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May 19, 2006 1:51 PM

Some Northwest links in Milberg Weiss indictment

Posted by Mark Watanabe

From Deputy Business Editor Rami Grunbaum:

The law firm that corporate executives love to hate, Milberg Weiss Bershad & Schulman, was indicted Thursday along with two of its name partners on a litany of charges centering on alleged illegal kickbacks to plaintiffs who picked the firm to litigate their class-action securities lawsuits.

Microsoft, Infospace, Sonus Pharmaceuticals, Avenue A, Willamette Industries and most recently Boeing -- these and other local companies have felt the sting of lawsuits by Milberg Weiss (or a predecessor firm, which was not indicted). It's been the nation's leading practitioner of the securities class-action suit.

All told, according to the indictment, the firm collected more than $200 million for its work in more than 150 class-action and shareholder derivative-action lawsuits. It directed more than $11.3 million in illegal kickbacks to three "paid plaintiffs" who helped Milberg Weiss secure the coveted position of lead law firm in the suits, prosecutors said.

Did any of the alleged kickbacks to plaintiffs involve Northwest companies? The 102-page indictment identifies two for which the law firm allegedly made specific payments to a plaintiff.

-- For a suit against Heart Technology, a Redmond company that made artery-cleaning medical hardware, an unnamed co-conspirator was paid $19,859 in 1997, according to the indictment.

-- In a lawsuit against Oregon biotech company Epitope, $3,849 was paid in 1993 to one of the paid plaintiffs who was indicted earlier.

All plaintiffs in a class action are supposed to be treated equally, so such undisclosed payments for steering business to a law firm would be illegal.

Milberg Weiss has denied the allegations. A statement from the company also said it "is particularly incensed that the prosecutors decided to indict the firm itself. The firm has 125 attorneys and another 240 employees who, even according to the government, did not participate in or know anything about the matters at issue. But they will inevitably suffer serious personal and professional harm as a result of the government's actions."

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