A former partner at a New York law firm pleaded guilty to conspiracy on Monday, becoming the third lawyer to admit breaking the law in a class-action kickback scheme that prosecutors said helped net the firm hundreds of millions of dollars.
William Lerach, 61, whose high-profile legal victories include a $7 billion judgment against now-defunct energy giant Enron Corp., entered his plea to one count of conspiracy to obstruct justice and make false statements.
Under the plea deal, he also agreed to forfeit $7.75 million to the government, pay a $250,000 fine and accept a sentence of one to two years in prison.
Lerach was the seventh person to plead guilty to charges stemming from a seven-year federal investigation. Among them were three former partners, including Lerach, from the firm now known as Milberg Weiss.
Several people enlisted as plaintiffs have also entered guilty pleas.
Prosecutors said the firm previously known as Milberg Weiss Bershad & Schulman paid $11.3 million in kickbacks to people who became plaintiffs in lawsuits targeting companies such as AT&T, Lucent, WorldCom, Microsoft and Prudential Insurance.
The tactic allowed Milberg Weiss attorneys to be among the first to file litigation and secure the lucrative position as lead plaintiffs' counsel, according to court documents.
Firm co-founder Melvyn Weiss, 72, and the firm itself have pleaded not guilty to conspiracy and other charges.
Flanked by his two attorneys, Lerach appeared in federal court wearing a black suit and a pair of large glasses.
Asked by U.S. District Judge John Walter how he would plead to the charge, Lerach answered, "Guilty, your honor."
After the hearing, Lerach shook hands with the three federal prosecutors who have been leading the investigation of his former law firm.
Outside court, Lerach and his attorney John Keker declined to comment. Sentencing was scheduled for Jan. 14.
Lerach apologized in a statement released when prosecutors announced the plea deal last month, saying he "crossed a line and pushed too far."
Prosecutors said the firm made an estimated $250 million by filing the class-action cases over two decades.
Weiss and top lawyers dominated the industry in securities class-action lawsuits, which involve shareholders who claim they suffered losses because executives misled them about a company's financial condition.
Lerach previously acknowledged making secret payments to physician Steven G. Cooperman, and that other plaintiffs received payments — generally 10 percent of the attorneys' fees — from other Milberg Weiss partners, according to the plea agreement.
Cooperman pleaded guilty to a federal conspiracy charge for his role as a plaintiff in the alleged kickback scheme.
After leaving Milberg Weiss in 2004, Lerach formed his own firm in San Diego and took much of his former employer's securities litigation with him, including shareholder suits against Enron.
Lerach, a resident of Rancho Santa Fe, resigned last month from the firm now known as Coughlin Stoia Geller Rudman & Robbins. His plea agreement shields that firm from being charged in the Milberg Weiss case.
Others who pleaded guilty in the case include former partners Steven Schulman and David Bershad, and Seymour Lazar, who served as a plaintiff.
Schulman, 56, pleaded guilty to a racketeering conspiracy charge. He agreed to forfeit $1.85 million to the government and to pay a $250,000 fine. He is awaiting sentencing.
Bershad, 67, pleaded guilty to conspiracy and agreed to cooperate with the government. He will be sentenced early next year.
Unlike Bershad's plea deal, there is no cooperation provision in Lerach's agreement.
Lazar, 80, of Palm Springs pleaded guilty to three counts, including obstruction of justice and subscribing to a false tax return. He is scheduled to be sentenced in January.
The Milberg Weiss firm has pleaded not guilty to one count each of conspiracy, mail fraud, money laundering and obstruction of justice in a revised indictment.
Weiss has pleaded not guilty to two counts of conspiracy and one count each of obstruction of justice and making false statements.