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Indicted law firm fired by Ohio officials

Published May 20, 2006

One day after the law firm of Milberg Weiss Bershad & Shulman was indicted on charges of paying more than $11-million in kickbacks to clients, Ohio Attorney General Jim Petro on Friday fired the firm as his special counsel and New York Attorney General Eliot Spitzer said he will return $124,455 in campaign contributions from the firm, according to a spokesman.

On Thursday, a federal grand jury indicted the class-action law firm in a scheme that paid illegal kickbacks to get people to take part in shareholder lawsuits.

The charges followed years of investigation into the way New York-based Milberg Weiss, Bershad & Schulman conducts shareholder lawsuits against major corporations.

Lawsuits by the firm, the lead plaintiff in more than half the federal shareholder suits settled from 1997 to 2004, generated hundreds of millions of dollars in attorneys' fees, the indictment said.

"The conduct alleged in the indictment is particularly troubling because it represents a pattern of deception that spans 2½ decades," said U.S. Attorney Debra Wong Yang. She said the secret kickback arrangement often allowed the firm to be first to file a shareholder lawsuit.

The government seeks to recover at least $216-million in "tainted attorneys' fees."

The firm and attorneys David J. Bershad and Steven G. Schulman were charged with secretly paying about $2.4-million to Seymour M. Lazar, a Palm Springs lawyer involved in real estate, and others to act as class-action plaintiffs since 1981 and concealing the payments.

Lazar was also named in the indictment along with Paul L. Selzer, another Palm Springs lawyer.

The indictment's 20 counts included conspiracy, racketeering conspiracy, money laundering, mail fraud, filing false tax returns, obstruction of justice and criminal forfeiture.

The firm defended itself in a statement on its Web site.

"The government's allegations of wrongdoing have been categorically denied by the indicted partners, and the firm intends to join with them in vigorously defending against the charges," it said.

"The firm is particularly incensed that the prosecutors decided to indict the firm itself," the statement added, asserting that its hundreds of employees will suffer personal and professional harm.

Bershad's attorney, Andrew Lawler, said his client "categorically denies the allegations of the indictment." Lawler said the use of the racketeering law was unjustified.

On Friday, Petro, the Ohio attorney general, also removed Milberg Weiss from representing the Ohio Tuition Trust Authority, the state's college savings plan, in lawsuits against Putnam American Government Income Fund, which is run by Putnam Investments. The 300 suits claim Putnam and other mutual fund companies engaged in improper trading.

Milberg Weiss has been Special Counsel to the Ohio Attorney General since December 2003, according to Mark Anthony, a spokesman for Petro.

[Last modified May 20, 2006, 07:06:04]

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