Three months ago, William S. Lerach, the powerful class-action attorney both feared and loathed in executive suites across the country, received a disturbing call from his lawyer. Federal prosecutors, wanted more time to build a criminal case against him, reports the New York Times. Until then, a three-year investigation into whether Lerach and his former New York law firm, Milberg Weiss Bershad & Schulman, had used illegal tactics in shareholder lawsuits that made him and the firm rich and famous had appeared to be dormant. The phone call meant that the inquiry had suddenly gained traction.
A firm that had spent decades winning multimillion-dollar lawsuits against huge corporations was now in the cross hairs of an investigation and a possible indictment that could put it out of business. On June 23, the exact parameters of the federal investigation became clear when the United States Attorney’s office in Los Angeles indicted an eccentric 78-year-old Palm Springs investor named Seymour M. Lazar. The indictment charged Lazar with accepting millions of dollars from an unidentified law firm in what the government describes as “kickbacks” for serving as the lead plaintiff in dozens of fraud suits the firm filed against corporations from 1976 to 2004. Milberg Weiss and others have acknowledged that it is the unidentified firm cited as Lazar’s co-conspirator in the court papers.