Democrats accept funds from indicted firm

NY Times:

Over the years, as it became Exhibit A for critics of shareholders’ class-action lawsuits, the law firm of Milberg Weiss often enjoyed the support of Democrats who called the suits an invaluable weapon in the universal conflict between big business and the little guy.

The Democrats, in turn, enjoyed the support of Milberg Weiss and its partners, who together contributed more than $7 million to the party’s candidates since the 1980s.

Last year, the firm was indicted on federal charges of fraud and bribery. But the political partnership has not been entirely severed. Since the indictment, 26 Democrats around the country, including four presidential candidates, have accepted $150,000 in campaign contributions from people connected to Milberg Weiss, according to state and federal campaign finance records. And some Democrats have taken public actions that potentially helped the firm or its former partners.

The recent contributors include current and former Milberg partners who had either been indicted or were widely reported to be facing potential criminal problems when they wrote their checks. One of them, William S. Lerach, was a fund-raiser for John Edwards’s presidential campaign until his guilty plea last month. Melvyn I. Weiss, a founder of the firm, gave the maximum $4,600 to Senator Hillary Rodham Clinton in June. Other firm members contributed to the presidential campaigns of Senators Barack Obama and Joseph R. Biden Jr.

Milberg Weiss reaped billions of dollars in legal fees over four decades as the acknowledged king of class-action lawsuits, which accused executives of misleading investors with erroneous financial statements or some other fraud. According to the indictment, the New York-based firm ran a “racketeering enterprise” that collected a quarter billion dollars from 250 of the firm’s cases in which people were paid secret kickbacks for serving as plaintiffs.

The law firm has denied the charges.

The reluctance of Democrats to shut off the cash spigot, even in the face of scandal, underscores how the pressure to raise money creates marriages of political interests that can be difficult to break up. Fred Wertheimer, a longtime advocate of campaign finance reform, called it the “natural outcome of a system where huge amounts of private contributions are raised and spent, and the political parties turn to groups with interests in government to feed the spending machine.”


Where is the pressure? Democrats have already collected twice as much as Republicans during the primary phase of the campaign. It appears to be a case of greedy Democrat politicians and a law firm of more than suspect ethics. If these guys don't think giving kickbacks to plaintiffs is unethical it is hard to say where they would draw the line. The firm may have also used nominee transactions to funnel money to various campaigns.


Along the way, as Milberg Weiss’s brass-knuckles legal strategy made it a target for Republicans advocating limits on class-action suits, it usually could count on Democrats in Washington to protect its interests. After federal prosecutors indicted the firm in May 2006, four Democratic congressmen issued a joint statement, posted on Milberg Weiss’s Web site, accusing the Bush administration of persecuting lawyers who take on big businesses.

The statement, signed by Representatives Gary L. Ackerman, Carolyn McCarthy and Charles B. Rangel, all of New York, and Robert Wexler of Florida, contained several passages that appear to be lifted directly from a “class-action press kit” distributed by a national trial lawyers group. All but Mr. Wexler have received campaign contributions from Milberg Weiss partners.

More recently, Mr. Edwards, a trial lawyer who became wealthy pursing personal injury cases, joined labor unions and consumer groups last May in pressing securities regulators to intervene in a lawsuit against banks brought by Mr. Lerach on behalf of Enron investors. His campaign said Mr. Edwards’s actions had nothing to do with Mr. Lerach, and were consistent with the candidate’s longstanding defense of working people.

Still, Mr. Edwards’s willingness to be seen doing anything that could benefit Mr. Lerach and allowing him to raise money provided fodder for critics. At the time the Edwards campaign took on Mr. Lerach as a fund-raiser, it was already widely reported that Mr. Lerach, who left Milberg Weiss in 2004, was one of the unnamed co-conspirators cited in court documents related to the firm’s indictment.

Don't expect much to come of this story. While the reporting of the NY Times is good, there is no outrage like you usually see from the Times if a Republican was involved. Democrats just have a way of getting a way with this sort of thing without much consequence. That is probably why those involve continue to think they have done nothing wrong.

Update: Mark Tapscott points me to this article in the Examiner which covered some of the same area on October 5, 2007.

A spokesman for the Democratic National Committee said more than $1 million in donations from attorneys who pleaded guilty or have been indicted on federal charges for an alleged $11.8 million kickback scheme will not be returned.

These were donations directly to the DNC. Howard Dean and the DNC are not eager to return the money although they might return $5000 donated after Dean took charge. The policy does not make much sense if it came from unethical conduct.

The Examiner also has a Lawyers Gone Wild series which has more on the purchase of influence.


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