Accusers Become Accused

In response to an ongoing federal investigation of alleged misconduct and the indictment of longtime client Seymour Lazar, Milberg Weiss representatives said in a media statement e-mailed to MortgageDaily.com that the firm was “outraged” and “reject the allegations as baseless.”

Although, the law firm is not named in the indictment, Milberg Weiss said, “it unfairly implicates the firm in the wrongdoing alleged against Lazar.”

The 17-count indictment alleges that Lazar, a 78 year-old retired lawyer, was part of an “illegal kickback scheme” in which Lazar and/or his family members gave false testimony in more than 50 class action and shareholder derivative action law suits and received “kickbacks” from certain law firms for their fraudulent participation.

The indictment also alleges that a “New York law firm disguised the kickback payments in its internal accounting records” and that the payouts to Lazar totaled more than $2.4 million while the firm benefited from more than $44 million in attorney’s fees in the law suits beginning in 1981 through 2004.

Payouts to Lazar, his wife, mother-in-law, son, and daughter ranged from $8,000 up to $250,000, according to the indictment posted on the U.S. Department of Justice’s Web site.

Milberg Weiss, who said they have been cooperating with the federal investigation for more than three years, expressed discontent in their statement to MortgageDaily.com with the fact that the U.S. Attorney’s Office would tarnish the reputation of the firm and its employees, while noting that the firm has represented cases they say “have achieved remarkable results on behalf of investors, consumers, and other victims of corporate misconduct totaling billions of dollars,” including collaborated efforts with the government in the “war against corporate misconduct.”

Milberg Weiss class action lawsuits in 2004 included cases against mortgage-related entities such as Fannie Mae, New York Community Bancorp (read about case), RBC Centura Bank, First Southern Bank, and most recently the Friedman Billings Ramsey Group last May.