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Bill Lerach: Life After Prison

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Disbarred and forever branded as an ex-felon, the man once called ‘King of the Class Actions’ wants to teach, but can’t

By Marianne Regan

Shed a tear not for Bill Lerach.
He’s out of jail, lives in a La Jolla Farms home valued at $24 million, his fourth wife, Michelle,  runs a cute cupcake shop on Girard Avenue and Phillip Seymour Hoffman may soon be starring as Lerach in a movie based on the book, “Circle of Greed.”
Oh yes, and he says he’d like to be remembered simply as just “an ordinary guy.”
Fat chance.
Lerach was released from prison last March, serving less than two years, after pleading guilty in 2007 to a single count of conspiracy. The federal government claimed that he and his partners at his former firm of Milberg, Weiss, Bershad, Hynes and Lerach secretly paid kickbacks to individuals  who agreed to serve as lead plaintiffs in class action lawsuits against big corporations, most famously Enron.
The firm allegedly raked in about $250 million in attorneys’ fees over a 25-year period by paying clients a total of $11.3 million to act as lead plaintiffs in more than 175 class actions from 1979 to 2005.
Lerach was fined $250,000, another $7.75 million in forfeiture and 1,000 hours of community service. He was disbarred.
He has sought to complete some of his community service hours by teaching a course at the UC Irvine School of Law,  a request that was rejected by U.S. District Judge John Walter in Los Angeles.
Walter cited several public statements by Lerach  which, in the judge’s view, appeared to display a lack of remorse for his crimes.
“He still denies that he did anything wrong,” Walter said. “He misled and fooled the court into believing he had remorse at the time of his sentencing.”
The judge added that he now believes that the sentence was “way too lenient” and that he should not have accepted Lerach’s plea deal.
In a wide ranging interview with San Diego Metropolitan Magazine, Lerach said that if he got the teaching assignment at UC Irving, he has designed a course titled, “Regulation of Free Market Capitalism: Have We Failed.” It is meant, Lerach says, to take a very broad view of the American economy, the financial markets, the competitive markets, the consumer markets and ask the question, “Are we regulating capitalism in a way that maximizes the benefit to entrepreneurs and consumers or has it become tilted so far towards deregulations that it is hurting us?”
In Lerach’s motion to the court seeking credit for designing and teaching the proposed course, he said that he “would caution students to practice law ethically and within the strictures of the law, and he would counsel them on steps they might take to avoid his fate.”
Judge Walter said the only message Lerach could teach students was, “Don’t get caught.”
The “Circle of Greed” authors, Patrick Dillon and Carl M. Cannon, had Lerach’s full cooperation in writing their book. Dillon says the book is in the hands of Hollywood producer Martin Elfand and is moving through development, which means lining up a director, production company and screen writer.
A 2005 book, “The Money Lawyers,” by Joseph C. Gouldon, also chronicled Lerach’s career and subsequent rise as a plaintiff’s lawyer.
Lerach has both fans and detractors. Don Bauder, the retired financial editor and senior columnist for The San Diego Union-Tribune who now writes occasionally for the San Diego Reader, says, “Lerach amassed a $700 million fortune while investors he represented got back only 15 cents on the dollar. His fine — $7.75 million — was far too lenient.”
On the other side, George Mitrovich, president of the City Club, said Lerach has paid his debt to society. “He went to prison. That’s a pretty big debt to pay. He pled guilty to a serious offense and he served his time.”
When asked his view of the criminal justice system, now that he has spent some time behind bars, Lerach opined that there “is so much wrong with the system and I’m sure there are those who do not want to hear it from someone who has been through it, from my perspective. But all I can tell you is, from my own experience, that there seems to be a disproportionate number of young African-Americans, Hispanics and some white men, whose lives are being crushed and ruined and, of course, the lives of their loved ones who are also being crushed and ruined, by gigantic sentences for, honestly, what don’t seem to me to be, and maybe it depends on your own value system, horrible crimes.
“I realize that different people have different views about the drug problem and the collateral crime that it creates, but all I know is that when I was in jail, I met a lot of what seem to be perfectly good, decent men of all races, young men, whose lives have been ruined.”
According to Lerach, more laws are not needed, but he would recommend much shorter jail sentences for first-time offenders, saying that, if he were in charge, he’d be much tougher on recidivists “because there are people in this world who are bad guys who just can’t get along in society and who need to be in jail.”
Lerach even ventured an opinion on President Obama, saying, “I’m very disappointed.” He said he had been very enthusiastic about his candidacy and he thought Obama “would be a very strong, progressive president,” but that “it hasn’t put racism behind us and maybe it’s made it worse.”
Whatever the future holds for Lerach, it won’t be practicing law, a matter which would require a presidential pardon to get him back in the legal game.
In an interview with Law 360, he said the current environment for plaintiffs attorneys is now far different from when he was known as “The King of the Class Actions.”
“The judges are hostile, the fees are compressed and it is a tough time for plaintiffs lawyers. I won’t be doing anything commercial. That part of my life is over.”

