"Leraching" lawyer under
By Al Lewis, Business Columnist
Sunday, August 14, 2005
William Lerach has sued so many companies for securities fraud that there is a word for it. Executives in the renowned lawyer's gunsights complain that they've been "Lerached."
"I have become a verb," Lerach told Denver Post reporter Tom McGhee in a 2001 interview.
But now it looks like Lerach may be getting Lerached.
Prosecutors have informed Lerach and two of his former partners that they may be indicted on charges of criminal conspiracy, according to a recent report in The Wall Street Journal, citing unnamed sources.
Lerach and his former partners deny wrongdoing.
Investigators have been probing Lerach for at least four years. In June, a man who has repeatedly turned up as a plaintiff in Lerach's lawsuits was indicted by a federal grand jury.
Prosecutors allege that Seymour Lazar, 78, a retired lawyer, received $2.4 million in illegal kickbacks for either serving - or getting family members to serve - as plaintiffs in more than 50 lawsuits over 20 years. Additionally, Palm Springs lawyer Paul Selzer, 64, is accused of laundering kickbacks for Lazar's benefit.
Some say Lerach is a champion of shareholders' rights, but he may be the most hated lawyer in Corporate America's boardrooms. Silicon Valley venture capitalist John Doerr has called Lerach "a cunning economic terrorist."
Critics say Lerach looks for a sharp downturn in a company's stock, then races to the courtroom to file a lawsuit. Once a suit is filed, he can torment a company with motions and depositions. Often, companies settle to avoid the huge legal bills or the embarrassing revelations that can emerge from a good Leraching.
Sometimes it's clear companies deserve this beating. Other times it's not. But one thing is certain: Lerach has Lerached scores of companies and made hundreds of millions of dollars doing it.
A decade ago Lerach went after Charles Keating, the poster child for savings-and-loan fraud, and junk-bond king Michael Milken, who pleaded guilty to several securities-fraud charges.
More recently, Lerach has recovered about $7 billion for Enron investors by suing banks and investment brokers for allegedly participating in the collapsed energy trading giant's schemes.
In Colorado, Lerach is the lead attorney on a pending class-action lawsuit against Qwest for its accounting problems. He has also helped extract multimillion-dollar settlements from StorageTek, Miniscribe, Tele-Communications Inc., Samsonite, The North Face, Evolving Systems and EFTC Corp.
Because Lerach's storied firm, Milberg Weiss, has been so successful, it attracts one-third or more of the class-action cases filed each year. Last year, Lerach and his former partner, Melvin Weiss, split their firm in two. Weiss' firm is based in New York. Lerach's firm is in San Diego.
Lerach exists because the American system of policing corporations has been left to individuals and the courts. The U.S. Securities and Exchange Commission and the state securities regulators don't have the resources to pursue every complaint, so lawyers, who often take as much as 30 percent of the spoils, fill the vacuum.
Lerach is a capitalist exploiting a capitalist system. He represents the privatization of securities regulation.
"He has been probably the most successful class-action lawyer in history," said Ted Fiflis, a securities-law professor at the University of Colorado at Boulder. "This may be a way of getting at Lerach to put him out of business."
Whether Lerach is under attack because he is guilty or because he has made too many enemies is for a court to decide, Fiflis said. Given his financial war chest and legal brainpower, Lerach is not going to be easy pickings for prosecutors.
"He's incredibly brilliant at arguing on his feet," said Phil Feigin, a lawyer who used to be Colorado's securities commissioner and has worked with Lerach on securities-litigation reform.
"He's tireless. He works 27 hours a day. He's open, engaging, powerful, charming and very charismatic," Feigin said.
And if you happen to own stock in Enron or Qwest, Lerach - for all his alleged faults and exorbitant fees - may be your only shot at a modest recovery.
Al Lewis' column appears Sunday, Tuesday and Friday. Respond to Al at denverpostbloghouse.com/lewis, 303-820-1967 or firstname.lastname@example.org.