A retired mortgage broker has admitted he was illegally paid millions of dollars by a major law firm that has filed numerous class-action lawsuits against large lenders.
Howard Vogel has admitted to taking nearly $2.5 million in kickbacks from Milberg Weiss.
Vogel has agreed to plead guilty to charges of accepting the money from the New York law firm, which specializes in securities fraud and financial class action lawsuits, and then lying about taking the cash, according to documents filed in U.S. District court in Los Angeles.
Vogel, who faces up to five years in prison, has also agreed to cooperate in the federal investigation into the firm.
Federal prosecutors allege in the court papers that between 1991 and 2005 Vogel, who had operated his mortgage business out of New Jersey, cut a secret deal with the firm to act as plaintiffs in nearly 40 suits. In return, Vogel received a cut of the attorney's fees when the cases were settled or decided.
For instance, for agreeing to serve as a plaintiff in a case against Valero Energy Corp. Vogel received 14 percent of the firm's fees, which came out to $637,000, court documents show. He has allegedly lied about buying shares so he could bring a lawsuit against the company and then share in the settlement, prosecutors alleged.
Vogel was also a hired plaintiff in cases against other companies that include Oxford Health Plans and Barnesandnoble.com.
Milberg Weiss had little to say about Vogel's plea and his agreement to work with prosecutors on the continuing investigation.
"The firm has not yet had an opportunity to review the fillings concerning Howard J. Vogel," the firm said in a statement e-mailed to MortgageDaily.com. "We continue to cooperate with the investigation."
The investigation into the firm's activities was launched six years ago. Last year Seymour Lazar, one of the firm's clients and a retired lawyer, was charged with taking more than $2.4 million in kickbacks in an alleged scheme similar to Vogel's. Lazar had denied the allegations.
Vogel agreed to pay $2 million in fines. According to the plea agreement a $630,000 payment on the fines is due in mid May with a payment of $1.37 million due by Jan. 8. He could not be reached to comment.
After being named in Lazar's indictment, the firm told MortgageDaily.com it was "outraged" at the charges, which it rejected as "baseless."
Milberg Weiss, well known to the mortgage industry, has filed several class action lawsuits against mortgage-related entities and businesses including Fannie Mae, New York Community Bancorp, First Southern Bank and the Friedman Billings Ramsey Group.