William Lerach

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William "Bill" Shannon Lerach (born March 14, 1946, Ohio River Valley,[1] Midwestern United States) is a former lawyer who specialized in private securities class action lawsuits. The $7.12 billion he obtained as the lead plaintiff's attorney in the case against Enron is currently the largest sum ever recovered in a group of securities class-action lawsuits in U.S. history.[2] In 2007 he pled guilty to obstruction of justice and was sentenced to two years imprisonment. In 2009 he was disbarred from practicing law in California.

Background[edit]

Following the bankruptcy of Enron, Lerach was the lead attorney who sued banks, law firms, accounting firms and related entities involved in the fraud.

Lerach was appointed by President Clinton to the U.S. Holocaust Memorial Council in 1998.[3] He was also a figure in ending the Joe Camel advertising and marketing campaign by RJ Reynolds. Lerach successfully argued the case in front of the California Supreme Court, stating that R.J. Reynolds' Joe Camel campaign constituted an unfair, unlawful, and fraudulent business practice because it targeted minors and induced minors and cigarette sellers to break the law.[4]

About 75% of the class action suits filed and led by Lerach typically brought charges of insider trading, stock fraud and stock manipulation against corporate officers and directors of the largest corporations in the US. Over his legal career, Lerach was the lead counsel in recovering approximately $45 billion on behalf of defrauded shareholders.

In 2007, Lerach pled guilty to one count of obstruction of justice and began a two-year prison sentence.[5] He was disbarred in 2009. Lerach was a major Democratic donor for many years.[6] His case and sentencing were presided over by US District Court Judge John F. Walter, nominated to the bench by President George W. Bush in 2002.[7]

For over 30 years, Lerach was a securities lawyer. He headed up the prosecution of securities class and stockholder derivative actions which resulted in billions of dollars of recoveries for defrauded shareholders of Wall Street banks, major accounting firms, corporations and insurance companies. Lerach was the subject of considerable media attention and a frequent commentator on economic and political matters and securities and corporate law.

Lerach was involved in many securities class action and corporate derivative suits in recent years, including Enron, Dynegy, Qwest, WorldCom, Citibank, Drexel Burnham, Tyco, Merrill Lynch, Bank of America, Disney, Goldman Sachs, Credit Suisse First Boston, Global Crossing, AT&T, Hewlett-Packard, Apple Computer, ExxonMobil, R.J. Reynolds, Arthur Andersen, and AOL Time Warner.

Lerach's Pursuit of Cheney and Halliburton[edit]

Lerach was successful in suing some of the largest names in American business and was suing Halliburton and its then CEO Dick Cheney, the Vice President of the United States, when he fell from grace.[8] Lerach had turned his sights on Halliburton and Cheney, the former CEO. In Lerach's lawsuit against Halliburton, he argued that Cheney had fled the company just ahead of the stock collapse, finding refuge in the White House. The attorney was in a position to subpoena and demand public testimony from the vice president, and he doubted that Cheney would be able to successfully hide behind a claim of executive privilege.[9]

Lerach's on-camera comments were prominently featured in the Oscar-nominated 2006 documentary about the monumental collapse of the 7th largest corporation in the U.S., “Enron: The Smartest Guys in the Room.” For years he was listed among the “Best Lawyers in America.” Lerach frequently lectured on class and derivative actions, accountants’ liability, and attorneys’ fees, and was a guest lecturer at Harvard Law School, Stanford Univ Law School, Univ of San Diego Law School, UCLA Law School, the Council of Institutional Investors and the International Corporate Governance Network.

