Friends of Ours

Prosecutor May Have Moonlighted As Dominatrix

The New York State Attorney General's Office has suspended 36-year-old Alisha Smith as an assistant prosecutor pending an investigation "that she was leading a double life as an S&M dominatrix" as reported by Melanie Eversley for USA Today.

Apparently, her suspension "has less to do with her personal pleasure and more to do with the possibility that she profited from it" as reported by Jamie Schram and Bob Fredericks for the New York Post:  "sources cited a standing executive order in the Attorney General's Office that requires employees to 'obtain prior approval from the [Employment Conduct Committee] before engaging in any outside pursuit ... from which more than $1,000 will be received or is anticipated to be received.'"

Prior to joining the AG's office Smith was an attorney with the class action firm Milberg Weiss as reported by John O'Brien for Legal Newsline.

Another former Milberg Weiss attorney, Paul D. Young, was among those sued by New York City in November 2006 to shut down "gay S&M sex club" El Mirage which operated for seven years out of the basement of a property he owned as reported by Roger Parloff for Fortune.

In 2006 Milberg Weiss was indicted for its alleged role in a decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks from court-approved attorneys' fees in securities fraud cases, and several former partners including Mel Weiss and Bill Lerach were sent to prison.  The firm itself avoided prosecution after paying a $75 million fine.

Milberg Can't Get No Love

Poor Milberg.

The class action law firm which represents slighted consumers and shareholders in their battles against those mean corporations is getting knocked around these days like a red-headed stepchild.

A few years ago an earlier incarnation of the firm was indicted for its alleged role in a decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks from court-approved attorneys' fees in the cases.  Several former partners were sent to prison, and the firm avoided prosecution after paying a $75 million fine.

The surviving firm slogged on to face other controversies last year. 

U.S. District Judge Robert P. Patterson Jr. sanctioned the firm and its co-counsel pursuant to Rule 11 with a public reprimand after allegations from two "confidential sources" in a lawsuit against Sony Corporation subsequently were not supported by the witnesses' deposition testimony, and U.S. District Judge Richard M. Berman rebuked the firm in a ruling on its request for additional attorneys' fees a lawsuit against Nortel Networks Corp. because of, among other issues, improper staffing.

And now Milberg is being sued by fellow class action law firm Whatley Drake & Kallas over the amount of attorneys' fees it collected from settlements in litigation involving reimbursements by HMOs to health care providers as reported by Iulia Filip for Courthouse News Service.  The two firms served as co-counsel in the litigation but Whatley Drake & Kallas alleges the Milberg law firm collected nearly $8 million in undeserved attorneys' fees in breach of their fee sharing agreement since it "ceased working on any of the matters in the wake of its indictment in May of 2006."

Et tu, Brute?

Download Complaint

Reading which may be of further interest:

Congress Must Investigate The Trial Lawyers

Congress Must Investigate The Trial Lawyers

The last few years have revealed an ugly underbelly to the plaintiffs' bar, and some of the biggest trial lawyers across the country have been brought down in criminal prosecutions for their sharp practices.

Bill Lerach and Mel Weiss, two legal eagles who made a fortune in bringing security fraud class actions against publicly traded companies, pleaded guilty in October 2007 and April 2008, respectively, for their roles in an alleged decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks from their court-awarded attorneys' fees in the cases. 

Mass tort lawyers William Gallion and Shirley Cunningham Jr. were convicted in April 2009 for fraudulently taking $94.6 million from a $200 million settlement in the fen-phen litigation that should have gone to their clients.

Tobacco and asbestos lawyer Dickie Scruggs pleaded guilty in 2008 and 2009 in separate schemes to bribe Mississippi judges to rule in his favor.

The above are just a few of the higher profile names in an otherwise long list of plaintiffs' lawyers who have been convicted and sent to prison.  What the heck is going on?  These men -- all now disbarred -- were officers of the court, and crusaded with self-righteous indignation against corporate wrongdoers.  Their convictions now suggest that they were motivated less by principle and more by greed.

Although the plaintiffs' bar no doubt has many law-abiding practitioners it is time for Congress to hold investigative hearings to determine the extent to which corruption pervades the lawsuit industry.

Indeed, in May 2008, Representatives John Boehner and Lamar Smith sent a letter to Rep. John Conyers, the then-Chair of the House Judiciary Committee, requesting an inquiry after Bill Lerach admitted that his conduct was an "industry practice," and said that "everybody was paying plaintiffs."  In this letter Rep. Boehner writes:

If in fact Mr. Lerach's crimes are an "industry practice," then the Milberg Weiss scandal has revealed a clear and present threat to our nation's prosperity.  The United States Congress has an obligation to take action -- by holding hearings to determine the extent of the trial lawyer scandal and the threat to our economy, identifying appropriate legislative remedies, and sending them to the President without delay.

