A LEADING law firm is under investigation by the US Government amid allegations that it paid kickbacks to a man who became the lead plaintiff in many of its cases.

Milberg Weiss Bershad and Shulman, America’s biggest corporate fraud class action law firm, confirmed yesterday that it had been subpoenaed by the US Department of Justice.

It said that it was co- operating fully with government investigators.

The investigation came to light as an elderly Californian investor was charged with fraud in connection with dozens of lawsuits in which he had served as lead plaintiff. Seymour Lazar, 78, of Palm Springs, was charged with fraud, conspiracy, money-laundering and obstruction. The lawsuit alleges that a New York law firm paid him “millions of dollars in secret and illegal kickbacks” worth as much as $2.4 million (£1.3 million).

The legal documents also allege that Mr Lazar or a close relative acted as a plaintiff in more than 50 Milberg Weiss lawsuits over the past 25 years. The cases earned as much as $44 million in fees for the firm.

A spokesman for Milberg Weiss said: “We are saddened by the indictment today of Seymour Lazar, who has been a client of this firm. Many of [Mr] Lazar’s cases championed consumer rights, and resulted in many of the protections consumers enjoy today, including safeguards against discrimination by restaurant chains, prohibitions on unfair charges by rent-a-car companies, and penalties for misconduct by big corporations and their accountants.”

Milberg Weiss was angered by the government investigation, which it said had been continuing for more than three years. It said: “We are outraged that these allegations have been made against the firm and reject them as baseless.”

Milberg Weiss said that it had never paid kickbacks to any of its former clients. It said that it paid retainer fees to other law firms that helped to find plaintiffs for its cases, but insisted that the payment of such fees was common practice in the industry.

The firm has led some of the biggest securities class action lawsuits in history, including cases on behalf of investors in Enron, WorldCom and Tyco.

FIRM'S WINS

• 1989: Exxon Valdez oil spill — $5bn (on appeal)
  
  
  
  
• 1998: Swiss banks and Nazi gold — $1.25bn
  
  
  
  
• 2000: Nazi slave labour — $5bn
  
  
  
  
• 2003: Oxford Healthcare investor lawsuit — $300m
  
  
  
  
• 2004: Raytheon investor lawsuit — $460m