Prominent Class Action Attorney Melvyn Weiss Sentenced to 30 Months in Prison
 
June 16, 2008
 

On June 2, 2008, Judge John F. Walter of the United States District Court for the Central District of California sentenced prominent plaintiffs’ attorney Melvyn I. Weiss to 30 months in prison for his role in concealing illegal kickbacks to plaintiffs in securities class action cases. Mr. Weiss was also ordered to forfeit $9.75 million in ill-gotten gains and to pay a criminal fine of $250,000. The sentencing of Mr. Weiss comes as a result of a major government investigation into what federal prosecutors have described as a $250 million illegal kickback scheme used by Mr. Weiss’ former law firm, Milberg Weiss (now known as Milberg LLP). According to federal prosecutors, the firm paid illegal kickbacks to individuals in exchange for their service as lead plaintiffs in numerous class action and shareholder derivative action lawsuits, which enabled Milberg Weiss to be the first to file stockholder class action lawsuits and to apply to be lead counsel, resulting in large legal fees for the firm.

These developments, along with other recent scandals affecting plaintiffs’ attorneys, have prompted the introduction of a new bill in Congress to address what appears to be an industry-wide practice of illegal kickbacks in securities class actions. The new bill, called the Securities Litigation Attorney Accountability and Transparency Act (SLAATA), is designed to make reforms to current class action law, such as requiring disclosure of payments between plaintiffs and attorneys; introducing a competitive bidding process for the selection of lead counsel; and commissioning a study of fee awards in securities class actions to determine appropriate attorneys’ fees. SLAATA is in the first stage of the legislative process where it is being considered in committee.

http://www.usdoj.gov/usao/cac/pressroom/pr2008/075.html

http://www.govtrack.us/congress/billtext.xpd?bill=h110-5463