NEW YORK, May 21 (Reuters) - A former corporate partner at
Baker & McKenzie pleaded guilty to money laundering and
conspiracy to commit securities fraud on Monday in connection
with two separate criminal indictments.
"My actions were wrong and were violations of the law,"
Martin Weisberg said at a plea hearing before U.S. District
Judge Nicholas Garaufis. "I deeply regret these actions."
Weisberg, 61, and his lawyers declined to comment after the
hearing in federal court in Brooklyn. He faces up to 15 years in
prison when he is sentenced on Sept. 14.
Weisberg was indicted in 2007 and accused of conspiring with
officers at two companies, Xybernaut Corp and Ramp Corp, to
commit a $55 million stock-fraud scheme. The alleged wrongdoing
took place while Weisberg was working in New York for now
defunct law firm Jenkens & Gilchrist Parker Chapin.
The second indictment, in 2008, alleged that he siphoned off
$1.6 million in interest from clients' escrow accounts while he
was working at the New York office of Baker & McKenzie, which he
joined in 2005.
Prosecutors said that Weisberg was the escrow agent in
charge of a $30 million account for Siam Capital Management Inc
and two affiliated entities. Weisberg placed the money in an
interest-bearing account without telling his clients, spending
$1.3 million of that interest on himself, they said.
The account was discovered when Siam sought to remove
Weisberg as its escrow agent following the 2007 indictment.
On Monday morning, as the trial in the 2008 case was due to
begin, federal prosecutors announced they had reached an
agreement, in which Weisberg would plead guilty to one count in
each indictment, resolving both cases.
Baker & McKenzie said last week it cooperated with the
prosecution in the 2008 case. "Mister Weisberg was with our firm
for a fairly short time," spokesman Kevin Blasko said. "He
resigned at our insistence immediately after we learned of his
indictment on charges arising from activities unrelated to our
A parallel civil complaint filed by the U.S. Securities and
Exchange Commission in relation to the conduct underlying the
2007 indictment is still pending against Weisberg.
In 1991, Weisberg was acquitted following a trial in federal
court in Texas on fraud charges stemming from a client's alleged
peso arbitrage scheme. His client was found guilty and served
seven years in prison.
Weisberg was also named as a defendant, along with Baker &
McKenzie, in a 2011 complaint filed by Industrial Enterprises of
America Inc in Delaware bankruptcy court. The company sought as
much as $600 million in damages for itself and shareholders who
were allegedly harmed by a stock-fraud scheme perpetrated by two
Baker & McKenzie and Weisberg represented IEAM at the time
of the fraud committed by the executives, John Mazzuto and James
Margulies. Weisberg was not criminally charged in connection
with the IEAM fraud. Mazzuto was convicted and sentenced to
between 7 and 21 years in prison. Margulies, who pleaded guilty,
received a sentence of up to 4-1/2 years.
Baker & McKenzie and Weisberg settled the bankruptcy lawsuit
in December 2011. The amount of the settlement was redacted from
The case is U.S. v. Weisberg, in the U.S. District Court for
the Eastern District of New York, no. 08-347.
For the U.S.: Assistant U.S. attorneys Ilene Jaroslaw and
For Weisberg: George Stamboulidis, Lauren Resnick, Ryan
Farley and Essence Liburd of Baker & Hostetler.
(Reporting by Jessica Dye)
Follow us on Twitter @ReutersLegal | Like us on Facebook