When he was on top of the world, flamboyant class-action plaintiffs lawyer William Lerach made more than $100 million during the 1990s for himself and even more for his now-disgraced firm, Milberg Weiss.
Silicon Valley tech executives shuddered and Fortune 500 chief executive officers reached for their checkbooks at the mere mention of being “Lerached.” At one point, Lerach boasted that he had won more than $4 billion in damages for shareholders in 400 class-action securities lawsuits.
Lerach once called himself “the Willie Horton of securities law.” Bullying and foul-mouthed, he ran roughshod over corporations, fishing for real and imagined malfeasance against shareholders. His courtroom thrashings were aimed at high-tech giants such as Apple Inc., Symantec, Conner Peripherals, Intel Corp. and Seagate Technology.
At one point, Seagate’s former CEO admitted to The New York Times that he had “Lerach’s picture on my wall right in front of me. I hate him.”
And no wonder. Lerach even sued Mickey Mouse.
Lerach owns a lavish mansion near San Diego in the third-richest ZIP code in the nation, a neighborhood also home at various times to singers Jewel and Juice Newton, brewer Joseph Coors, McDonald’s heiress Joan Kroc and golfer Phil Mickelson.
At 12,500 square feet, the Tuscan-style house sits on 12 acres, with a lemon grove, a swimming pool, a tennis court and a walk-in aviary with hornbills and toucans. It is filled with American Indian art, modern sculpture and an eclectic collection of art from various galleries in the United States and Europe.
Lerach also owns vacation homes in Steamboat Springs, Colo., and Hawaii, and he often flew on a private jet. His immense 18th-floor office sported a huge tropical fish tank, marble-topped bar and exquisite, panoramic views of San Diego Harbor.
As a prolific and generous contributor to Democratic office holders, seekers and causes, he enjoyed sleepovers in the White House’s Lincoln Bedroom during Bill Clinton’s presidency and once raised $400,000 at a single fundraiser at his mansion.
Between the years of 1993 and 1995, he was the nation’s second-largest political donor, as he and his then-wife, Star Soltan, gave $480,083 to mostly Democratic candidates and causes. With such prolific contributing, Lerach was able to rub elbows routinely with Hollywood celebrities, such as Barbara Streisand, Tom Cruise and Steven Spielberg, who shared his political sympathies.
Now he sleeps in another federally owned bedroom, as federal convict No. 46683-112. The former star litigator is paid not the thousands of dollars per hour that he often garnered, but between 12 and 40 cents each hour, working about seven and a half hours per day — about half of the daily hours he formerly sometimes worked by choice.
He reported May 19 to the low-security federal prison in Lompoc to reside in one of the facility’s two military-style barracks shared with 351 other federal inmates.
He’ll be there for two years, having pleaded guilty in February to participating in a massive kickback scheme in which he and three other senior Milberg Weiss partners paid more than $11 million in bribes to plaintiffs in an estimated 150 cases, then lied about it in court filings. Federal officials say the firm got $250 million in tainted fees in the bribery scheme.
The scheme began in 1981 and continued until 2005, after the Justice Department’s multiyear investigation became known. Lerach’s sentencing judge called the scheme “evil” because it subverted the entire judicial system.
The Examiner does not know what Lerach thinks about his change in fortunes. On July 18, he signed a prison form agreeing to a July 22 phone interview with The Examiner, and Warden Linda Sanders approved it.
But at the appointed hour, Lompoc Executive Assistant Katie Shinn called to report that Lerach “said he changed his mind. He does not want to give the interview.” Requested to reconsider, Lerach again declined, and signed another official form withdrawing his consent.
Ironically for somebody who owns a Hawaii vacation home he cannot now visit, Lerach once famously warned a defendant in a settlement hearing that “I’m going to take away your f—ing condo in Maui! I’m going to take away every penny you own.”
And in 2002, Lerach wrote a 27-page essay triumphantly claiming that then-recent accounting scandals showed that he had been right all along about corporate malfeasance. The essay’s title: “The Chickens Have Come Home to Roost.”
