Man pleads guilty in kickback case

A man prosecutors say was paid about $2.6 million to be a professional plaintiff — and helped a prestigious New York law firm get lucrative class-action lawsuits — pleaded guilty Thursday to obstruction of justice and two other charges.

After reaching a plea deal, Seymour Lazar, 80, of Palm Springs appeared before U.S. District Court Judge John Walter. Lazar also pleaded guilty to one count each of subscribing to a false tax return and making a false declaration to the court.

Lazar also agreed to forfeit $1.5 million and pay $600,000 in fines. "He does take full responsibility for his actions," said his attorney, Thomas Bienert.

Lazar faces up to 18 years in federal prison when he is sentenced Jan. 28, but prosecutors have recommended home detention because of his declining health and his age.

Lazar was the latest person to plead guilty in a seven-year federal investigation that accuses the firm, previously known as Milberg Weiss Bershad & Schulman, of secretly paying $11.3 million in kickbacks to get people to take part in more than 225 class-action and shareholder lawsuits.

Prosecutors estimate the firm, now known as Milberg Weiss, made $250 million by filing lawsuits against some of the nation's largest companies, including Lucent, Microsoft, Prudential Insurance and AT&T.

Among those who have pleaded guilty are former partners Steven Schulman and David Bershad, and top attorney William Lerach.

Firm co-founder Melvyn Weiss has been indicted on two counts of conspiracy and one count each of obstruction of justice and making false statements.

Weiss, 72, pleaded not guilty to the charges on Monday. If convicted of all four counts, he would face up to 40 years in prison. He remains free after posting a $1.5 million bond.

Lazar was initially indicted on more than a dozen charges, including money laundering, conspiracy and mail fraud. The indictment said he "frequently served" as a plaintiff, and received about $2.6 million from the firm.

Lazar didn't plead guilty to any charges of receiving kickbacks, and prosecutors will move to drop those charges after he is sentenced. But prosecutors said in court that if he stood trial they could prove he was paid about 10 percent of attorneys' fees obtained in lawsuits in which he was a plaintiff.

Money was funneled to designated attorneys or law firms that would then give it to Lazar, prosecutors said.

Attorney Paul Selzer is suspected of acting as one such intermediary. Selzer has pleaded not guilty to money laundering charges.

Weiss and top lawyers dominated the industry in securities class-action lawsuits, in which shareholders claim they suffered losses because executives misled them about a company's financial condition.

The firm also has been charged in the case and pleaded not guilty Monday to one count each of conspiracy, mail fraud, money laundering and obstruction of justice.

Schulman, 56, pleaded guilty last week 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 also has pleaded guilty to conspiracy and agreed to cooperate with the government. He will be sentenced early next year.

Lerach has agreed to plead guilty to conspiring to obstruct justice and making false statements under oath, prosecutors said. He will forfeit $7.75 million to the government, pay a $250,000 fine and accept a sentence of one to two years in federal prison, prosecutors said.

Lerach is scheduled to appear in federal court on Monday.

He resigned last month from the firm he founded in San Diego, now known as Coughlin Stoia Geller Rudman & Robbins.