Lerach testified before federal and state legislative committees concerning corporate governance and securities matters and was frequently quoted in the national media regarding corporate issues. He published numerous articles and op-ed pieces, including "Achieving Corporate Governance Enhancements Through Litigation,[10] "keynote address to the Council of Institutional spring Meeting, March 27, 2001; "Why Insiders Get Rich, and the Little Guy Loses," LA Times, Jan 20, 2002; "The Alarming Decline in the Quality of Financial Reporting"[11] " "The Chickens Have Come Home to Roost: How Wall Street,the Big Accounting Firms and Corporate Interests Chloroformed Congress and Cost America's Investors Trillions";[12][13] "The Average Joe Deserves a Bailout,";[14] "Loser CEOs, Raking It In,[15] " Washington Post, Nov 11, 2007; "Always an Insider's Game," AP Jan 6, 2008 and "What About the Rest of Us? Bailout Fails to Help the Little Guy," Pittsburgh Post-Gazette, Mar 23, 2008. Mr Lerach has addressed the Take Back America Convention in Washington DC. Highlights of his speech and comments are included in the book, "Taking Back America-and Taking Down the Radical Right" by Robert Borosage and Katrina vanden Heuvel(2004), Chapter 11 "Holding Corporations Accountable" which was adapted from Lerach's Commencement Address delivered at the University of Pittsburgh Law School.[16]

Lerach earned his undergraduate and law degrees from the University of Pittsburgh. He gave the May 2003 Commencement Address "American Law: Instrument of Social Progress or Weapon of Repression?" at the Univ of Pittsburgh Law School.[16] The University of Pittsburgh bestowed one of its highest awards on Lerach, designating him a "Legacy Laureate" reserved for the University's most outstanding graduates. He was a major financial donor to Democratic Party organizations at the state and national level.[17][18] In law, a class action or a representative action is a form of lawsuit where a large group of people collectively bring a claim to court and/or where a class of defendants are being sued.

In August 2002, The Nation published a cover story by William Greider featuring Lerach with the title "Is This America's Top Corporate Crime Fighter?"[19]

On a televised PBS broadcast, Lerach was part of a panel to discuss accounting fraud, corporate misconduct and securities laws and regulations on the program, "NOW with Bill Moyers" on September 27, 2002[20] and November 21, 2003.[21]

2007 criminal investigation[edit]

Before leaving his law practice in August 2007, Lerach was a partner in the San Diego, California based firm, Coughlin Stoia Geller Rudman and Robbins. He had formed the firm in 2004, after leaving the firm of Milberg Weiss, which was subsequently indicted.[22][23][24]

According to a June 2007 statement in which he alluded to the ongoing Milberg Weiss investigation,[25][26][27] Lerach said he was considering retirement. On August 31, 2007,[28][29][30] Lerach left the firm, which is now known as Coughlin Stoia Geller Rudman & Robbins.[31]

Lerach pled guilty to one felony count of conspiracy to commit obstruction of justice and making false declarations under oath related to his involvement in a kickback scheme.[32] On February 11, 2008, he was sentenced to two years in federal prison, two years' probation, fined $250,000, and ordered to complete 1,000 hours of community service.[33] He was imprisoned at the Federal Correctional Facility, Safford, Arizona. The final two-and-a-half months were spent in home confinement following stints in the Arizona federal prison and a halfway house in San Diego.[34] His license to practice law was suspended in December 2008[35] and on March 12, 2009, he was disbarred by the California State Bar.[36] He was officially released from custody on March 8, 2010.[37] Lerach's former Milberg Weiss partner, Melvyn Weiss, was similarly sentenced in early June 2008.[38]

In an interview following his release, Lerach offered his thoughts and opinions that possible political motivation and the timing of his indictment could have been likely factors in his prosecution. He also stated that his firm's modus operandi was generally-accepted legal practice regarding lead plaintiffs in class action lawsuits.[39][40] Essentially, Lerach's firm would provide incentive awards for shareholders who were willing to endure scrutiny by corporate defense firms and the considerable time involved required to be a lead plaintiff in representing the class of investors who had losses as a result of fraud or managerial impropriety. Lerach has also taken ownership for any impropriety and has lectured in several law schools since completing his sentence and has stated unequivocally that "fee-splitting is not permitted. Period."