A different life in Lompoc
Lompoc — the site of the Lompoc Federal Correctional Complex — is in an often-foggy inland valley one hour north of Santa Barbara and 175 miles northwest of Los Angeles. One might presume William Lerach hears lots of planes from adjacent Vandenberg Air Force Base.
Lerach’s daily schedule is not his own. Lights come on at 6 a.m., breakfast 30 minutes later and work 30 minutes after that. Among the jobs for Lompoc inmates are food serving, orderly duties, plumbing, painting, groundskeeping, warehouse work and farming chores, according to Bureau of Prisons spokeswoman Traci Billingsley. Inmates can ask for a particular job but must do whatever is assigned. Wages vary with jobs.
At 11 a.m., Lerach gets a half-hour lunch break. Work continues until 3:30 p.m. Dinner is at 5 p.m. Then, finally, comes a bit of somewhat free time. Until 10 p.m., inmates can use physical recreation areas, take advantage of various educational opportunities or use the library.
A chaplain is available and inmates write letters — all of which, except those to their attorneys, are subject to inspection by prison officials. Inmates can make phone calls — but only to people on a list preapproved by prison officials, and no more than 300 minutes per month. They cannot accept incoming calls, but they can see preapproved visitors.
At 10 p.m., the prisoners line up for the last of four or five daily official “counts” — after which, overhead lights go out. Inmates are able to keep small lamps at their beds. On weekends, lights stay on until 11 p.m.
At least the property doesn’t feature the well-armed patrols, walls, searchlights, towers or multiple barbed-wire fences of the neighboring maximum-security prison for more dangerous criminals. Instead, a single fence marks the property line of Lerach’s new “home.” — Quin Hillyer
William Shannon Lerach is born in Pittsburgh in 1946. His father, Richard Lerach, is a stockbroker who invests his entire fortune in the stock market, only to lose it in the 1929 crash, according to the son.
Completes undergraduate and law school at the University of Pittsburgh, finishing second in his class in the latter. He lands his first job with prestigious Pittsburgh firm Reed Smith Shaw & McClay.
Makes partner in Reed Smith in record time, but leaves in 1976, saying he thought he was on the wrong side in the courtroom.
Accepts a position at Milberg Weiss, a New York firm that was pioneering aggressive class-action securities litigation. His first assignment is to open a one-lawyer branch office in San Diego.
Files first of hundreds of class-action securities lawsuits against Silicon Valley firms in 1984, winning a $5 million settlement from Seagate Technology. Lerach makes approximately $1.5 million in fees from the case.
Becomes one of the country’s most generous Democratic contributors, securing a night in the Lincoln Bedroom in the White House in 1994 and a seat of honor next to President Clinton at a 1995 White House dinner.
Clinton vetoes the Private Securities Litigation Reform Act of 1995. The Republican-led Congress passes PSRA over Clinton’s veto and specifically cites Lerach in the official congressional report on the measure.
Wins a $250 million settlement from Charles Keating of the savings and loan scandal, and wrests $1.5 billion from Michael Milken and the Drexel Burham Lambert brokerage firm.
Owns a mansion in an exclusive San Diego suburb that is part of the nation’s third-richest ZIP code. His massive office looks out over San Diego Harbor. He brags about his $1.5 million art collection.
Leaves Milberg Weiss in 2004 and forms Lerach Coughlin Stoia Geller Rudman & Robbins LLP.
Media reports in 2005 that the U.S. Department of Justice has been investigating Milberg Weiss for several years concerning allegations the firm had paid bribes to lead plaintiffs.
In 2006, Milberg Weiss becomes the first law firm ever indicted under federal racketeering statutes. Four partners, including two named and two unnamed are also indicted.
Lerach and Melvin Weiss, the man who hired him in 1976, are revealed in 2007 as “Partner A” and “Partner B” in the government’s indictment. Both deny all charges.
Lerach pleads guilty in February 2008, becoming the third of the four indicted Milberg Weiss partners to do so. Prosecutors say the bribery scheme generated at least $250 million from an estimated 150 cases.