David J. Bershad, a former managing partner of securities class action law firm Milberg Weiss Bershad & Schulman, pleaded guilty July 9 to one count of conspiracy to obstruct justice and conspiracy to make false statements under oath. Bershad was indicted in May 2006 in connection to alleged kickback arrangements made by the firm, now known as Milberg Weiss.

As part of his plea agreement, filed in Los Angeles federal court, Bershad will pay $250,000 in fines, forfeit $7.75 million that he made from the arrangements and cooperate with prosecutors in their ongoing investigation. He also faces a maximum sentence of five years in prison, which will be determined in a sentencing hearing scheduled for June 2008.

Bershad, who joined Milberg Weiss in 1968, admitted to keeping a cache of pooled cash in his office safe that he secretly paid out in order to recruit and retain named plaintiffs for Milberg Weiss' suits. Federal prosecutors say Bershad and the firm paid more than $11 million to people so they would join class action and shareholder lawsuits. Prosecutors allege that over the past 20 years, the firm made more than $200 million from these arrangements in more than 150 suits.

Also named last May in the 105-page indictment were the firm, former partner Steven G. Schulman, an attorney who allegedly received kickbacks and a man who allegedly laundered money to facilitate the scheme. These defendants pleaded not guilty and are expected to face trial in January 2008. Milberg Weiss partner Melvyn Weiss and former partner William Lerach have not been indicted but are under federal investigation.

Last year, a former Milberg Weiss plaintiff pleaded guilty to accepting kickbacks, and another is expected to file a guilty plea July 10.

In a July 9 statement from a Milberg Weiss spokesman, the firm announced it had terminated its relationship with Bershad, who had been on a leave of absence since May 2006 and formally resigned in January, and officially announced its name change. In the statement, the firm said, “We remain confident that [Bershad's] actions will have no effect on the firm's commitment to its clients and its ongoing work to protect public shareholders and consumers.”