Rep. Boehner's request at the time went nowhere.  Perhaps it was because Rep. Conyers was distracted by the criminal investigation into his wife -- Detroit, MI councilwoman Monica Conyers -- who was convicted on federal corruption charges in June 2009.  Or maybe the inaction was because the Democrat Party gets a lot of campaign contributions from the trial lawyers.  For example, lawyers from the class action law firm Milberg Weiss which was indicted with Bill Lerach and Mel Weiss "contributed more than $7 million to the party's candidates since the 1980s."   Rep. Conyers and his fellow Democrats probably did not want to bite the hand that feeds them.

Of course, that was then, and this is now.  Republicans control the House, Lamar Smith is the Chair of the Judiciary Committee, and the time has come for the investigation which was requested three years ago.  Although Reps. Boehner and Smith focussed on class action securities fraud cases in their May 2008 letter, any hearings should include the full spectrum of the lawsuit industry and cover policy issues in addition to corruption allegations.

Here are a few additional topics Congress should explore based on recent headlines:

***  The Dubious "Confidential Sources"

Class action lawyers frequently bolster their complaints with allegations attributed to "confidential sources" within the company they are suing in the hopes of avoiding outright dismissals by the courts.  Except it's increasingly turning out that these "confidential sources" never were company insiders nor made the allegations attributed to them.

Last August federal judge Robert P. Patterson Jr. sanctioned Milberg LLP and its co-counsel with a public reprimand after allegations attributed to "confidential sources"  were not supported by their deposition testimony.  And last month federal judge Suzanne Conlon dismissed a case filed by Robbins Geller Rudman & Dowd LLP after allegations attributed to a "confidential source" were not supported by his deposition testimony.  Ironically, Milberg LLP is the successor to the firm founded by convicted felon Mel Weiss, and Robbins Geller Rudman & Dowd LLP is the successor to the firm founded by convicted felon Bill Lerach.

It's one thing to make allegations; it's quite another thing to attribute allegations to "confidential sources" who later claim they never said any such thing.

***  The Public Pension Fund Plaintiffs

In securities fraud class actions the trial lawyers frequently rope in a large public pension fund to serve as a plaintiff, and the relationship raises a host of issues.

Why is the public work being farmed out to a private firm in the first instance? Government attorneys are more than qualified to handle the cases, and by farming them out to private firms the pension funds lose billions in dollars that are awarded as attorneys' fees rather than included within the settlement recovery.  Given that many public pension funds are woefully underfunded it seems reckless to leave billions of dollars on the table for the taking by the plaintiffs' lawyers.

And what is the criteria by which the outside firms are selected?  In many cases the retained firms have provided campaign contributions to the elected official responsible for making the decision.  For example, former New York comptroller Alan Hevesi long had been criticized for retaining his campaign donors to represent the state's State Common Retirement Fund in securities fraud class actions, and he took $100,000 from Milberg Weiss for his 2002 campaign.  Although it's all perfectly legal it just looks unseemly.

Ironically, last October Hevesi pleaded guilty for steering more than $250 million in pension fund business in exchange for $1 million of improper benefits including campaign contributions, and the dirt bag is set to be sentenced on April 15. 

The relationship between public pension funds and class action law firms certainly deserves a look but in 2009 then New York Attorney General Andrew Cuomo -- a recipient of trial lawyer campaign largesse -- took a pass on the issue.

*** Attorneys' Fees For Non-attorney Work

Plaintiffs' cases are vehicles by which to earn lucrative attorneys' fees.  Except sometimes the performed work could have been done by someone other than an attorney.

Last year U.S. District Judge Richard M. Berman rebuked Milberg LLP in a ruling on its request for additional attorneys' fees in the securities fraud case In re Nortel Networks Corp. Securities Litigation because of, among other issues, "improper staffing": "'It is clear that a significant portion of the work done by senior attorneys could have been performed by more junior attorneys or paralegals at lower billing rates,' Berman said."

A substantial portion of the attorneys' fees generated in class actions is through the review of voluminous document productions, and much of this work often is performed by temporary attorneys whom the plaintiffs' firms obtain from staffing agencies.

The document review process involves both objective and subjective coding components. The objective component simply entails inputting bibliographical data from the document -- such as date, title, author, recipients -- onto a coding sheet or into a database, and the subjective component involves substantive analysis which includes issue spotting, determining relevancy, and providing comments for the document.

It is questionable whether temporary attorneys should be used for the objective coding of documents which seemingly is little more than clerical work. Indeed, some law firms outsource the objective coding portion of a document review to data entry service providers, and perhaps appropriately use the temporary lawyers with their much higher billing rates only for the subjective coding component; however, some plaintiffs' class action firms in many cases -- including Milberg in In re Tyco International, Ltd. Securities Litigation -- have used temporary attorneys for both the objective and subjective coding portions of the document review.

