04 Aug

Financial Analysis in Defense of White Collar Crime Cases

From my Thought Leadership series at Securities Docket:

White collar crime cases tend to focus on the flow of money. Government investigators analyze the finances of a company or individual to determine where money came from and where it went. It is this trail of money that leads to evidence of a crime.

Sometimes the financial evidence is direct, but often it is indirect. Consider a case of alleged tax fraud, in which the government is trying to prove that a person or business had unreported income. The evidence may be large unexplained deposits to a bank account. If the source of the funds is unknown, the government may consider the deposits indirect evidence of unreported taxable income. Making such assumptions is often necessary when investigating financial frauds, as those committing fraud deliberately try to hide the true sources and uses of funds. Read More

18 Sep

Plea Agreement with Bill Lerach

The U.S. Attorney’s Office has announced a plea agreement with Bill Lerach, former partner at Milberg Weiss. He will plead guilty one one count of conspiracy, forfeit $7.75 million, and pay a $250,000 fine. He will receive a prison sentence that could be from one to two years.

The charges against Lerach were part of a string of indictments in an investigation of millions of dollars in secret kickbacks paid by Milberg Weiss in exchange for people being named plaintiffs in class-action suits and shareholder suits. The government has alleged that Milberg Weiss received more than $200 million in fees from these lawsuits. Read More

10 Jul

Milberg Weiss Partner Pleads Guilty

David Bershad, former senior partner at Milberg Weiss & Bershad LLP, has pleaded guilty to conspiracy in federal court. He admitted to concealing secret payment agreements with plaintiffs in class action suits, and will forfeit $7.75 million and pay a $250,000 fine. Bershad could receive up to five years in prison, but if he cooperates in the prosecution of others, he will likely serve less than that. Read More

01 Jun

Settlement Discussed With Milberg Weiss

Milberg Weiss & Bershad LLP is talking with federal prosecutors about a potential settlement regarding the accusations of improper kickbacks in class-action suits. Milberg partner David Bershad is also in talks with prosecutors about a personal guilty plea.

The firm and Bershad were indicted in 2006, along with former partner Steven Schulman. The indictment of the firm lists 20 charges related to the payment of $11.3 million in kickbacks.

An agreement between Milberg and prosecutors might be finalized withn a few weeks. The settlement would likely include the payment of a fine and some future monitoring of the firm and its business practices.

01 Feb

Dell Accused of Kickbacks and Improper Accounting

An investor group has filed a lawsuit in U.S. District Court in Austin, Texas against Dell Inc., accusing the company of improper accounting practices as well as taking kickbacks.

The lawsuit alleges that Dell has been inflating its profits by hundreds of millions of dollars due to this scheme. It is alleged that Intel was giving Dell up to $1 billion per year in “secret” and “likely illegal” kickbacks to ensure that Dell continued to use only Intel chips in its computers. It is also alleged that Dell was misleading investors about significant problems with accounting, quality and customer service. Read More

27 Dec

Whistleblower Cases in 2006

A recent article on Forbes.com put the whistleblower issue in perspective financially. In the last year, the Justice Department says that whistleblowers revealed $1.3 billion of fraud, mostly in the health care arena. This was apparently one of the bigger years for the Justice department. The whistleblowers were paid $190 million for their assistance.

This fiscal year, the Federal government recovered $3.1 billion in settlements from people and companies in whistleblower cases. The largest settlement was $920 million from Tenet Healthcare, the second largest hospital group in the country. Tenet was accused of overbilling the government for $806 million in Medicare and paying $49 million in kickbacks to doctors.

19 May

Milberg Weiss Indicted on Charges of Conspiracy to Give Kickbacks in Class-Action Cases

The New York based law firm of Milberg Weiss Bershad & Schulman was indicted in Los Angeles yesterday for twenty years of activities, including a conspiracy to give kickbacks to lead plaintiffs in securities class-action cases. It is alleged that the fraud included payment of over $11 million in kicbacks, disguised as referral fees or other legitimate payments.

Included in the charges are conspiracy, racketeering, mail fraud, money laundering, and filing false tax returns. Melvyn Weiss, a co-founder of the firm, is not named as a defendant, but partners David Bershad and Steven Schulman are. Read More