Follow the (shyster) money!

posted at 9:06 am on March 20, 2008 by Ed Morrissey
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The disgraced law firm of Milberg Weiss faces federal indictments for kickbacks and corruption in pursuing class-action lawsuits, along with its founder, and three of its senior partners have already pled guilty. One might think that politicians associated with the firm and the indicted partners would cut all ties and dump their contributions. However, neither Hillary Clinton nor Barack Obama have done so despite the investigation being public since 2002:

Democratic presidential candidate Hillary Clinton has received more campaign money from disgraced lawyers at the controversial Milberg Weiss law firm than any other member of Congress, but she won’t say whether she’ll keep the contributions.

Sen. Barack Obama of Illinois, Clinton’s chief rival for their party’s nomination, received much less money from the same lawyers but is likewise mum.

Clinton received $21,971 and Obama $5,300 from four senior partners of the firm or their spouses. Presumptive Republican nominee John McCain got no money from the firm’s four senior partners.

Three of the partners — William Lerach, David Bershad and Steven Schulman — have pleaded guilty to participating in an illegal kickback scheme in securities class-action lawsuits first made public by federal investigators in 2002. The firm itself and Melvyn Weiss, its senior named partner, were also indicted and face trial later this year.

I started writing about Milberg Weiss almost three years ago, so their corruption doesn’t constitute breaking news. At the time, I noted that Barbara Boxer won a large amount of attention — and cash — from MW, almost $75,000 over two Senate campaigns. In turn, Boxer fought restrictions on the class-action lawsuits that MW needed to survive, and in fact perverted to ensure a steady flow of business into the firm, as well as continuing use of the class-action mechanism to basically extort money from deep-pockets defendants.

How did MW do this? They provided kickbacks to plaintiffs to falsify their status in order to bring lawsuits:

Federal prosecutors here have charged a retired Palm Springs, Calif., lawyer with taking kickbacks from a prominent New York law firm in exchange for serving as plaintiff in dozens of class-action and shareholder lawsuits that earned the firm $44 million over 20 years.The indictment against 78-year-old Seymour M. Lazar, unsealed Thursday, stems from a years-long investigation by the U.S. attorney’s office into the practices of Milberg Weiss Bershad Hynes & Lerach, which before splitting into two firms last year had led the largest of the investor suits against bankrupt energy trader Enron Corp. …

Reports of the grand jury investigation of Milberg Weiss, some of whose partners have close ties to the Democratic Party, were aired in the news media in early 2002 just as one of its top lawyers, William Lerach, was taking the lead in the Enron litigation.

The charges against Lazar do not involve the Enron suits, however, but suits against Standard Oil, United Airlines, Denny’s and other corporations in which Lazar or his relatives acted as plaintiffs.

It worked out well for MW, too. They paid $11.7 million in kickbacks to get over $200 million in fees, or a little over 5.5% as a rate. Lawyers usually don’t work that cheaply, but in this case Lazar and his family apparently didn’t quibble.

William Lerach has ties to Hillary Clinton going back to the 1990s. He stayed in the Lincoln Bedroom shortly before Bill Clinton vetoed class-action reform legislation that Lerach opposed (a veto which Congress overrode). In the aggregate, Milberg Weiss attorneys have donated almost $50,000 since 2000 to Hillary and $20,000 to Obama since 2004. Lerach himself gave $100,000 to the Clinton Presidential Library.

Now, when a firm as corrupt as Milberg Weiss decides that they want to give people money, one has to ask what they thought they were buying. In the case of Lazar, we know exactly what those kickbacks bought. In Boxer’s case, we also see how their contributions kept class-action reform from killing their moneymaking machine. What have Hillary and Obama promised, and why won’t they return the funds from a firm known for the last six years as corrupt?

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