***

Editor’s Note: For other articles on Bill Lerach, visit:
• www.prospect.org/cs/articles?article=the_lerach_dilemma

• www.nytimes.com/2008/02/12/business/12legal.html

www.nypost.com/p/news/opinion/books/circle_of_greed_D92w9ytw4F9sbILbnQCc2I

• www.dandodiary.com/2010/03/articles/plaintiffs-bar/book-review-circle-of-greed-the-rise-and-fall-of-bill-lerach/

2 Comments on “Bill Lerach: Life After Prison

  • I recently heard Mr. Lerach speak at a Rotary meeting and he opened our eyes as to how much trouble our pensions are in. Like him or not, the guy is brilliant and if I was ever defrauded by a powerful corporation, this is the guy I’d want. I’m not totally clued in about class action suits; but it would be interest to know if Mr. Lerach was targeted and I’m sure Wall Street was no fan. And probably not too popular in the Bush White House. My hunch tells me that lawyers probably do this all the time. When you do the math according to this article..if he was charged with doling out a “total of $11.3 million to act as lead plaintiffs in more than 175 class actions from 1979 to 2005″…that’s about $65,000 per lead plaintiff. That sounds like small potatoes. I also heard an interview that giving out add’l payments to plaintiffs is fine if done with the judge’s permission after a case settles. As long as the plaintiff has a legitimate claim and if we like a free market, laissez faire approach, I’m in favor of a plaintiff getting all he or she can.

  • We are all actors upon the stage, and Mr Lerach has played an interesting role. I am still trying to ascertain the level of harm, and what parties were harmed, by the actions that Mr Lerach admitted to — advancing payments to plaintiffs prior to settlements without disclosing those payments to the court, as far as I understand it, is what he pled guilty to.

    To make Mr Lerach’s fine and sentence “fair” — at nearly 20 months incarceration in Lompoc and elsewhere in Federal Correctional Institute — well then, we had ought to really take a hard look at what fines and jail terms should be assessed to people like Angelo Mozilo (ex CountryWide CEO), Charles Prince (ex CitiGroup CEO) John Thain of Merrill Lynch, Mr Cassano of AIG-FP, and numerous other members of the banking and “shadow banking” system who conspired to defraud Americans of huge amounts of their pension savings, of their stock holdings (in many cases retirement-based), and worse.

    The harms and damage done by the orgy of looting, through deception, fraud, and derivatives, perpetuated by white collar Wall Street criminals — from predatory lending to securitization to naked credit default swaps — had yet to be measured. The devastation of pension funds is a giant shoe which is going to drop, and drop, and drop on America’s retirees. Re-examined in the this sort of light, I think our DoJ, which outdid itself for 7 odd years in prosecuting Mr Lerach, should have its hand full for a few more centuries prosecuting the legion of blatant criminality by the Mozilos and Princes out there.

    What fines, what restitution, what jail sentence should be handed done for those acts? If Mr Lerach’s admitted wrongdoings merit $7.75 million and loss of nearly two years of liberty, I shudder to think what our Wall Street criminals — most as of yet still at large – ought receive.

    Curiously enough, some of the class action lawsuits Mr Lerach helped prosecute were against some of those same corporate criminals named above, and it’s worth pointing out that the period where Mr Lerach was “on the sidelines” (that is, in prison) coincided with the era of most rampant and blatant fraud and criminality on Wall Street and in the markets — as if the corporate malefactors, seeing Mr Lerach indicted and sent up to Lompoc, knew there was no cop on the beat, and it was safe to run amok again.

    For the harm that he caused, Mr Lerach deserves admonishment, and has paid a price. Maybe it’s time to focus on those in the financial and corporate sector who as of yet have not be called to account.

    “Far better it is to dare mighty things, to win glorious triumphs even though checkered by failure, than to rank with those poor spirits who neither enjoy nor suffer much because they live in the gray twilight that knows neither victory nor defeat.”

    Theodore Roosevelt
    26th president of US (1858 – 1919)

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