I noted with interest today the headlines (see below) in a few newspapers about the guilty plea of one William S. Lerach, a mega-millionaire liberal from San Diego County who has given over a million dollars to Democrats and the Democratic Party over the years (see: http://www.opensecrets.org/indivs/search.asp?key=9XVTQ&txtName=lerach&txtState=CA&txtAll=Y&Order=N).
Lerach was made infamous by suing companies (shareholders, really) and executives supposedly on behalf of the “victimized shareholders.” We now found out he made himself and his firm rich by illegally paying kickbacks to a small army of professional plaintiffs whose job it was to find people for Lerach to sue.
I have two small personal connections to Lerach and am very glad to see him now formally labeled a “criminal” and destined for one to two years in federal prison.
One, I was the first staffer for former Congressman Chris Cox (now Chairman of the Securities and Exchange Commission) who, back in 1995, wrote “The Private Securities Litigation Reform Act.” This act was aimed at reducing the abuse of the federal court system by lawyers like Lerach and had the distinction of being the first law enacted over President Clinton’s veto. The U.S. Public Interest Research Group (U.S. PIRG), a very liberal group funded by the likes of Lerach, blasted Cox when it tried to prevent his being confirmed as Chairman of the SEC.
My second connection to Lerach is a scathing letter I sent to a federal judge over 10 years ago regarding a class action lawsuit brought against John Hancock Insurance by Lerach. As a policy holder of John Hancock Mutual Life Insurance I was named a member of the “class” and advised that if I wanted to opt out, presumably so I could sue on my own, I had to send in a letter. The following is an excerpt of my letter:
July 6, 1997
Clerk of the Court
U.S. District Court for the District of Massachusetts
I am writing to exclude myself from the proposed class action lawsuit…
Further, I strenuously object to the outrageous amount of attorney’s fees -- $39 million plus $750,000 in fees on some $350 million in payouts to the “Class” -- characterized as not being expected to have any effect on John Hancock’s financial strength or ratings…
I object to the proposed settlement and the attorney’s fees for the following reasons:
2) Should I remain passive and accept the settlement, I would be participating in a lie as I have not been harmed.
3) The language that a $350 million payout will not hurt John Hancock is a lie, pure and simple. This amount will hurt the company -- in fact, it will turn honest shareholders like me into a “class” by shifting wealth from me to the lawyers and the alleged “class”. As I learned from my economics classes in college, there is no such thing as a free lunch.
4) One of the lawyers in the firm bringing the suit, William Lerach, is a trial attorney well-known here in California for his frivolous lawsuits and legal blackmail against both individuals and corporations -- it makes me sick to think that my premiums could be going to line the pockets of Lerach and his colleagues…
Thanks for your time and energy in service of this class and of other, more important federal cases.
Sincerely,
Charles S. DeVore
From www.rtumble.com today:
Lerach: Guilty Plea to End Crusading Lawyer's Lucrative Run -- In a three-decade career, California lawyer William S. Lerach won tens of billions of dollars for his clients by suing executives embroiled in corporate scandal. Casting himself as the voice of victimized shareholders, he chalked up unprecedented awards in the Enron accounting mess and the Exxon oil spill. CARRIE JOHNSON in the Washington Post BERNADETTE TANSEY in the San Francisco Chronicle BRUCE V. BIGELOW in the San Diego Union-Trib -- 9/19/07
Interesting bit of history, isn’t it?
All the best,
Chuck DeVore
State Assemblyman, 70th District
www.ChuckDeVore.com
I once had the pleasure of staying in Lerach's penthouse ski home in Steamboat Springs (as the guest of one of the associate attorneys in his firm.) Six bedrooms, seven bathrooms - class action work buys a lot of chalet. I enjoyed drinking as much of his single-malt scotch as I possibly could.
Posted by: Jim | September 19, 2007 at 09:14 PM
Mr. Devore's delight in the recent Lerach plea bargain says much about Mr. Devore, and it isn't very good. He says that back in 1995, he helped write “The Private Securities Litigation Reform Act.” He claims erroneously that "This act was aimed at reducing the abuse of the federal court system by lawyers like Lerach and had the distinction of being the first law enacted over President Clinton’s veto."
The PSLRA was nothing of the sort. Yes it was intended to reduce the number of lawsuits, but it was specifically done to make it EASIER for corporations to commit fraud and to get away with it. In fact, the PSLRA goes down in history as one of the most important factors in making the Enron fraud, the WorldCom fraud, and countless others possible. Had there been no PSLRA as an incentive to commit fraud, the fraud would have been caught sooner and stopped dead. Mr. Devore is either in denial or he is simply a corporate shill, who exists to protect the interests of corporate crime.
It is a fact, for example, that Millberg's case against WorldCom was originally tossed out, based on......you guessed it, the PSLRA. Meanwhile the fraud at WorldCom went ahead full steam, along with many others. When the situation reached a crisis point and the damages went into the billions upon billions of dollars, the SEC finally decided to take a look. And where did they go to start their investigation? The SEC used the Millberg-Lerach complaint--a literal blueprint of the WorldCom crimes.
So instead of cheering for Mr. Lerach's downfall, Mr. Devore should be holding his head in shame for his role in making some a massive series of frauds possible. Congratulations, Mr. Devore.
Posted by: Ralph Adamo | September 20, 2007 at 07:19 PM