STEVEKT s for Defendantonline.wsj.com/public/resources/documents/schulmansentencing.pdffrom "the Me1 Weisses and the William Lerachs and the David Bershads, perhaps at one extreme"

75 Livingston Avenue ~oselan$l ~ e w Jersey 07068 Telephone: 973.535.1900 Facsimile: 973.535.9664

Admitted Pro Hac Vice as Attorneys for Defendant Steven G. Schulman

Attorne s for Defendant STEVEKT G. SCHL~MAN

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

VS.

STEVEN G. SCHULMAN,

Defendant.

Case No. CR 05-587(C)-JFW

STEVEN G. SCHULMAN'S SENTENCING POSITION

Date: October 27,2008 Time: 1 :30 p.m. Judge: Hon. John F. Walter Courtroom: 16

Case 2:05-cr-00587-JFW Document 552 Filed 10/14/2008 Page 1 of 51

TABLE OF CONTENTS

Page JNTRODUCTION ........................................................................................ 1

LEGAL BACKGROUND .............................................................................. 4

MR. SCHULMAN'S EXEMPLARY CHARACTER ................................... 5 A. Mr. Schulman's Personal Background and Character .......................... 5

B. Mr. Schulman's Upbringing .... .. . . . . . . . . .. . . . . .. . . .. . .. . . .. . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 7

C. Mr. Schulman's Career ......................................................................... 9

D. Love for the Law and Loss of Law License ....................................... 12

E. Mr. Schulman's Personality and Character ..................................... 14

1 . Employees and Staff ................................................................. 14

2. Professional Colleagues ............................................. . ............ 16

3. Adversaries ............................................................................... 17

4. Young Lawyers ......................................................................... 18

5. Clients ....................................................................................... 20

6. Friends ...................................................................................... 20

7. Family ....................................................................................... 21

F. Mr. Schulman's Philanthropic and Charitable Endeavors .................. 23

THE COURT SHOULD FOLLOW THE PROBATION OFFICE'S RECOMMENDATION AND ADOPT A FOUR-LEVEL BOOKER DOWNWARD VARIANCE TO AVOID UNWARRANTED SENTENCING DISPARITY AND FOR OTHER SIGNIFICANT MITIGATING FACTS .................................................................. ........... .... 25 A. The Court Should Avoid Unwarranted Sentencin Disparity

Between Mr. Schulman and the "Bi Three" of hf essrs. Weiss, Lerach and Bershad and Calculate as re -5~1 .1 Sentence for Mr. Schulman Below a Range of 18 to 30 Months ................................... 26

1 . Messrs. Weiss, Lerach and Bershad Initiated the , Set up the Cash Fund/Bonus S stem and 14 Controlle c O n s P i r a ~ the Conspiracy Decades Before r. Schulman

Was Significantly Involved ...................................................... 27


TABLE OF CONTENTS (continued)

Page 2. Mr. Schulman Became Involved in the Paid.Plaintiff

Cons iracy Decades Later than Messrs. Weiss, Lerach and 8 ershad and Only with Respect to Mr. Vogel ................... 28

3. Even with Respect to Mr. Vogel, Mr. Bershad and Mr. Weiss, Rather than Mr. Schulman, Controlled the Relationship .............................................................................. 30

B. Mr. Schulman's Compelling Family Circumstances Support a Below-Guidelines Sentence ................................................................ 3 1

1. Legal Background ....................................................... ..... ......... 3 1

2. Mr. Schulman is the Primary Source of Financial Support for his Three Young Children ................................................... 32

3. Mr. Schulman Is a Loving Parent to All of His Three Young Children .................................... ... ................................. 3 3

C. The Forfeiture and Fine in This Case Will Financially Devastate Mr. Schulman, Especially In Light of the Loss of His Law License ................................................................................. ............ ... 34

V. ADDITIONAL CONSIDERATIONS UNDER SECTION 3553 A 4 iN SUPPORT IMPOSING A SENTENCE BELOW THE SENTE C G GUIDELINES RANGE ..................................... ... ........................................ 3 9 A. History and Characteristics of the Mr. Schulman ............................... 40

