NY Times, July 10, 2007:
A seven-year federal investigation into accusations that a leading securities class-action law firm, Milberg Weiss, paid secret kickbacks to plaintiffs gained traction yesterday when David J. Bershad, a former partner with extensive knowledge of the firm’s finances, pleaded guilty to conspiracy and agreed to cooperate with prosecutors.
Mr. Bershad’s guilty plea is the latest blow to a powerhouse firm that once dominated the landscape for class-action securities lawsuits and spurred fear as well as contempt in corporate boardrooms. But over the last year, the firm has struggled to retain its major clients, its lawyers and its hold on numerous lawsuits even as the number of securities-related cases has declined, in part because of the strong performance of the stock market.
Yesterday’s guilty plea also put renewed pressure on William S. Lerach and Melvyn I. Weiss, two of the industry’s leading lawyers who founded the New York-based law firm and have long been the focus of the federal investigation. Mr. Lerach split from Milberg Weiss in 2004 to form a firm in San Diego, and last month, he announced that he was considering retirement. Neither Mr. Lerach nor Mr. Weiss has been indicted. Calls to their lawyers were not returned.