Overlawyered: Chronicling The High Cost Of Our Legal System

Posts Tagged ‘scandals’

Feds indict Mel Weiss

Critics long derided the federal investigation of Milberg Weiss as slow to produce results, but things are moving along at a brisk clip now, with an indictment charging the nation’s best-known class-action securities lawyer with conspiracy, racketeering, obstruction of justice and making false statements, just after his best-known former colleague at the firm, William Lerach, agreed to cop a plea deal. “In addition, Steven G. Schulman, a former senior partner at the Milberg Weiss firm, agreed to plead guilty to a racketeering conspiracy charge, prosecutors said.” (AP/Business Week; Jurist “Paper Chase”; ABA Journal first and second stories. Documents, all PDF: Milberg Weiss superseding indictment; Schulman charge, plea, press release).

The Sirota & Sirota law blog, an “unfriendly competitor” of Milberg Weiss in the class-action biz, has this post from June offering some perspective on the ongoing investigation.

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Lerach’s guilty plea

Following up on Walter’s Sep. 18 roundup, Lerach should be proud of his lawyers: his plea deal is for a single count of mispaying Steven Cooperman, drops all of the Torkelsen-related charges, will likely get him out of prison in under two years, requires the government to forgo prosecution of his current law partners, and doesn’t require him to cooperate with the prosecution of Melvyn Weiss. He may well be disbarred afterwards, but he’ll also be a multimillionaire in his late sixties who can retire comfortably even after paying an $8 million fine, and nothing stops plaintiffs’ firms from offering small fortunes to Lerach to act as a “non-legal consultant.” [plea agreement; WSJ; The Recorder; NY Times]

Relatedly, Wired reprints its 1996 “Bloodsucking Scumbag” article.

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Kentucky Fen-Phen update: judgment entered

We’ve provided extensive coverage of the Kentucky fen-phen scandal, in which the lawyers who represented fen-phen plaintiffs were found in a civil suit to have misappropriated more than $64 million of their clients’ money. The judge who heard the suit has now entered final judgment against the lawyers, which will allow the plaintiffs to start collection proceedings in 30 days, barring appeal by the lawyers. (The good news: to appeal, they would need to put up an appeals bond, which would make it easier for the plaintiffs to collect. It’s not clear whether they’re going to appeal; they may be too busy defending themselves against the criminal charges which have been filed against them.)

The lawyers’ lawyer calls it a “travesty of justice,” and offers an unusual defense to charges of defrauding clients:

“No one, including the judge, has acknowledged that the attorneys’ fees were ordered by a judge or the fact that each and every client in the case received multiples, and I repeat multiples, of any amount that they would have received if they had not been represented by my clients — Bill and Shirley.”

Since the lawyers did a good job in achieving the initial settlement, it’s okay for them to defraud their clients of some of the money? Pretty sure it doesn’t work that way. (And of course, in claiming that the fees were “ordered by a judge,” she somehow neglects to mention the fact that the judge was paid off by the lawyers, and that as a result he quit just before he was going to be kicked off the bench.)

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Lerach retires; nearing a plea deal?

Law.com reports in its summary:

Renowned plaintiffs attorney William Lerach, lead partner at Lerach Coughlin, announced Tuesday he’s stepping down from the firm he started when he split off the West Coast offices of what is now Milberg Weiss. Lerach said he’s planning to take some time off. That could include going to prison, or at least the U.S. Attorney’s Office. Lerach is said to be nearing a deal with federal prosecutors related to legally questionable payments Milberg Weiss made to its lead plaintiffs and a former expert witness.

The WSJ Law Blog similarly reports that “Lerach has not been charged, but he is in advanced talks with prosecutors on a plea deal that could be announced in September and involve serving prison time, according to two people familiar with the investigation.” It also has Lerach’s departure memo to colleagues at the law firm that will now be known as Coughlin Stoia Geller Rudman & Robbins (cross-posted from Point of Law).