B. Nature and Circumstances of the Offense .......................................... 40

C. Sentencing Goals Under Section 3553(a)(2) ...................................... 41

VI. THE COURT SHOULD GRANT THE GOVERNMENT'S RECOMMENDED DOWNWARD DEPARTURE OF FOUR OFFENSE LEVELS FOR MR. SCHULMAN'S SUBSTANTIAL ASSISTANCE ........................................................................ . .... ...... ............ 43

VII. CONCLUSION ............................................................................................. 45


TABLE OF AUTHORITIES

Page FEDERAL CASES

;all v. United States, 552 U.S. -, 128 S. Ct. 586 (2007) ................................................................ 4

Cimbrough v. United States, - U.S. -, 128 S. Ct. 558 (2007) ............................................................... 4

'n re Microstrategy Znc. Sec. Liti ation, 1 15 F. Supp. 2d 620 (ED. %a. 2000) ................................. ........... ............ 17

Ynited States v. Ameline 409 F.3d 1073 (9th Cir. 2005) (emphasis added) .......................................... 32

Ynited States v. Booker, 543 U.S. 220 (2005) ..................................................................... 1, 2, 3, 4

Ynited States v. Car 520 F.3d 984 cert. denied, Zavala v. United States, 2008 U.S. LE .................................................................... ..... 4

United States v. Men eather, 447 F.3d 625 (%h Cir. 2006) ................................................................. . ........ 3 1

STATE CASES

7n re Walt Disney Co. Derivative Litigation 907 A.2d 693 (Del. Ch. 2005), a f d , $06 A.2d 27 (Del. 2006) ..................... 10

FEDERAL STATUTES

18U.S.C. 5 1962(d) ................................................................ .. .................................. 1

18 U.S.C. tj 3553(a) .................................................................................. 1, 3, 39, 4C

18 U.S.C. 3 3553(a)(1) ....................................................................................... . ..... 32

18 U.S.C. 4 3553(a)(2) .......................................................... . .................................. 41


I. INTRODUCTION

In sentencing intermediary lawyer Richard R. Purtich, the government urged

the Court to consider a "spectrum" of "relative culpability in a role in the scheme"

from "the Me1 Weisses and the William Lerachs and the David Bershads, perhaps at

one extreme" to the paid plaintiffs and uncharged intermediary attorneys at the other

extreme. (United States v. Purtich, CR 06-400-JFW, 811 1/08, Sent. Hrg., Tr. 32-33

("Purtich Sent. Transcript"), attached hereto as Ex. ZZ at 484-85) Unlike the "Big

Three," as Messrs. Weiss, Lerach and Bershad were known, Mr. Schulman exercised

significantly less authority, dealt with only one paid plaintiff and entered the

conspiracy decades after these three co-defendants. The Court should follow the

Probation Office's recommendation and grant a four-level Booker downward

variance based on Mr. Schulman's lesser culpability as well as the other significant

mitigating factors pointed to by the Probation Office, especially Mr. Schulman's

young family and their need for his financial support and his presence in their lives.

The Court should also follow the government's recommendation and downward

depart four levels due to Mr. Schulman's substantial assistance, which was a

significant cause of Mr. Weiss' guilty plea. For these reasons, the Court should

sentence Mr. Schulman to a sentence of 6 months imprisonment.

Mr. Schulman pleaded guilty to a one-count felony information charging him

with racketeering conspiracy in violation of 18 U.S.C. 5 1962(d). The plea

agreement provides for a total offense level of 18, which with a criminal history

category I corresponds to an advisory Sentencing Guidelines range of 27 to 33

months.