Circle of Greed[edit]

In March 2010, a book about Lerach's life and career was published. Circle of Greed: The Spectacular Rise and Fall of the Lawyer Who Brought Corporate America to its Knees[8] was written by Pulitzer Prize-winning journalists Patrick Dillon and Carl M. Cannon, who had followed Lerach when employed by the Copley Press. Although the title suggests that the book is critical of Lerach, it is not entirely unsympathetic. Lerach is on record as telling other journalists that he thought Dillon and Cannon were tough, but fair. Lerach fully cooperated in the writing of the book without asking to see the manuscript before it was published in its final form. Dillon and Cannon interpreted Lerach's willingness to let the chips fall as they might demonstrated a gutsy pragmatism and a confidence in his own story that they could not help but admire.[41]

1995 Congressional testimony[edit]

While testifying in Congress in 1995 against the passage of the Private Securities Litigation Reform Act (part of Newt Gingrich's Contract with America) which Congress passed by over-riding the veto of President Clinton, Lerach warned at the hearing: "In 10 or 15 years you will be holding another hearing about a debacle in the securities market that will make you remember the S&L mess with fondness."[42]

References[edit]

  1. ^ Reynolds Holding, William Carlsen, et al. (November 15, 1999). "Phantom Riches". San Francisco Chronicle. 
  2. ^ http://www.cfo.com/article.cfm/4245836?f=home_breakingnews/ Enron Settlements Hit Record $7 Billion, Aug 3, 2005
  3. ^ "Grand Jury Probe May Affect San Diego Lawyer Pressing Enron Lawsuit". FoxNews.com. Associated Press. February 8, 2002. 
  4. ^ Siegal, Nina (November 1998). "The Last Days of Joe Camel: How a team of lawyers defeated tobacco". California Lawyer. Retrieved 11 August 2012. 
  5. ^ Parrish, Michael (12 February 2008). "Leading Class-Action Lawyer Is Sentenced to Two Years in Kickback Scheme". The New York Times. 
  6. ^ Selvin, Molly. "Two-year sentence for Lerach". Chicago Tribune. 
  7. ^ "History of the Federal Judiciary". Fjc.gov. Retrieved February 2, 2012. 
  8. ^ a b "Press Release: Circle of Greed by Carl M. Cannon and Patrick Dillon « Crown Publishing – Broadway Books". Broadway-books.crownpublishing.com. March 2, 2010. Retrieved February 2, 2012. 
  9. ^ Drake, Bruce (March 9, 2010). "'Circle of Greed': The Rise and Fall of a Self-Appointed Legal Robin Hood". Politicsdaily.com. Retrieved February 2, 2012. 
  10. ^ [1][dead link]
  11. ^ "Microsoft Word - declinepaper_updated.doc" (PDF). Retrieved February 2, 2012. 
  12. ^ "Microsoft Word - Lerachhandout.doc" (PDF). Retrieved February 2, 2012. 
  13. ^ "Economics Roundtable: William Lerach". YouTube. January 10, 2008. Retrieved February 2, 2012. 
  14. ^ by AZanimal (December 6, 2007). "interest-rates-subprime-fixed-rate". San Francisco Chronicle. Retrieved February 2, 2012. 
  15. ^ Lerach, William S. (November 11, 2007). "Loser CEOs, Raking It In". The Washington Post. 
  16. ^ a b http://www.rgrdlaw.com/pdf/news/commencement.pdf[dead link]
  17. ^ Peter Elkind (September 4, 2000). "The King of Pain Is Hurting". Fortune. 
  18. ^ Bruce V. Bigelow (September 19, 2007). "Prison sentence part of lawyer's plea deal". The San Diego Union-Tribune. 
  19. ^ "Is This America's Top Corporate Crime Fighter?". The Nation. July 18, 2002. Retrieved February 2, 2012. 
  20. ^ "NOW with Bill Moyers. Transcript. Risky Business. September 27, 2002". PBS. Retrieved February 2, 2012. 
