Obituaries

Melvyn Weiss, 82, lawyer who fought corporate fraud

Mr. Weiss’s suits sometimes led to more transparent corporate bookkeeping and greater accountability.
New York Times
Mr. Weiss’s suits sometimes led to more transparent corporate bookkeeping and greater accountability.

Melvyn I. Weiss, whose avalanche of class-action lawsuits made him a pariah to corporate America, a hero to plaintiffs, a catalyst for legal protections of investors and consumers, and finally a felon, died on Friday at his home in Boca Raton, Fla. He was 82.

The cause was amyotrophic lateral sclerosis, his son Stephen A. Weiss, a partner in the law firm Seeger Weiss, said.

Mr. Weiss was a pro bono lawyer for victims of terrorism and other causes, a prodigious fund-raiser for liberal Democratic candidates, and a leader of the Israel Policy Forum, which favors a two-state solution to the Palestinian conflict. He and his wife, the former Barbara Joan Kaplan, sponsored a program in public-interest law at his alma mater, New York University Law School.

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But he was best known for his aggressive advocacy in building a fledgling law firm into a powerhouse robust enough to compel miscreant and recalcitrant businesses to pay billions of dollars in claims to aggrieved shareholders and customers.

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He sued, or threatened lawsuits against, them or their advisers for securities fraud, phony accounting, environmental damage, false advertising, and other misconduct.

Ironically, as an investor Mr. Weiss was himself a victim of Bernard L. Madoff’s Ponzi scheme, which claimed fictitious profits from Wall Street. Madoff was arrested in 2008 and convicted in what was described as the largest financial fraud in American history.

To corporate directors and legal reformers seeking to curb frivolous lawsuits, the firm that Mr. Weiss cofounded, which became known as Milberg Weiss Bershad Hynes & Lerach, was an exemplar of tort litigation gone amok. To many of his clients, though, he was a white knight.

His lawsuits sometimes led to more transparent corporate bookkeeping and greater accountability, including the election of additional independent directors to company boards.

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A 1994 lawsuit against the tobacco company R.J. Reynolds was credited with helping to kill its advertising campaign built around the cartoon character Joe Camel, which industry critics argued was targeted at underage smokers.

Mr. Weiss found himself in the legal crosshairs in 2007, when federal prosecutors charged that in 150 cases across the country, Milberg, as his firm was known, had funneled $11.3 million in kickbacks to so-called figurehead investors so that they would be readily available as potential plaintiffs.

Their unbridled litigiousness gave Mr. Weiss and his partners an advantage by enabling them to file suit ahead of rival firms, get themselves appointed lead counsel, and gain a greater share of legal fees.

According to prosecutors, the conspiracy generated more than $250 million in fees to Milberg — including $9.8 million for Mr. Weiss, who lived in a 12,200-square-foot waterfront mansion in Oyster Bay, N.Y., and owned 140 Picasso lithographs and etchings.

“The scheme was based in greed,” said Thomas P. O’Brien, the federal prosecutor for central California, “and it affected the integrity of the courts and the interests of an untold number of absent class members.”

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One figurehead plaintiff, Dr. Steven Cooperman, presented himself as an injured party in so many Milberg cases that in 1993, dismissing a lawsuit against a chain of used-car dealers, a federal judge caustically described the doctor as “one of the unluckiest and most victimized investors in the history of the securities business.”

While Mr. Weiss often fulminated against corporate greed — “Greed is a growth industry and it always will be,” he said — he candidly acknowledged his own motivation.

“Am I in it for the money?” he said in a 2004 interview with The New York Times. “Yes.”

The federal charges against Mr. Weiss and his partners did not question the substance of the lawsuits they had filed, but only how the firm had contrived to increase its fees.

In 2008, facing 40 years in prison if convicted on all counts, Mr. Weiss pleaded guilty to racketeering.

After an outpouring of more than 250 letters to the court from supporters and a 125-page sentencing memorandum from his lawyer, Benjamin Brafman, Mr. Weiss was sentenced by US District Judge John F. Walter to 30 months in prison and ordered to forfeit $9.75 million and pay a $250,000 fine.

He served half his sentence in a federal correctional institution and the remainder confined at home.

“Mel Weiss did not invent securities class actions, but he brought them to a prominence and impact unmatched by any other lawyer of his time,” US District Judge Jed S. Rakoff of Manhattan said in an e-mail on Monday.

Melvyn Irwin Weiss was born on Aug. 1, 1935, in the Bronx, a grandson of Jewish immigrants from Russia and the son of Joseph Weiss, an accountant, and the former Jean Bystock.

He was raised in the Hollis Hills section of Queens and graduated from Jamaica High School. He helped his father keep the books for small businesses while earning a bachelor’s degree from City College of New York in 1956. He graduated from New York University Law School in 1959 and served in the Army.

In addition to his son Stephen, he is survived by his wife; another son, Gary; a daughter, Leslie Weiss; a sister, Rita Fox; and seven grandchildren.

After working in two other law firms, Mr. Weiss joined Lawrence Milberg, a veteran litigator, in a new partnership in 1965. A year later, the partners gambled on a new federal court rule that facilitated class-action suits by one plaintiff on behalf of many.

The goal of the regulation was to empower private lawyers to help the government enforce laws against civil rights violations and consumer fraud. Milberg exploited the new rule to pioneer an aggressive legal strategy: On behalf of groups of investors, the firm sued corporations whose stock had plunged on the ground that the company had committed stock market fraud by overstating its revenue forecasts.

After 13 lean years of betting on future contingency fees, Milberg collected a $4.5 million bonanza in 1978 for settling a fraud case involving housing funding by the bankrupt US Financial Corp.

But in 1995, Congress targeted Milberg and similar firms with legislation to discourage frivolous suits. The new law required plaintiffs’ lawyers to demonstrate evidence of fraud before a case could proceed. And the lead plaintiff would be whoever suffered the greatest financial loss — not the party who got to the courthouse first.