles federal court Thursday provides the first glimpse of evidence that prosecutors say they have linking Milberg Weiss -- the nation’s most prominent class-action law firm -- to a scheme to pay plaintiffs to file lawsuits against large U.S. corporations.

Marina Ein, a spokeswoman for Milberg Weiss, said the firm had not seen the filing and had no comment.

The four-year federal probe came to light in 2002, when a flurry of subpoenas went out to lawyers, stockbrokers and plaintiffs who had participated in Milberg Weiss lawsuits.

Seymour Lazar, a Palm Springs investor and former entertainment lawyer who had represented the likes of the Beatles and comedian Lenny Bruce, was indicted in June, accused of collecting $2.4 million in “secret and illegal kickback payments� for his role in dozens of lawsuits.

His lawyer has said prosecutors are trying to pressure Lazar, who is in his late 70s and recovering from heart surgery, to cooperate in a probe of Milberg Weiss.

The documents describe a request by Lazar that another law firm hold payments that prosecutors describe as kickbacks for acting as a professional plaintiff.

Lazar’s attorney, Thomas Bienert, said his client had done nothing wrong: “At all times, Mr. Lazar was under the advice and counsel of lawyers. He didn’t [believe] that he was acting in any illegal way in terms of the relationship with Milberg.�

The indictment against Lazar did not name Milberg Weiss, but the firm said it had been subpoenaed.

Cases listed in the indictment were filed by Milberg, which has secured $30 billion in class-action judgments for investors, consumers and workers during its 30-year history.

The 1995 Private Securities Litigation Reform Act, which was drafted with Milberg Weiss in mind, limits plaintiffs to no more than five class actions in three years.

Law firms are prohibited from sharing attorneys’ fees with a client who acted as a named plaintiff -- the gist of the case against Lazar, prosecutors said.

Allies of Milberg Weiss have portrayed the case as a partisan attack by the Bush administration, which they say is trying to use the courts to limit lawsuits against corporations after failing to push tort reform through Congress.

The documents filed Thursday accompanied a motion that prosecutors filed opposing Lazar’s efforts to have a judge terminate his house arrest and electronic monitoring.

Among the documents was a February 1994 memo discussing an alleged “fee split� arrangement among the law firm that had represented Lazar, Riverside-based Best, Best & Krieger, Lazar himself and the New York law firm that brought the cases -- apparently Milberg Weiss.

In 1994, Lazar received a large “windfall� payment from the New York firm and wanted Best to hold the money in its accounts rather than a client trust fund, the memo said.

“Mr. Lazar does not wish to have this relationship documented,� the memo said. “He points out that this relationship has been ongoing for years and has never been documented.�

“We have indicated to [Lazar] 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 memo said.

A representative for Best could not be immediately reached for comment.

The memo noted that a request from Lazar that Best pay for his personal expenses, including a lease on a car and a charitable contribution on his behalf, “just smells bad, and probably would to an investigator.