  21. ^ "NOW with Bill Moyers. Transcript. Rewriting the Rules". PBS. Retrieved February 2, 2012. 
  22. ^ Justin Scheck (August 16, 2005). "Lerach Hunkers Down After Indictment". The National Law Journal. 
  23. ^ Peter Elkind (November 3, 2006). "The fall of America's meanest law firm: Milberg Weiss, the lawsuit factory that took corporations for $45 billion, is in the feds' cross hairs". Fortune. 
  24. ^ Justin Scheck (June 1, 2007). "Milberg Partners Talk Pleas With Prosecutors". The National Law Journal. "When the probe began in 1999, it was focused on Lerach." 
  25. ^ Julie Creswell (June 1, 2007). "Top Lawyer, Under Fire, May Depart". The New York Times. 
  26. ^ Molly Selvin (June 1, 2007). "Class-action lawyer could face charges". Los Angeles Times. 
  27. ^ Greg Farrell (July 9, 2007). "Plea may aid case against law partners". USA TODAY. 
  28. ^ Jenny Anderson (August 29, 2007). "Lawyer Quits Firm to Focus on Inquiry". The New York Times. "According to the indictment, in the early stages of the scheme, which lasted from the 1970s through 2005, Milberg Weiss partners provided cash to pay the kickbacks since it is illegal for a plaintiff to receive any portion of the legal fees, which could be viewed as an incentive to settle rather than act in the best interest of the class. The firm would later award those partners bonus payments equal to the amounts they had paid in." 
  29. ^ Carrie Johnson (August 29, 2007). "Lerach to Leave Law Firm As He Tries to End Probe". The Washington Post. 
  30. ^ Mark Lachter (August 31, 2007). "Snag in Lerach plea deal". LA Biz Observed. 
  31. ^ Coughlin Stoia Geller Rudman & Robbins LLP website.
  32. ^ Mr. Lerach pled guilty to a one count criminal information. http://graphics8.nytimes.com/packages/pdf/business/19legal_pleaagreement.pdf
  33. ^ "Lawyer William Lerach sentenced to 2 years in class-action kickback scheme". Chicago Tribune. Associated Press. February 12, 2008. "I pleaded guilty in this case because I was guilty," Lerach said before sentencing. "It was, as they say, felony stupid." 
  34. ^ Karen SloanContactAll Articles (April 13, 2010). "Out of Prison, Lerach May Get a Teaching Job". Law.com. Retrieved February 2, 2012. 
  35. ^ Carrie Johnson (February 12, 2008). "Lerach Gets Two Years In Prison for Kickbacks". The Washington Post. 
  36. ^ California Bar Journal, October 2009, p. 17.
  37. ^ [2][dead link]
  38. ^ Edvard Pettersson (June 2, 2008). "Weiss Sentenced to 2½ Years for Kickback Scheme (Update1)". Bloomberg L.P. "Weiss, 72, must also forfeit $9.75 million and pay a fine of $250,000. He pleaded guilty April 2 to racketeering conspiracy, admitting he helped secretly pay a stable of plaintiffs to file suits from 1979 through 2005. By using them to sue first, the firm was more likely to lead cases and reap larger fees. ... Lerach is serving a two-year prison term after pleading guilty to conspiracy last year. Weiss faced as much as 40 years in prison if convicted at trial." 
  39. ^ posted at 1:15 pm on Sun, Apr 11, 2010. (April 11, 2010). "Fear and Loathing in the Boardroom – voiceofsandiego.org: Government". voiceofsandiego.org. Retrieved February 2, 2012. 
  40. ^ Cavanaugh, Maureen. "The Story Of Bill Lerach's Fighting For Consumers". KPBS.org. Retrieved February 2, 2012. 
  41. ^ Posted on March 14, 2010 by Kevin LaCroix (March 16, 2010). "Interview with the Authors of "Circle of Greed" : The D & O Diary". Dandodiary.com. Retrieved February 2, 2012. 
  42. ^ "Unraveling SD Lawyer's 'Circle of Greed' – voiceofsandiego.org: Government". voiceofsandiego.org. Retrieved February 2, 2012.