More on the story Walter only teased us with earlier today: The Associated Press reports on the fall of a mighty class action plaintiffs’ lawyer — the managing partner and third name in the firm now known only as Milberg Weiss:

A former partner of a major New York law firm pleaded guilty to conspiracy Monday in connection with kickbacks the firm is accused of paying to plaintiffs in class action and shareholder lawsuits.

David J. Bershad, 67, of Montclair, N.J., pleaded guilty in federal court to one count of conspiracy that includes obstruction of justice and making false statements under oath.

…Prosecutors believe the firm, now known as Milberg Weiss, received more than $200 million in fees from such lawsuits filed over the past 20 years. Bershad was responsible for overseeing the firm’s accounting department and financial affairs….

Bershad could face up to five years in federal prison when he is sentenced on June 23, 2008.

Grisly. According to the New York Law Journal, Bershad himself made — sit down for this part — $160 million as a Milberg Weiss partner over the last twenty years, so that $8 million (why so low?) should not be all that painful, financially; but this is not the style in which to go out for a Columbia Law man.

Here is the stipulated statement of facts in support of the plea agreement, from the Law Journal. If you have trouble following what he did wrong — the rules regarding class actions and fees are fairly arcane — in short, if you represent a class, you’re not allowed to secretly share attorneys’ fees with favored class members. Such payments create conflicts of interest between the paid plaintiffs and the rest of the class members the lawyers represent. As the statement says:

By entering into such secret payment arrangements, BERSHAD and the other Conspiring Partners were able to secure a reliable source of individuals who were ready, willing, and able to serve as named plaintiffs in Class Actions that Milberg Weiss wanted to bring. In addition, some of these individuals would investigate and propose to BERSHAD and other Conspiring Partners potential Class Actions for Milberg Weiss to bring. Such payment arrangements generally enabled Milberg Weiss to file more Class Actions and to file them more quickly than would be possible absent such arrangements. Filing Class Actions more quickly than other competing plaintiffs’ law firms enhanced Milberg Weiss’s ability to obtain lead counsel status in cases, before and after the passage of the Private Securities Litigation Reform Act of 1995. Lead counsel generally obtained a larger share of the attorneys’ fees awarded in a Class Action than other counsel.

The statement of facts goes on to lay out a Byzantine arrangement of cash flow, everything short of a hollowed-out pumpkin. It describes the sort of thing that, well, crooks do. At this point, the crooks have names in the court filings such as Partner A, Partner B, down through the alphabet — and, just like Little Cats A through Z in The Cat in the Hat, they all cleaned up.

So, how long will this 67-year-old man sit in jail? I imagine he had something more like Miami in mind. But it could get even hotter — for his partners. Bershad is surely going to spill his guts even more. As the story continues:

Legal experts believe Bershad’s plea appears to be an effort to reduce his possible prison sentence in exchange for testimony.

Meanwhile, the good work of the firm goes on:

In its statement Monday, the firm said: “We remain confident that [Mr. Bershad’s] actions will have no effect on the firm’s commitment to its clients and its ongoing work to protect public shareholders and consumers.”

Filed under: class actions, Milberg Weiss