Aug. 7 (Bloomberg) -- Former Baker & McKenzie LLP partner Martin Weisberg, who admitted to stealing from a client and taking part in a $55 million securities fraud, was sentenced to two years in prison, the U.S. said.
Weisberg, 62, pleaded guilty to conspiracy and money laundering in May 2012 after prosecutors alleged he skimmed $1.3 million in interest from an escrow account for a hedge fund client, SIAM Capital Management. Separately, Weisberg joined a scheme to manipulate the stock price of technology firms Xybernaut Corp. and Ramp Corp. prosecutors said.
“Instead of using his talents to provide wise counsel, he lied to and stole from his own clients, lied to the Securities and Exchange Commission, and betrayed the investing public,” U.S. Attorney Loretta Lynch in Brooklyn, New York, said in a statement.
U.S. District Judge Nicholas Garaufis in Brooklyn also ordered Weisberg to pay $297,500 in restitution and $250,000 in forfeiture, according to prosecutors.
Weisberg left Baker & McKenzie in October 2007 at the time of his arrest in the securities case. Previously, he had worked at firms including Cravath, Swaine & Moore LLP, Morgan Lewis & Bockius and Shea & Gould, according to a memorandum filed by his lawyers in March.
He graduated from Northwestern University School of Law in 1975, where he was first in his class, according to the memorandum.
Richard Albert, a lawyer for Weisberg, declined to comment on the sentence.
Friends and family described him as a workaholic who committed long hours to developing his practice, the defense lawyers wrote.
The former Baker partner is “filled with shame and utterly disgraced, his own actions and serious lapses of judgment having betrayed his talent and a legal practice built up painstakingly over the years,” his lawyers said in a different memorandum filed June 14. The lawyers requested probation.
Assistant U.S. attorneys Ilene Jaroslaw and John Nowak disputed Weisberg’s description of his legal career, saying that it was marked by “significant negative events,” according to a memorandum filed May 31.
In 1991, he was indicted in connection with an alleged money laundering conspiracy while he was at Morgan Lewis, the prosecutors said. He was acquitted at trial, they said.
Weisberg, who joined the firm Troutman Sanders LLP in 2005, was asked to leave weeks later because he refused to follow his managing partner’s instructions regarding his representation of Ramp, prosecutors said.
Baker & McKenzie partner William Linklater, who served as the firm’s director of professional responsibility while Weisberg was employed, told the court in a March letter that the matter was “a painful eye-opener for us.”
“Mr. Weisberg does not represent who we are,” Linklater wrote.
After learning of the charges against Weisberg, the firm conducted an investigation and found that that he had failed to make appropriate disclosures to the firm on multiple occasions, opened unauthorized escrow accounts and violated other ethical practices, according to Linklater.
“The firm regrets having made Mr. Weisberg a partner and continues to deal with the aftermath of that mistake,” he wrote.
In the escrow scheme, Weisberg was accused of placing $30 million in an interest-bearing account and taking out about $1.3 million without the hedge fund’s knowledge, according to U.S. prosecutors. He concealed the theft by telling his client that the bank holding the account didn’t produce monthly statements and sent letters to the client with false balances, the U.S. said.
In the securities scheme, Weisberg conspired with Xybernaut Corp. and Ramp Corp. executives to profit from short selling the companies’ stock after having the companies issue heavily discounted shares, according to the government.
Prosecutors alleged the defendants caused Xybernaut, a Fairfax, Virginia-based maker of wearable computers for aircraft mechanics and telephone linemen, and Ramp, a New York developer of health-care software, to issue hundreds of millions of discounted shares through offshore entities between 2001 and 2005.
The case is U.S. v. Saltsman, 07-cr-641, U.S. District Court, Eastern District of New York (Brooklyn).
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