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Kentucky fen-phen lawyers are jailed

“The court finds that there is a serious risk that the funds will be moved offshore and that with these funds at their disposal, the defendants will flee to a country with which the United States has no extradition treaty or otherwise disappear,” U.S. District Judge William Bertelsman wrote in the Friday order sending Shirley Cunningham Jr., William Gallion, and Melbourne Mills Jr. to jail without bond until the January 7 trial date. (Jim Hannah, “Fen-phen lawyers are jailed”, Cincinnati Enquirer, Aug. 11). We have lots of coverage of the Kentucky fen-phen lawyers, who have been found in a civil case, to have misappropriated $62 million of settlement funds by overcharging on attorneys’ fees and other diversions. Cincinnati attorney Stan Chesley, who has not been criminally indicted, is also civilly liable on part of his $20 million fee for helping to negotiate the settlement, with the scope of liability yet to be determined; trial has been delayed while the criminal trial is pending.

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Kentucky fen-phen follies: May 20

Most recently: May 15; at American.com.

  • Curlin, the horse owned by fen-phen fraudsters Gallion and Cunningham, won the Preakness by a head. Curlin’s trainer is apparently ensconced in his own scandal, having served a six-month suspension for illegally drugging horses. (Andrew Beyer, “Making a Run for It”, Washington Post, May 20; Jennie Rees, “Curlin camp a crowded place”, Louisville Courier-Journal, May 20).
  • Stan Chesley did not even show up to the court-ordered May 16 mediation session, allegedly forcing a rescheduling until May 23. (Chesley’s attorney says he was in contact with his client at the hearing.) Plaintiffs have asked for sanctions. (Paul Long, “Mediation over lawyer fees fails”, Cincinnati Post, May 18).

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Kentucky fen-phen follies: Abbott v Chesley and Bonar v Chesley updates

Earlier: May 11, May 8, Apr. 5, Apr. 4, etc.

  • Barbara Bonar gets supporting testimony in her claims against Stan Chesley, but loses bench trial in case she brought over questionable settlement over Catholic church sex abuse. Bonar, the next president of the Kentucky Bar, will appeal. In the meantime, she faces trumped up ethics charges for representing class member opt-out settlements. (Andrew Wolfson, “Covington lawyer loses fee dispute case”, Louisville Courier-Journal, May 12).
  • Angela Ford, who is bringing the lawsuit on behalf of Kentucky fen-phen victims ripped off by their attorneys against their co-counsel, Stan Chesley, is now also facing what seems to me retaliatory political pressure; a Hamilton County, Ohio, judge, apparently unaware of deposition commissions, is complaining that she subpoenaed an Ohio witness without being licensed to practice law in that state. For some reason, a Kentucky judge, Stanley Billingsley, is testifying on behalf of Chesley. An American Home Products witness contradicted defendants’ claims that they “set aside” some settlement money for future Kentucky claimants (who, under the U.S. Supreme Court Amchem precedent, could not be bound by the settlement). And the parties are in mediation tomorrow and Thursday, which, judging by Chesley’s attorney’s complaints about press coverage, implies a confidential settlement is near. Next court hearing is May 31. (Shelly Whitehead, “Fen-phen suit heads to mediation”, Cincinnati Post, Apr. 24; Beth Musgrave and Jim Warren, “Lawyers meet Wednesday to try to reach deal on fen-phen millions”, Lexington Herald-Leader, May 14).
  • Angela Ford herself has a website, which is not surprising, but it does include a remarkable resource of publicly-available court documents related to the Abbott v. Chesley case.

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Kentucky fen-phen court: “Chesley was paid more than he should have been”

So wrote Boone Circuit Court Senior Judge William Wehr in a motion denying both Stan Chesley’s motion to dismiss a suit against him in the Kentucky fen-phen fee scandal. But, with plaintiffs’ summary judgment motion also denied, a jury will ultimately decide how much that “more” should be, and whether a fiduciary duty was broken. The same order denied a request by Melbourne Mills to reconsider the finding that a fiduciary duty was broken. Chesley’s attorneys state that he will pay back $7 million of his $20 million fee. (Jim Hannah, “Chesley made too much”, Cincinnati Enquirer, Apr. 5). Earlier: OL Mar. 26 and links therein. (Cross-posted at Point of Law.)

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