With David Bershad’s guilty plea earlier this week, it became clear that the Milberg Weiss prosecution is fast reaching an end. That means, of course, that Bill Lerach is almost in the government’s clutches. While the probe began in 1999 with a tip from convicted art fraudster Steve Cooperman that he had taken kickbacks from Lerach (Cooperman, by the way, also entered a guilty plea early this week), much of the government’s work the past few years has focused on the relationship between former expert witness John Torkelsen and the lead partner at Lerach Coughlin Stoia Geller Rudman & Robbins. And that could play a role if Lerach were to reach a plea deal.
It’s been alleged for years — in media outlets and court filings — that Torkelsen, once an extremely effective damages expert (and now an incarcerated felon, for a fraud unrelated to Milberg) was basically paid on a contingency fee. In short, the accusation was that in cases where Milberg Weiss got a big settlement, he’d get paid far more than his hourly rate. And in cases where the firm didn’t do so well, he wouldn’t get paid at all.
Such an arrangement would contravene what Milberg Weiss and Torkelsen represented in court filings, which could therefore amount to perjury.
Several people involved in the Milberg case said L.A. Assistant U.S. Attorney Robert McGahan has been the guy in charge of sniffing out Milberg. Over the last year, he’s subpoenaed documents from a long list of plaintiff firms that co-counseled with Milberg Weiss in an attempt to trace the flow of money from the firm to Torkelsen. And more recently — over the last month, in fact, as plea talks with Lerach have been ongoing — the prosecutors have been interviewing people involved in cases where Torkelsen was paid.
We’re hearing now that McGahan’s built up quite a stack of papers, records relating to dozens of cases in which, the prosecutors seem to think, Torkelsen’s payments differ from what was reported in court filings.
Torkelsen didn’t factor into the Bershad plea deal, so the speculation among people involved is that any Lerach indictment — or plea deal — could look much different than the charges that are already public. It should all be clear within the next six weeks or so, said people with knowledge of the case, since, by then, they expect Lerach to have a deal hammered out.
— Justin Scheck