A New York state judge has joined a notorious plaintiff class action law firm that was indicted on federal racketeering charges and seen several of its former name partners sent to jail after their felony convictions. The judge, Herman Cahn, joined Milberg LLP only months after issuing a ruling that was favorable to the indicted law firm and its jailed standard bearer Mel Weiss:
The class-action giant only last year settled a federal indictment over charges it had run a 30-year kickback scheme. The firm paved the way for this nonprosecution agreement by repudiating three partners -- Melvyn Weiss, David Bershad and Steven Schulman. Milberg claimed it had been in the dark as to their "illegal activities," and all three men later pleaded guilty to felonies.
Only later did we learn and report that Milberg the law firm had agreed to pay indicted partner Melvyn Weiss a slice of the firm's future lawsuit winnings, and was also picking up his legal fees. The supposedly remorseful firm made sure its founding felon would receive this cash even if he went to prison -- which he did. The Justice Department later admitted it had inexplicably sanctioned this sweetheart deal.
Meantime, as a felon, Melvyn Weiss had to obtain court approval for any fees for legal services he provided. In July of 2008, New York Supreme Court Judge Herman Cahn was asked to pronounce judgment on the Milberg payoff. A month later he agreed to let Melvyn Weiss have his booty, even as the judge acknowledged that law firms are generally barred from sharing legal fees with nonlawyers, and that Melvyn Weiss had forfeited his right to practice law.
And now for the latest news: In December, Judge Cahn retired from the bench. Last week, the renamed Milberg LLP announced it had hired a "distinguished" new attorney: Herman Cahn. In its press release, the firm listed his most notable cases, though omitting any on which he'd ruled on its behalf.
To recap: A class-action firm's name partners are nailed in a 30-year fraud. Class-action firm rewards lead perpetrator with share of future earnings. State judge sanctions the earnings deal. Class-action firm hires state judge. We'll let our readers decide what they think of this "fact pattern," as a plaintiffs lawyer might put it.
The law firm -- which now simply goes by the moniker Milberg LLP in light of the felony convictions of its prior named partners -- was called the "meanest law firm" in America by Fortune magazine, and settled the federal racketeering indictment against it by agreeing to pay a fine of $75 million and hire a compliance monitor. Speaking on the intregity of the remaining partners at Milberg, Ariana Tadler said: "The lawyers that stayed were not implicated or involved in the indictment, and we are going to work just as aggressively as we always have to do the best for our clients."
Although Milberg LLP claims that none of its remaining partners participated in the illegal conduct the question still begged is whether some of them were aware of the scheme and what, if any, steps they took to address the problem. After all, what did they think was happening when the same individuals repeatedly were serving as plaintiffs in dozens of lawsuits? Indeed, in 1995, Congress enacted the Private Securities Litigation Reform Act specifically for the purpose of curbing the abuses for which Milberg Weiss and its partners were indicted, and surely this legislation raised a red flag even among the innocents at the firm.
Frankly, the apparent failure of Ariana Tadler and other current partners at Milberg to uncover the racketeering crimes of Mel Weiss that allegedly occured for decades at the law firm right under their noses hardly instills confidence in their ability now to represent effectively defrauded investors.
After the indictment of Milberg Weiss political hacks from the Democratic Party -- including Rep. Charles Rangel, Rep. Carolyn McCarthy, Rep. Gary Ackerman & Rep. Robert Wexler -- initiated an ultimately unsuccessful public campaign to derail the prosecution. Two of these Congressmen, Messrs. Rangel and Wexler, now are facing allegations of wrongdoing on a host of issues.
In order to fully appreciate the sleaze factor among some of the partners at Milberg Weiss Bershad & Schulman LLP -- in case federal racketeering charges which resulted in jail for many does not adequately do the job -- it's worth taking a look also at a contemporaneous case against former partner Paul D. Young who was sued by New York City for criminal nuisance involving the operation of a gay S&M sex club out of the basement of his home. The sex club, El Mirage, is tied to a larger gay sex club enterprise further including the East Side Club at 227 East 56th Street and the West Side Club at 27 West 20th Street. Gay businessman Robert N. DeBenedictis appears to have some interest in all three of these gay sex clubs -- as well as several gay bars, restaurants and other businesses serving the gay community -- and also is a defendant in a class action consumer fraud lawsuit for his alleged role in the company he founded which sells the hair loss remedy Avacor. Read Class Action Complaint Against Avacor