As previously reported, class action plaintiff law firm Milberg Weiss Bershad & Schulman LLP and two of the firm’s top partners, David Bershad and Steven Schulman were indicted in mid-May 2006 for paying millions of dollars in kickbacks to clients to serve as plaintiffs. Prosecutors allege that the class action firm paid people to serve as class representatives and recruited people to purchase stock in anticipation that share prices would fall, thereby positioning itself to play a lead role in any subsequent securities fraud class action lawsuits and, concomitantly, realize greater attorney fees. In today’s New York Times, Cindy Chang provides additional details, reporting that “The law firm and the partners are accused of making $11.3 million in secret payments to entice people to serve as plaintiffs in more than 150 lawsuits. ”
In July 2006, they entered pleas of not guilty in a California federal court. Ms. Chang reports that the trial date now has been set for January 2008, rejecting a request by prosecutors to set the trial for October 2007. While the late trial date permits defense attorneys additional time to prepare a defense for the class action firm, it also means another year of uncertainty for the firm. For example, Milberg Weiss’ legal troubles have caused Illinois Cook County Circuit Judge Nancy Arnold to delay approval of a class action settlement involving Boeing until she completes a review of the testimony of the six plaintiffs in the case.
Cindy Chang’s article, entitled “Trial of Class-Action Law Firm Is Set for 2008,” may be found in Section C. of the November 28, 2006 edition of the New York Times.