AUSWR
The Association of U S West Retirees
 

 

 

"Vulture" heads to hoosegow"
By Al Lewis
Denver Post
Wednesday, February 13, 2008

Here's something you never, ever see:  renowned consumer advocate Ralph Nader writing a letter to a federal judge asking him to go easy on a confessed white-collar crook.

"Until now, I have not written a letter asking a judge to be lenient in sentencing a defendant," Nader wrote.  "I do so today because of the unique contribution William Lerach has made to our society and to the practice of law.  ...The suits he has filed have improved the marketplace and have improved corporate governance."

Lerach, 61, is a renowned shareholders attorney who has sued just about every major company accused of fraud from Enron to WorldCom to Denver-based Qwest.

Lerach has made examples out of hundreds of sleazy executives.  Now, it looks like he's being made an example, too.

On Monday, Lerach received a two-year federal prison sentence for his role in a kickback scheme.

"I pleaded guilty ... because I was guilty," Lerach reportedly said at his sentencing Monday.  "It was, as they say, felony stupid."

Lerach's former firm, Milberg Weiss, is accused of paying people kickbacks to become plaintiffs in class-action lawsuits.

This firm was so good at what it did, it once attracted one-third or more of the class-action cases filed each year.  It so dominated this field that some defendants complained of being "Lerached."

You can bet Qwest founder Phil Anschulz won't be sending a care package to Lerach in the hoosegow.

Lerach sued Qwest for accounting fraud and won $400 million.  His firm demanded fees of $96 million, which the courts slashed to $60 million.

"Guys like him masquerade as legal eagles for the downtrodden," said Curtis Kennedy, an attorney who challenged Lerach's fee on behalf of Qwest retirees.  "Their gluttony proves they are ... overfed vultures."

Our corporate system favors litigation over regulation.  When companies cheat, the remedy is to sue, and lawyers get rich.

Still, it's easy to lionize Lerach, too.  He took on Charles Keating, the poster child for savings-and-loan fraud, and junk-bond kind Michael Milken, who pleaded guilty to securities-fraud charges.

Lerach recovered more that $7 million for Enron investors, and in Colorado he has helped extract multimillion-dollar settlements from StorageTek, Mimiscribe, Tele-Communiciations Inc., Samsonite, the North Face, Evolving Systems and EFTC Corp.

A sentencing memorandum Lerach's lawyers compiled cited scores of letters from do-gooders such as Nader and even a regular guy named Charles Prestwood.

"Our country needs more people like Mr. Lerach, Prestwood wrote, "to help put a stop to corporate crime and stop the large corporations and banks from stealing everything from the poor, lunch-pail-carrying people."

Rest assured, more are on the way.  After the 1980s class-action lawsuits targeted S&Ls.  After the 1990s, it was telecom flops.

"Now there's an uptick in shareholder litigation due to the sub prime meltdown," said John Holcomb, a University of Denver business professor.

With Lerach out of the way, and his former partner Melvyn Weiss fighting similar charges, scores of other law firms can chase the many opportunities to sue that our free-market system provides.

"I suspect his competitors are applauding his departure," Holcomb said.

Respond to Al Lewis at blogs.denverpost.com/lewis, 303-954-1967 or alewis@denverpost.com

http://www.denverpost.com/allewis/ci_8234543