Milberg Weis Partner Pleads Guilty in Kickback Scheme

By Jeralyn, Section Crime in the News
Posted on Tue Jul 10, 2007 at 07:07:00 AM EST
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On Monday in Los Angeles, David J. Bershad, a former partner at the huge class action law firm Milberg Weiss, until yesterday known as Milberg Weiss & Bershad, became the first principal of the firm to plead guilty in an investigation into kickbacks. Bershad, the law firm and another partner, Steven G. Schulman, were indicted last year. The investigation is continuing.

The 20-count indictment, which included conspiracy and other charges, detailed a scheme that began in the 1970s and continued as recently as 2005. In that scheme, lawyers inside Milberg Weiss paid $11 million in “secret and illegal kickbacks” to named plaintiffs in more than 150 class-action and other shareholder lawsuits. The lawsuits, according to the indictment, earned the firm more than $216 million.

Bershad, represented by Karl Rove lawyer Robert Luskin, pleaded guilty to conspiracy. He is cooperating with the Government.

Bershad could receive up to five years in prison. His sentencing date is set for June, 2008. Why is it so far away?

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Most likely because Bershad has to earn his sentence concession from the Government. The way he gets from five years or whatever his sentencing guideline range is to probation is by ratting out others.

The Government doesn't want to buy a pig in a poke. It wants results. While the Government will insist Bershad must tell and is telling the truth when it comes time for him to testify against others, the reality is Bershad's truth has to match the Government's version of the truth, or Bershad will get bupkis.

Only the Government can move for a downward departure from the guidelines for cooperation. Every plea agreement states that the decision whether to file such a motion lies in the sole discretion of the Government. They are the sole arbiter of whether the defendant is telling the truth.

It's a system that induces people to make stuff up to satisfy prosecutors so they get a reduced sentence.

This is a huge problem with the sentencing guidelines. They reward purchased testimony -- testimony that is purchased with promises of leniency. Freedom is a commodity far more precious than money. It's an arrangement that renders such testimony suspect.

Rewarding cooperators with freedom for telling the Government's version of the truth has made our sentencing system morally bankrupt.

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Milberg Weis Partner Pleads Guilty in Kickback Scheme | 1 comment (1 topical)

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I agree (5.00 / 1) (#1)
by Deconstructionist on Tue Jul 10, 2007 at 07:39:37 AM EST

with the concern about the use of "purchased" cooperation. Even when the purchased undercover work/information/testimony is not false there is the problem that we end up with situations where law enforcement and one set of criminals are aligned for mutual benefit against another set of criminals.

Just because a certain snitch might be telling the truth does not eliminate my concern about the process. We should remember that it's also illegal for a defendant (or defense counsel) to offer a thing of value in exchange for truthful testimony and it's not a defense that the purchased testimony is truthful.

In the interest of full disclosure, I will state that I have represented many defendants who have cooperated (and many who have had purchased testimony used against them-- not infrequently the same client wears both hats) and it is my duty to inform clients of the potential to reduce sentences through cooperation with authorities and to assist them in such cooperation if they choose to go that route.

I'd also offer that this problem is not really one I'd blame on the sentencing guidelines. The use of "purchased cooperation" existed in the federal system long before the guidelines existed and exists now in state systems with no guidelines. The guidelines probably have done a couple of things -- given more incentive for cooperation in more cases due to their rigidity and often harsh sentencing ranges and furthter shifted the balance of power toward law enforcement and prosecutors and away from judges-- but I'd say those factors while important are not enough to lay the blame for the problems associated with buying snitches on the guidelines per se.