Close Close

Retirement Planning > Social Security

Report: Milberg Weiss Under Rent-a-Plaintiff Scrutiny

Your article was successfully shared with the contacts you provided.

LOS ANGELES, Calif. (–One of the most prominent class-action plaintiffs’ law firms in the United States, one at the center of several securities-fraud actions, could face criminal charges from a grand jury that was convened last October, according to an article in the Wall Street Journal Monday.

Last week, the grand jury indicted Seymour Lazar, for fraud, conspiracy, money laundering, and obstruction, the Journal reported. Mr. Lazar or a member of his family allegedly as plaintiff appeared in dozens of securities fraud cases from 1981 to 2004, and the Journal reports that the grand jury has concluded he was promised a share of the legal fees generated by these lawsuits.

His daughter, for example, allegedly received two secret payments in the period 2000-2001 that totaled US$183,000 for her participation in a securities fraud action against a pharmaceutical company.

Milberg has been at the center of much litigation that has been of great importance to the alternative-investments industry. A year ago, it split into two, essentially by spinning off Lerach Coughlin Stoia Geller Rudman & Robbins LLP (the charges relate to events prior to the division of the firm last year).

Lerach Coughlin, too, continues to be at the center of securities fraud litigation. One client of Lerach Coughlin, for example, is Pennsylvania Avenue Advisors LLC, a mutual fund management firm that has under management certain funds that employ hedge-fund-like tactics. Lerach Coughlin represented Pennsylvania Avenue in a lawsuit against UniSource Energy Corp., Tucson, Ariz., and its directors in an Arizona state court, alleging that planned merger was the result of self-dealing and breach of fiduciary duty.

Pennsylvania Avenue’s president, Thomas Kirchner, said Tuesday that this lawsuit has since become moot, because the merger collapsed. “And the stock price went up, so the market vindicated our complaint,” he added.

Milberg Weiss haven’t replied to HedgeWorld’s request for comment. But the firm has issued a statement saying that it has cooperated with the government’s investigation over the past three years and that the indictment “unfairly implicates the firm in the wrongdoing alleged against Mr. Lazar.”

[email protected]

Contact Bob Keane with questions or comments at: [email protected].