Lead Plaintiff's Guilty Plea Trouble for Lawyer

Saturday, March 24, 2007 | 0

By Barry Zalma

Steven Cooperman, a former ophthalmologist previously convicted of insurance fraud, admitted to taking payments for serving as lead plaintiff in class actions filed by Milberg Weiss over a period of 12 years.

Court documents filed January 31, 2007 detail Cooperman's role and appear to put "Partner B," who some press sources claim may be Bill Lerach, at the heart of the lucrative kickback scheme. In the plea agreement, Cooperman admitted to perjury and conspiracy to obstruct justice for taking kickbacks when he acted as the plaintiff in dozens of class actions filed by Milberg Weiss. The charging documents do not identify "Partner B" by a real name.

The 50-page filing describes how Cooperman allegedly conspired with a number of lawyers at what was called Milberg, Weiss, Bershad, Hynes & Lerach to manufacture securities lawsuits against failing companies. It also references several allegedly fake documents that disguised kickbacks Milberg Weiss gave to Cooperman for being a plaintiff in their class actions.

That Cooperman helped prosecutors build their case against Milberg Weiss is nothing new. He has been cooperating since its beginning. In fact, he is the witness who first told prosecutors about the kickbacks.

The problem for the U.S. Attorney's Office has been that Cooperman, a convicted felon and fraud perpetrator, has a major credibility problem. He offered to cooperate in the Milberg investigation only after he was convicted and sent to prison for orchestrating an insurance scam by claiming some fine art in his Beverly Hills home had been stolen.

Because of his past, anything Cooperman could say in trial about Lerach, or anyone else linked to Milberg Weiss, could look like an attempt to escape another stint in the slammer. On January 31, 2007 Cooperman's credibility became less of a problem. His plea -- to conspiring with Milberg Weiss and several of its senior partners to obstruct justice and make false statements in class actions -- indicates that he is not dealing with the US Attorney to avoid punishment. Cooperman's plea puts him at risk to up to five years in prison, with three years of supervised release, plus a fine of either $250,000 or twice the amount he gained in the Milberg scheme.

While Cooperman's credibility may remain questionable, the detailed allegations introduced January 31, 2007, in a 50-page charging document in U.S. v. Cooperman, CR 06-776(A), suggest prosecutors are closing in on Partner B.

Court documents filed in the U.S. District Court for the Central District of California are rife with details about the role Partner B played in the alleged kickback scheme at Milberg Weiss. Among other things, prosecutors claim that "Partner B" directly paid Cooperman in cash to conceal the scheme.

Cooperman Cooperates Cooperman first agreed to cooperate with federal prosecutors in August 2000 after he was found guilty of 18 federal charges in the insurance fraud case. But, while serving time for the insurance fraud convictions, Cooperman committed unspecified "additional crimes" that breached his cooperation agreement with prosecutors, according to a release from the Central District U.S. Attorney's Office.

Cooperman's attorney, Russell Gioiella, of New York's Litman, Asche & Gioiella, confirmed that his client was nailed by prosecutors for forging his doctors' signatures on health insurance forms while in prison for the fraud convictions.

Though Cooperman's guilty plea has no explicit cooperation provision, Gioiella said his client will continue to cooperate if asked by prosecutors.

Cooperman isn't the first former lead plaintiff tied to Milberg Weiss to plead guilty in the conspiracy probe. Howard Vogel, a retired mortgage broker from Florida, entered a guilty plea last April, just one month before federal prosecutors in Los Angeles indicted the Milberg firm and partner David Bershad and former partner Steven Shulman.

This column was first published in Zalma's Insurance Fraud Letter. Zalma's Insurance Fraud Letter (ZIFL) is published 12 months a year by ClaimSchool. Mr. Zalma serves as an expert witness or consultant in insurance coverage, claims handling, insurance bad faith and fraud. Mr. Zalma's law practice is limited to the representation of insurers and those in the business of insurance. He is available to provide advice and counsel concerning insurance fraud, first and third party insurance coverage issues, bad faith and first party insurance appraisals. It is republished here with permission.

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