Beleagured US class action firm Milberg announced yesterday (16 June) that it had struck a $75m settlement deal with federal prosecutors that will see criminal charges laid against it for a plaintiff kickbacks scam dismissed.
Sanford Dumain, a member of the firm’s executive committee, said in a statement the firm was “pleased” the government specifically recognised none of the lawyers currently at the firm were involved in any of the misconduct.
Dumain added: “In fact, our former partners who were prosecuted were deliberately concealing their illegal activities from us. This favourable outcome now allows us to put a painful chapter behind us so that we can resume building one of the best known plaintiffs firms in the country.”
As part of the settlement, Milberg is scheduled to make payments to the government totaling $75m over the next five years.
Dumain added that the firm risked having to pay forfeitures and penalties of many hundreds of millions of dollars if the criminal case against the firm had gone forward.
“We wanted to avoid that enormous risk, which we faced solely because of the misconduct of certain of our partners who are no longer with the firm,” he added.
The firm plans to make the settlement payments out of firm resources and income, and is evaluating pursuing claims against responsible parties.
Earlier this month, the former head of Milberg Weiss Bershad & Shulman (now Milberg), Melvyn Weiss was sentenced to 30 months in prison for his role in the kickbacks scheme, which related to securities class action cases (TheLawyer.com, 2 June 2008).