Lerach Gets Two Years In Prison for Kickbacks

William Lerach leaves the federal court building in downtown Los Angeles Monday. Lerach, a former partner at a well-known New York law firm, was sentenced Monday to two years in federal prison for his role in a lucrative kickback scheme involving class-action lawsuits against some of the nation's biggest corporations.
William Lerach leaves the federal court building in downtown Los Angeles Monday. Lerach, a former partner at a well-known New York law firm, was sentenced Monday to two years in federal prison for his role in a lucrative kickback scheme involving class-action lawsuits against some of the nation's biggest corporations. (Ric Francis - AP)

Network News

X Profile
View More Activity
By Carrie Johnson
Washington Post Staff Writer
Tuesday, February 12, 2008

William S. Lerach, who won billions of dollars for defrauded investors in class-action cases, was sentenced yesterday to two years in prison, ending up on the wrong end of the justice system after a legendary legal career.

The prominent California plaintiff lawyer recovered more than $7 billion for Enron shareholders before pleading guilty to a conspiracy charge last October. He will serve his time in a facility to be determined by prison officials.

The sentence imposed by U.S. District Judge John F. Walter in Los Angeles yesterday was far higher than the six months in prison and six months' home detention that Lerach had sought. In selecting the maximum term, the judge decried as "breathtaking" the cash kickbacks that Lerach and others at his former law firm paid to plaintiffs in an effort to gain control of big lawsuits and win larger fees in 150 cases over 20 years.

The scheme "corrupted the law firm, and it corrupted it in the most evil way," the judge said.

Lerach, 61, continued yesterday to challenge the motivation of federal investigators, who had been trailing him for nearly a decade. In court, he apologized to his family and his former law partners. He shook hands with reporters as he left the building but declined to offer extensive public comments.

Lerach's success made him the nemesis of executives at troubled companies and his legal victories brought him tens of millions of dollars, which he shared with Democratic politicians. Presidential candidate John Edwards vowed last year to return thousands of dollars Lerach had contributed.

In late December, authorities suspended Lerach's license to practice law, and legal experts said he is almost certain to be disbarred. Federal prosecutors in Los Angeles noted that Lerach "now stands in disgrace before the profession of which he considered himself a national leader."

"Mr. Lerach manipulated the court system for his own personal gain," U.S. Attorney Thomas P. O'Brien said in a statement. "Now, after telling lies, and encouraging others to lie, to federal judges around the country, he will pay the price."

True to form, the aggressive advocate refused to stand on the sidelines while awaiting his fate. Instead, Lerach wrote opinion pieces in The Washington Post and other newspapers in which he condemned executive greed at a time when millions of Americans are losing their homes to foreclosure.

In recent months, he also lectured to students at the University of San Diego law school, near his mansion in the exclusive Rancho Santa Fe suburb. Lerach lives there with his wife, Michelle, and his daughter Shannon, who is studying for her doctorate in abnormal psychology. He is likely to report to prison in April, lawyers said in court yesterday.

Lerach's lead defense lawyer, John W. Keker, told the judge in court filings that Lerach had rehabilitated himself through service to ordinary investors and that he would like to teach, on a volunteer basis, at his alma mater, the University of Pittsburgh, when he is released from prison.

Such luminaries as consumer advocate Ralph Nader, Sen. Carl M. Levin (D-Mich.) and financial affairs columnist Ben Stein wrote letters supporting Lerach's plea for leniency, as did defense lawyers who had squared off against the brilliant, abrasive advocate over the years. Lerach and his onetime firm, Milberg Weiss, often won far more money for investors than did government agencies, which lacked the resources to mount large-scale investigations. Milberg Weiss continues to fight criminal charges related to the kickbacks.

Retired California court of appeal judge, Edward J. Wallin, said that Lerach was "by far the most effective advocate for wronged investors in the history of our profession." Ralph C. Ferrara, a Securities and Exchange Commission official turned defense lawyer, said that corporations have lost a "magnificent adversary."

Employees of Lerach's new law firm, renamed Coughlin Stoia after Lerach's departure last summer, wrote testimonials describing how he had offered them no-interest loans for down payments on their homes. His personal driver and longtime office assistant implored the sentencing judge for mercy.

But prosecutors said going light on Lerach would do little to deter others from cheating the system. In court papers filed last month, Assistant U.S. attorneys Richard E. Robinson and Robert J. McGahan said the plea deal, combined with a lengthy prison term, "sends a compelling message to every lawyer, no matter how prominent or powerful, that a jail cell awaits those who choose to abuse the privilege of practicing law by engaging in criminal conduct."


© 2008 The Washington Post Company

Network News

X My Profile
View More Activity