The Probation Office confirms the applicable offense level, criminal history

category and advisory Guidelines range and recommends a below-Guidelines

sentence of 15 months imprisonment based on the statutory sentencing factors set

forth under 18 U.S.C. 5 3553(a). (Sentencing Recommendation at 3; see generally

United States v. Booker, 543 U.S. 220 (2005).) According to the Probation Office, a


15-month sentence "pre-5K1.1," i.e., prior to any calculation of any motion fol

downward departure for substantial assistance under Section 5Kl.l of tht

Guidelines, is necessary to avoid unwarranted sentencing disparity between Mr

Schulman and the co-participants who initiated the scheme, including Melvyn I

Weiss (sentence of 30 months imprisonment), William S. Lerach (sentence of 24

months imprisonment) and David J. Bershad (recommended pre-5K1. 1 sentence oj

18 months imprisonment). (Id. at 5.) For example, with respect to Mr. Bershad, the

Probation Office noted that Mr. Bershad's "participation in the scheme occurred ovel

a longer period and in which he was substantially more involved than Schulman."

(Id,) By contrast, Mr. Schulman entered the conspiracy to pay lead plaintiffs

approximately two decades after Messrs. Weiss, Lerach and Bershad initiated the

conspiracy. (Id. at 3.)

The Probation Office found other mitigating factors in Mr. Schulman's case

that justify a below-Guidelines sentence, including: (1) the positive contributions Mr.

Schulman has made to the legal profession and to shareholders and other parties he

represented, (2) the punishment Mr. Schulman has already suffered and will continue

to suffer as a result of his offense conduct, including disbarment and lawsuits filed

against him by his former partners and clients, (3) the fact that Mr. Schulman's

participation in this conspiracy appears to be an aberration in an otherwise law

abiding life, (4) Mr. Schulman's health conditions, (5) Mr. Schulman's significant

family responsibilities, and (6) Mr. Schulman's charitable contributions. (Id. at 3-4.)

In light of these factors and Mr. Schulman's lesser culpability compared to Messrs.

Weiss, Lerach and Bershad, the Probation Office recommends in substance a four-

level Booker downward variance from offense level 18 (27 to 33 months) to 14 (15

to 2 1 months).

The government also confirms the applicable offense level, criminal history

category and advisory Guidelines range. (Gov't Position Paper, DR # 549, filed

October 8,2008.) The government recommends a Booker downward variance of one


level (rather than the four levels recommended by the Probation Office) based on Mr

Schulman's unique family responsibilities, the significant adverse collatera

consequences resulting from his plea and Mr. Schulman's "somewhat lesse

culpability" compared to Messrs. Weiss, Lerach and Bershad, thereby resulting in i

pre-5K1.1 offense level of 17 and an advisory Guidelines range of 24 to 30 months

(Id. at 5.) The government further recommends a four-level downward departurr

based on Mr. Schulman's substantial assistance, pursuant to its motion under Sectior

5Kl.l of the Guidelines. (Id. at 3-5.) Consequently, the government calculates :

post-5K1.1 offense level of 13, resulting in an advisory Guidelines range of 12 to 1$

months. The government recommends a low-end sentence of 12 month!

imprisonment. (Id. at 5-6.)

Mr. Schulman urges the Court to adopt the four-level Booker downward

variance recommended by the Probation Ofice, thereby resulting in a pre-5K1. 1

offense level of 14 and an advisory Guidelines range of 15 to 21 months. In addition

Mr. Schulman respectfully requests that the Court grant the government's

recommendation as to the requested four-level downward departure for substantial

assistance, thereby resulting in a post-5K1.1 offense level of 10 and a Zone B

Guidelines range of 6 to 12 months. Although "Zone B" permits a probationary

sentence, Mr. Schulman acknowledges that imprisonment is appropriate in his case

due to the seriousness of the offense aid in particular his breach of his duties to the

courts and the classes that were not informed of the payments to paid plaintiff

Howard Vogel. Nevertheless, a low-end sentence of 6 months imprisonment is

sufficient but not greater than necessary to effectuate the sentencing factors in 18

U.S.C. $3553(a), given Mr. Schulman's truthful and valuable cooperation, the need

to avoid unwarranted sentencing disparity between Mr. Schulman and the "Big

Three" and the other mitigating factors relied upon by the Probation Office.