*** The Coupon Settlement Cases

In consumer fraud cases the class members increasingly get "nearly worthless" coupons for their purported injuries, and yet the plaintiffs' attorneys get millions in cash for their efforts.

For example, St. Louis, MO Judge Angela T. Quigless approved a class-action settlement last year against A.G. Edwards "that rewards lawyers at Milberg and other firms $21 million in cash while their clients get mostly coupons they can use over three years to obtain discounts on mutual funds." 

Ted Frank, a founder of the Center for Class Action Fairness, is crusading against these coupon settlement cases.  Frank "says the coupons are nearly worthless because so few of the intended beneficiaries will find it worthwhile to fill in all the necessary paperwork."  Indeed, why would a consumer want a coupon for future goods or services from the very company which allegedly defrauded them in the first instance?  In fact, the overwhelming majority of class members never redeem their coupons, and the only ones who really win are the plaintiffs' lawyers. 

It's long past time for Congress to take a hard look into the lawsuit industry:  the very credibility of our legal system is at stake.

Further reading that may be of interest:

Federal Judge Spares Mel Weiss From More Jail

Corporate Counsel Trade Group Challenges Use Of Temp Lawyers By Plaintiff Class Action Firms

The Shame:  Stanley Chesley Gets Disbarred

From Convicted Racketeer To Drunk Driver

Federal Appellate Courts Continue Crackdown On Plaintiff Attorneys' Fees In Class Action Cases

Lawrence Schonbrun No Fan Of Lawsuit Industry

Convicted Racketeer Mel Weiss Faces DUI Charge

Quid Pro Quo Ethics Complaint Filed Against New York Comptroller Thomas DiNapoli

The Public Rebels Against Trial Lawyers

Feds Bust Paul Ceglia Over Facebook Claim

Increasing Problem:  Confidential Sources Deny Allegations Attributed To Them In Class Actions

Lawyer Barons:  What Their Contingency Fees Really Cost America

Federal Appellate Courts Rejecting Lower Court Awards Of Attorneys' Fees In Class Actions

Federal Judges School Plaintiffs Lawyers

Milberg Gets Sloppy Seconds In Facebook Case

A Good Plaintiff Is Hard To Find

Judge Awards Lawyers $35,000 An Hour

Convicted Lawyer Raises Democrat Money

Class Actions Are Good Gigs For Trial Lawyers

Appeals Court Reverses Rule 11 Sanctions On Class Action Firms In Sony Corporation Case

Congress Holds Hearing On Asbestos Litigation

Judge Approves $13M Payout To Trial Lawyers

Federal Appeals Court Casts Critical Eye On Lawsuit Industry Settlement Practices

Lawsuit Industry Trembles Before Rick Perry

Rail Company Accuses Law Firm Of Racketeering

Delaware Judges Push Back Against Trial Lawyers

President Obama Picks Lawsuit Industry Tool To Head New Consumer Agency

Trial Lawyers Profit From M&A Suits

Class Action Settlements Sink To New Low

Milberg Can't Get No Love

Convicted Trial Lawyer Looks For Second Act

Class Action Lawyer Faces Disbarment Hearing

Stinky Settlement In Diaper Case

Big Payday For Trial Lawyers

NY State Sen. Carl Kruger Charged With Bribery

Carl Kruger, the powerful New York State senator from Brooklyn who is the ranking Democrat on the Finance Committee in Albany, is expected to surrender tomorrow to the U.S. Attorney in Manhattan on a bribery charge as reported by Kenneth Lovett and Greg B. Smith for the Daily News:  "One source said the charges will include allegations that Kruger used his influence in the Senate to push for approval of a merger involving the now defunct Parkway Hospital in Queens."

It's funny because Kruger's criminal defense lawyer Benjamin Brafman earlier insisted that his client was not a target of an unrelated pay-to-play investigation being conducted by the U.S. Attorney in Brooklyn as reported by Tom Robbins for The Village Voice:

"That's accurate," lawyer Benjamin Brafman told the Voice. "He is not a target." Brafman, whose clients have ranged from Sean "P. Diddy" Combs to rabbis and mobsters, refused to give up his source, but insisted he's right. "I am a pretty responsible guy in this area," he says. "I don't make those statements if they are not accurate."

Brafman previously represented class action king Mel Weiss for his role in an alleged decades-long conspiracy pursuant to which serial plaintiffs were paid kickbacks to file securities fraud suits against publicly-traded companies, and at the time of Weiss's federal indictment in September 2007 said "we are confident that when the evidence is carefully reviewed at a trial of these charges, Mr. Weiss will be fully exonerated" as then reported by Barry Meier for The New York Times.  Several months later Weiss pleaded guilty to a racketeering conpiracy charge pursuant to which he was sentenced thirty months in prison as then reported by Jonathan D. Glater for The New York Times.

