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Plaintiff Lawyer to Plead Guilty To Conspiracy

By Carrie Johnson
Washington Post Staff Writer
Tuesday, September 18, 2007

William S. Lerach, one of the nation's best known and wealthiest plaintiff lawyers, is preparing to plead guilty as early as today to a single criminal conspiracy charge that could send him to prison for up to two years, according to sources familiar with the case.

Lerach, 61, resigned from his California law firm last month after intense speculation about his personal exposure in a lengthy federal criminal investigation. At the time, he said he wanted "to focus single-mindedly on putting the matter behind me once and for all."

During his heyday, Lerach won settlements worth billions of dollars from major companies, including a record $7.3 billion payout from firms that helped Enron disguise its financial problems.

For seven years, federal prosecutors in Los Angeles have been probing allegations that Lerach and his former partners at the Milberg Weiss law firm enlisted people to buy shares in big corporations and then paid them to serve as plaintiffs in lawsuits. Government lawyers said that the payments, totaling more than $11 million, were not disclosed to judges or other investors and allowed Lerach and his team to arrive first at the courthouse to seize control of the class-action cases and to collect bigger slices of settlements or court victories.

Lerach is to plead guilty in court papers to be released as early as this week, with a court appearance following over the next several days, according to the sources, who spoke on condition of anonymity because the investigation is continuing.

He is not expected to offer testimony against his former law partners as part of the deal. Under its terms, the sources said, Lerach would serve a minimum of one year. The agreement requires a judge's approval.

Lerach's lawyer, John W. Keker, did not return calls yesterday. Thom Mrozek, a spokesman for the U.S. attorney in Los Angeles, George S. Cardona, declined to comment.

The lengthy investigation gained significant momentum in July, when David J. Bershad, who controlled the law firm's finances, pleaded guilty and agreed to cooperate with investigators against his longtime associates.

Milberg Weiss, based in New York, was indicted last year and has tried without success to secure a plea deal of its own in recent months, said lawyers involved in the case. A federal judge in Los Angeles is to hold a hearing on the broader case Friday. Prosecutors told the judge earlier this summer that they expected to make decisions about whether to offer plea deals or bring new criminal charges in the case by the end of September.

Lerach and longtime business partner Melvyn I. Weiss, from whom he bitterly split three years ago, had previously rejected government offers that would have required them to serve more than three years in prison.

Since then, however, Bershad briefed government investigators about the inner workings of the law firm's finances, sources said, and a former client of the firm pleaded guilty to related criminal charges. The charge at issue in the Lerach plea deal relates to 1996 conduct in a case involving that client, Steven G. Cooperman.

Weiss has not been charged with a crime, but he and Lerach were mentioned cryptically as "Partner A" and "Partner B" in court papers accompanying Bershad's July plea agreement. Through a defense lawyer, Weiss has continued to maintain his innocence and profess a desire to fight the government allegations.

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