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From: dvdw©6/27/2005 1:08:13 PM
of 3154
 
News: Most small cap investors will recognize this firm as a System Element, a fixture if you will; on the small cap scene; I've been an owner of many of the companies where all of a sudden this bedfellows arrival marked a prolonged period of Obfuscation ( a Feature of Systems in action). Will be Interesting to watch this case unfold.

http://securities.stanford.edu/1030/LQMTE04-01/

U.S. Pushes Broad Investigation
Into Milberg Weiss Law Firm

By JOHN R. WILKE
Staff Reporter of THE WALL STREET JOURNAL
June 27, 2005; Page A1

Federal prosecutors are investigating one of the nation's most aggressive class-action law firms, Milberg Weiss Bershad & Schulman, for alleged fraud, conspiracy and kickbacks in scores of securities lawsuits, and could seek criminal charges against the firm itself and its principals.

The three-year investigation focuses on allegations that the New York-based firm routinely made secret, illegal payments to plaintiffs who appeared on securities class-action lawsuits brought by the firm, according to court documents and lawyers close to the case. A grand jury in Los Angeles convened last October has been hearing evidence of alleged illegal payments in dozens of suits filed against oil, biotechnology, drug and chemical companies during the past 20 years, the lawyers close to the case said.

Prosecutors offered a glimpse of the broad investigation in an indictment filed in federal court in Los Angeles on Thursday against a single plaintiff, Seymour M. Lazar, a retired Palm Springs, Calif., entertainment lawyer who is 78 years old.

The charges don't name Milberg Weiss, but Milberg Weiss officials confirm that it is the firm cited in the indictment. The firm has been told that senior partners alleged to have authorized payments to the plaintiff and the firm itself could face indictment, the lawyers close to the case said.

Milberg Weiss has brought hundreds of class-action cases over 30 years and won tens of billions of dollars in settlements and judgments against businesses. Some corporate and Wall Street executives say the firm exemplifies abuses in class-action litigation that burdens the courts. In Washington, Milberg Weiss has often been cited in Republican-led efforts to curb class-action suits and in congressional debate that led to 1995 legislation to limit securities litigation.

Class-action lawyers said they feared that an indictment of Milberg Weiss could have far-reaching impact and hamper efforts to recover damages for shareholders and consumers. Michael Hausfeld, a prominent Washington plaintiffs' lawyer, said such a case "could taint private civil enforcement of securities law" and deflect attention from "the egregious corporate misconduct at issue in these suits."

Last week's indictment charged Mr. Lazar with fraud, conspiracy, money laundering and obstruction. It alleges that a New York law firm paid "millions of dollars in secret and illegal kickbacks" to Mr. Lazar.

The indictment alleges that Mr. Lazar or a member of his family appeared as a plaintiff in more than 50 Milberg Weiss securities cases during a period running from 1981 to 2004. Mr. Lazar and family members together received more than $2.4 million in secret payments from the law firm, the government charges. During this period, Milberg Weiss earned at least $44 million in legal fees from cases in which Mr. Lazar or a family member was a plaintiff, according to the indictment.

Investigators allege that Mr. Lazar was illegally promised a share in the legal fees that would result from the cases in which he was a plaintiff, according to the indictment. Named plaintiffs in class-action cases can't have a special interest or concealed inducements beyond others in the class.
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