Class-Action Lawyer Weiss Indicted

Melvyn I. Weiss, a pioneering lawyer who filed some of the nation's biggest class-action cases on behalf of investors, was indicted yesterday on conspiracy and false statements charges that could send the 72-year-old to prison for the rest of his life.

Criminal charges against Weiss follow weeks of pressure that intensified after his former partners William S. Lerach and David J. Bershad agreed to plead guilty and secured government deals that limited their exposure to prison time. A third partner, Steven G. Schulman, yesterday agreed to plead guilty to a federal racketeering charge, to cooperate with the prosecution, and to forfeit nearly $2 million.

The indictment against Weiss, who maintains his innocence, sets up the possibility that he will be the only figure at the New York law firm Milberg Weiss to take his case to trial. He will defend against charges that he and others engaged in a 25-year scheme to pay people to serve as plaintiffs in scores of cases, then concealed the payments from judges and the companies they sued.

The secret arrangements, federal prosecutors in Los Angeles say, guaranteed Milberg Weiss more control of lawsuits and a larger slice of the fees. In all, the firm collected more than $250 million as part of the conspiracy, government officials said.

"The scheme furthered personal greed at the expense of the integrity of the courts," U.S. Attorney George S. Cardona said.

Weiss is known in New York legal circles for his fiery approach, his charitable donations and his work on cases involving Holocaust victims. He also personally collected nearly $210 million in law firm profits between 1983 and 2005, according to court papers.

The indictment said Weiss first reached a deal to pay one plaintiff 10 percent of the firm's fees in 1979, a deal that persisted despite warnings from then-partner Bershad that it would break the law. Weiss and another partner replied that because only cash was changing hands "there would be no paper trail and therefore there was little risk they would ever be caught," court papers said.

In recent days, the world appeared to close in on Weiss, who could face a maximum sentence of 40 years in prison if he is convicted of the four criminal charges. Late Wednesday, the law firm he founded and led since 1965 announced that he would step aside.

"Although this indictment is a bitter disappointment, Mr. Weiss intends to fight these charges with all of the energy and talent that has made him one of the most outstanding members of the bar for more than 40 years," defense lawyer Benjamin Brafman said.

People involved in the case said Weiss's removal could make it easier for Milberg Weiss to reach a financial settlement with the government to resolve a May 2006 indictment against the firm over conduct related to the plaintiff payments. Discussions between prosecutors and the firm foundered this year as Weiss refused to give ground and admit culpability, lawyers involved in the case said. Prosecutors filed new obstruction-of-justice charges against the firm yesterday.

During its heyday, Milberg Weiss negotiated or won recoveries for shareholders at Tyco, Lucent, Nortel Networks and Raytheon, among other major companies.

"We will not be deterred from our work and will persevere throughout this difficult period," Milberg Weiss said in a statement yesterday.

The latest round of charges pushed a seven-year investigation into what could be its final phase, according to people involved in the case.

Lawyers for the firm and for two men who allegedly took part in the kickbacks -- repeat plaintiff Seymour Lazar and attorney Paul Selzer -- are scheduled to appear in a Los Angeles federal court today for a pretrial conference.