Class action attorney gets 30 months for kickback scheme

Class action attorney Melvyn Weiss, whose lawsuits targeted some of the largest corporations in the nation including the garment industry on Saipan, was sentenced Monday to 30 months in prison. Weiss was accused of helping orchestrate a lucrative lawsuit kickback scheme aimed at big companies.

U.S. District Judge John F. Walter also ordered Weiss, 72, to pay $9.7 million in forfeitures and $250,000 in fines.

Weiss pleaded guilty to a racketeering conspiracy charge in April as part of an agreement with prosecutors.

On Saipan, Gov. Benigno R. Fitial said the sentencing of Milberg Weiss attorneys further discredits the class action litigation against the Commonwealth’s garment industry, which is now in sharp decline.

“These disturbing criminal developments vindicate the CNMI and the industry and show that the class action suit was baseless and malicious,” said Fitial.

“The lawsuit by these unethical and disgraced attorneys damaged the CNMI’s reputation and harmed our industry. These attorneys are now being punished but the damage to the CNMI has already been done,” he added.

The Commonwealth is now going to lose its immigration control in part because of the lawsuit initiated by the former Milberg Weiss firm, Fitial said.

“The baseless class action accusations fueled proponents of federalization and ultimately led to the misguided federalization of the CNMI based on such sensational charges for political and monetary benefits,” he said.

Fitial also noted that Levi Strauss did not settle the suit and was later vindicated in court.

The governor is a former executive of Tan Holdings Corp., which used to own some garment factories on Saipan.

Richard Pierce, special assistant to the governor and a former executive director of the Saipan Garment Manufacturers Association, welcomed Weiss’s conviction.

“No pun intended, but if the shoe fits, wear it,” Pierce said. “I wish we could turn around and take action against him for the damages brought not only upon businesses here but also the people of the CNMI.”

Tan Holdings lawyer Steven Pixley noted the severe consequences the suits Weiss spearheaded had for Saipan’s business community, saying it damaged the garment manufacturing sector’s efforts to win the passage of federal legislation easing regulatory restrictions.

Furthermore, the litigation “accelerated the departure of the industry,” diminished sales of garments from Saipan and led to a wave of negative media attention for the island that spurred protests of retail apparel sellers nationwide, Pixley said.

Supporters of Weiss’ efforts to sue the garment industry did not immediately respond to requests for comment.

In a prepared, handwritten statement read before sentencing, Weiss apologized for his “wrongful conduct” and described the case as a fall from grace.

“I promise you my contrition is profound and genuine,” said Weiss, the co-founder of the New York law firm once known as Milberg Weiss.

Prosecutors had sought the maximum 33-month sentence. Weiss and his attorneys asked for a reduced prison term, citing his age and contributions inside and outside courtrooms.

Authorities said Weiss’ firm made about $250 million over two decades by filing legal actions on behalf of professional plaintiffs who received $11.3 million in kickbacks.

“Over the course of 25 years, Melvyn Weiss and his co-conspirators compromised the justice system as they caused associates to lie to judges across the nation,” said U.S. Attorney Thomas P. O’Brien.

One legal observer believed the case will have a significant impact on future class-action lawsuits.

“I think it’s going to make judges scrutinize those cases more closely,” said Brad Simon, a former federal prosecutor who now works as a criminal defense attorney. “It’s a shame because of the (defendants’) greed, they may have hampered the ability for investors to get redress.”

Milberg Weiss dominated the industry in securities class-action lawsuits, which involve shareholders who claim they suffered losses because executives misled them about a company’s financial condition.

The kickback scheme allowed attorneys at the firm to be among the first to file litigation and secure the lucrative position as lead plaintiffs’ counsel, according to court documents.

The lawsuits also targeted companies such as AT&T Inc., Lucent, WorldCom, Microsoft Corp. and Prudential Insurance. [B][I](With AP, Agnes E. Donato)[/I][/B]