The probe by the U.S. Attorney out of Brooklyn concerning allegations that Kruger "has performed official acts in exchange for campaign donations" remains ongoing as reported by Mitchel Maddux for the New York Post.

Last month Michael Levitis, a personal injury lawyer and night club owner, pleaded guilty "to charges that he lied to FBI agents about a pay-to-play bribe" in connection with "a federal corruption probe into the activities of state Sen. Carl Kruger" as reported by Mitchel Maddux and Rich Calder for the New York Post:  "Levitis, who owns the Russian nightspot Rasputin in Gravesend, was caught on a secretly recorded audiotape in April 2009, telling [an] informant he needed to pay off Jason Koppel, Kruger's longtime chief of staff and campaign treasurer, to get assistance on an upcoming official business inspection." 

Kruger is well-known in the Russian belt that runs through his Brooklyn district.  Last December Kruger pleaded for leniency on behalf of Nikolai Dozortsev -- a reputed "high-ranking member of Russian organized crime" -- following his money laundering conviction.   Although Dozortsev faced twenty years in prison Brooklyn federal judge Frederic Block sentenced the Ukraine-born lad to only five.

The Parkway Hospital merger surfaced in corruption charges against long-time Queens Assemblyman Anthony Seminerio who died in prison last January while serving a six-year prison term.

In addition to Kruger other politicos from the Albany cesspool are expected to be charged tomorrow.

UPDATE:  Among the others to face charges are William F. Boyland Jr., a four-term Democratic state assemblyman from Brooklyn, and Richard Lipsky, a lobbyist, and two hospital executives as reported by Nicholas Confessore and William K. Rashbaum for The New York Times.

The feds allege that Kruger "received a stream of bribes" totaling $1 million "in exchange for taking official actions on behalf of the bribe payers as opportunities arose," and then "funnel[ed] the payments to shell companies" created by accomplice Michael Turano as reported by Rich Calder and Douglas Montero for the New York Post.  Kruger's paid shill attorney Ben Braffman claims his client is "one of the most dedicated public servants for the past 25 years with an impeccable reputation" however, not everyone is on the same page as Braffman:  "A Democratic operative said, 'Everyone knows that Carl has been using his post to take money for years. so this isn't surprising.  What's more surprising is that it didn't happen 10 years ago.'"

Michael Turano is "a gynecologist who lives with his mother and brother in Brooklyn," and "the complaint said that Senator Kruger had a 'particularly close relationship' with Dr. Turano" as reported by William K. Rashbaum for The New York Times.   Kruger and Turano are boyfriends as reported by the New York Post:

Asked . . . if Kruger and Turano were lovers, Turano's lawyer declined to comment.  Kruger's attorney, Benjamin Brafman, said only, "I don't think that this is an appropriate area of inquiry, and I choose not to comment.

No word on whether the politician and the gynecologist will share a jail cell together if convicted.

Charlie Rangel Disrupts Court Proceedings

Charlie Rangel, the Harlem congressman who was censured last year for a series of ethical violations over his finances, is lucky that he was not held in contempt of court yesterday when he appeared at a bail hearing to support a criminal defendant who is accused of holding guns for a violent crack-trafficking street gang.  The disgraced Rangel repeatedly interrupted the proceedings until finally an exacerbated judge told him to sit down as reported by Irene Cornell for WCBS: 

Rangel caused a stir in the courtroom, repeatedly standing up and interrupting the judge. A court officer told Rangel three different times to sit down. When he stood up again, Judge Edward McLaughlin had apparently had enough. "I see someone standing who should not be standing, unless you have a bad back like I do," McLaughlin said. Rangel sat down.

Rangel's attendance at the hearing failed to sway the judge who refused to reduce bail for the jailed defendant as reported by Michael J. Feeney for the Daily News.

The former Ways and Means Committee Chair is known for throwing his weight around in an attempt to influence criminal proceedings.  In 2006 Rangel attempted to derail a criminal prosecution against plaintiffs class action law firm Milberg Weiss Bershad & Schulman LLP and several of its partners as then reported by Mike McIntire for The New York Times:

After federal prosecutors indicted the firm in May 2006, four Democratic congressmen issued a joint statement, posted on Milberg Weiss's Web site, accusing the Bush administration of persecuting lawyers who take on big businesses. The statement, signed by Representatives Gary L. Ackerman, Carolyn McCarthy and Charles B. Rangel, all of New York, and Robert Wexler of Florida, contained several passages that appear to be lifted directly from a "class action press kit" distributed by a national trial lawyers group. All but Mr. Wexler have received campaign contributions from Milberg Weiss partners.

Notwithstanding the efforts by Rangel and others, the indicted partners subsequently all pleaded guilty, and the firm agreed to pay a $75 million fine and employ a compliance monitor.