Federal prosecutors Friday recommended Melvyn Weiss, the long-reigning king of multibillion-dollar U.S. class action litigation, spend no more than 33 months in jail for paying secret kickbacks to clients.
Weiss, 72, pleaded guilty to a single federal racketeering charge in April. He has also agreed to pay $10 million in fines and forfeiture.
In a sentencing recommendation also submitted Friday, Weiss’s attorneys asked that he serve no more than two more years in prison, citing his advanced age and his character.
In February, U.S. District Judge John Walter sentenced Weiss’s former partner, William Lerach, to a maximum prison sentence allowed under his plea agreement and criticized prosecutors for proposing a sentence that he considered too lenient.
Weiss’s lawyers said they understood that Walter took the offenses seriously and asked for compassion.
The Bronx-born Weiss pioneered high-stakes shareholder litigation in U.S. courts and is best known for landing more than $1 billion in settlements for investors hurt by the Drexel Burnham Lambert junk bond scandal in the 1980s and an estimated $10 billion in damages from insurance companies accused of misleading sales methods in the late 1990s.
Milberg Weiss maintained a stable of clients with large stock portfolios who served or recruited family members or friends to serve as lead plaintiffs in its lawsuits in exchange for a share of the firm’s legal fees.
The arrangement allowed Milberg Weiss to be first to file lawsuits and, before class action reforms stripped away the first-to-file advantage, to obtain lead counsel status and a larger share of fees.
The illegal kickbacks were paid to clients in cash, or through intermediary law firms, prosecutors said.
Prosecutors said the scheme stretched over 25 years and involved more than 225 lawsuits and more than $200 million in legal fees.
(Reporting by Michael Erman, additional reporting by Gina Keating in Los Angeles; Editing by Braden Reddall)
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