More Milberg charges possible
A plea agreement by a former Brentwood eye doctor in the federal case against a prominent New York law firm suggests that prosecutors are seeking still more indictments, possibly including class-action lawsuit king William S. Lerach, legal experts said.
Steven Cooperman, 64, will plead guilty to taking more than $6.4 million in secret payments from Milberg Weiss & Bershad to serve as its lead plaintiff in class-action suits, prosecutors said Wednesday.
The firm and two of its partners, David Bershad and Steven Schulman, were indicted in May on charges they illegally paid clients to sue companies for securities fraud. The three defendants pleaded not guilty in July. Trial is set to begin Jan. 8 in Los Angeles federal court.
Under the plea agreement, Cooperman will admit that he and some of his relatives and associates served as named plaintiffs in about 70 class actions and shareholder suits spearheaded by the Milberg firm.
Government lawyers have long known of Cooperman’s involvement with the firm and particularly with Lerach, once its West Coast superstar.
Cooperman’s plea agreement could mean that prosecutors are still circling San Diego-based Lerach, who left Milberg Weiss in 2004 to launch his own firm.
“Cooperman has previously stated that his primary contact at the firm was Mr. Lerach,” said Jan Handzlik, a former federal prosecutor now in private practice in Los Angeles. “This new conviction and agreement to cooperate may signal further troubles for Mr. Lerach and others.”
The plea agreement indicates that prosecutors “are more and more eager to proceed against additional defendants,” said legal expert John C. Coffee, a professor at Columbia Law School.
However, representatives for Milberg Weiss and Lerach said Cooperman had a criminal history that made him a less-than-credible witness.
Lerach is widely believed to be the “Partner B” referred to throughout the 102-page Milberg indictment unsealed in May as a participant in the alleged kickback scheme.
His firm, Lerach Coughlin Stoia Geller Rudman & Robbins, has collected more than $7 billion in settlements on behalf of Enron Corp. shareholders and is frequently listed as among the top-ranked class-action firms.
A prosecution of Lerach could cast a pall over the lucrative class-action bar. While consumers hailed the legal victories on behalf of shareholders, business groups spearheaded legislation aimed at snuffing out what they consider meritless class actions costing companies millions.
Experienced firms such as Lerach’s, Milberg Weiss and a handful of others have proved to be in the best position to lure the institutional investors, such as the California Public Employees’ Retirement System, that now drive such litigation. Moreover, in the months since Milberg’s indictment, other firms have expanded by picking up anxious Milberg lawyers and clients.
Prosecutors apparently hope Cooperman proves valuable in making a case against Milberg and possibly Lerach.
Once a successful surgeon with homes in Palm Springs, Connecticut and Brentwood and owner of a valuable art collection, Cooperman retired in 1989 rather than fight charges filed with the state that he had fabricated records and performed unnecessary surgeries.
In 1992, after suffering big stock losses and in the face of debts totaling at least $4 million, Cooperman faked the heist of a Picasso and a Monet to collect a $12.5-million insurance payment, according to his testimony during his 2004 divorce trial.
Following his 1999 conviction for insurance, tax and wire fraud, Cooperman offered himself to the feds in exchange for a lighter sentence.
He told prosecutors that he had served as a ready-made plaintiff for Milberg Weiss in dozens of class actions, according to his divorce testimony, enabling the firm to become the lead lawyers in these cases and entitling it to the largest helping of fees.
While serving a 21-month federal prison sentence in connection with the staged art theft, Cooperman assisted prosecutors in the early stages of their Milberg Weiss probe.
The judge in Cooperman’s divorce case later concluded that while in prison, the former doctor committed insurance fraud by forging his physician’s signature on disability insurance papers to collect benefits.
Referring to that record, Milberg’s lawyer, William Taylor, issued an e-mail statement saying, “This new plea agreement demonstrates Mr. Cooperman’s willingness to say anything for a shorter sentence and the government’s willingness to urge him to do so.”
Times staff writer Myron Levin contributed to this report.