11. LEGAL BACKGROUND

In the wake of the Supreme Court's landmark sentencing decisions in Unite6

States v. Booker, 543 U.S. 220 (2005), Gall v. United States, 552 U.S. -2 128 S.Ct.

586 (2007), and Kimbrough v. United States, - U.S. _, 128 S.Ct. 558 (2007):

district courts are permitted broad discretion to take into account individualized

circumstances when fashioning appropriate sentences for criminal offenders.

Although the advisory Guidelines range is still relevant, district court judges should

not presume "that the Guidelines range is reasonable" but should "make an

individualized assessment based on the facts presented." Gall, 128 S.Ct. at 587, 596-

97. Sentencing courts need not find "extraordinary circumstances to justify a

sentence outside the Guidelines range." Id. at 595.

The Ninth Circuit has recently clarified its sentencing law in light of these

recent Supreme Court sentencing decisions. See United States v. Carty, 520 F.3d

984 (9th Cir. 2008) (en banc), cert. denied, Zavala v. United States, 2008 U.S.

LEXIS 4208 (2008). Specifically, the Ninth Circuit ruled that the Guidelines should

not take priority over any other Section 3553(a) factor:

The district court may not resume that the Guidelines range is reasonable . . . Nor should the ?3 uidelines factor be given more or less weight than any other. While the Guidelines are to be respecthlly considered, they are one factor among the 3553(a) factors that are to be taken into account in arriving at an appropriate sentence . . .

Id. at 991 (citations omitted). According to the Ninth Circuit, although the

Guidelines are a helphl "starting point," the district court "must make an

individualized determination based on the facts." Id. (citations omitted).

The government and the Probation Office both agree with Mr. Schulman that

an individualized determination of the facts in Mr. Schulman's case warrant a

downward Booker variance from the advisory Guidelines.


111. MR. SCHULMAN'S EXEMPLARY CHARACTER

As the Probation Officer correctly noted, Mr. Schulman's personal history and

characteristics, his lack of any criminal record, and his extensive charitable

endeavors and commitment to public service all weigh heavily in favor of imposing a

sentence below the advisory Guidelines range. The letters submitted on his behalf

uniformly describe him as a kind, generous person and father, and as an

extraordinarily talented lawyer. He has accepted responsibility for his crime, and his

punishment - even before this Court imposes a sentence - has already been severe.

Mr. Schulman was not the "face" of his firm like Mr. Weiss or Mr. Lerach, nor was

he the "money man" like Mr. Bershad. He was a trial lawyer who excelled in his

craft and loved the law as an intellectual pursuit and a profession. For an attorney of

Mr. Schulman's talent and dedication who defined himself as a lawyer, disbarment

has been an particularly painful and humiliating loss. Because of the history and

characteristics outlined below, and because individualized circumstances make any

more significant term of imprisonment greater than necessary to comply with the

sentencing purposes enumerated in Section 3553(a), Mr. Schulrnan respectfully

requests a sentence below the advisory Guidelines range.'

A. Mr. Schulman's Personal Background and Character

Mr. Schulman is a kind and decent man. He is a loving, dedicated father

whose young daughters depend on him and turn to him in times of troublee2 He is

generous and selfless with his time, talents, and financial support.

In his professional life, Mr. Schulman was a gifted attorney whose diligence,

intelligence, and lifelong love of the law launched him to the pinnacle of his field and

To preserve the confidentiality of his family and health matters as well as statements covered by this Court's protective order of August 18,2006, Mr. Schulman has filed under seal a separate Addendum concurrent1 herewith addressing certain confidential matters relating to his history an characteristics and attachin the documents related to these issues.

J More f etail regardin Mr. Schulman's family situation and the need for his

presence and financia F and emotional support is set forth in the Addendum.


earned him the respect and admiration of colleagues, adversaries, clients, and judges.

He is uniformly praised not only for his brilliance as an advocate, but for his

professionalism and civility.

Despite his professional success, his character remained constant. He is a

modest man who does not hold himself above anyone, and he quietly supports the

places and schools that helped him on his way, including local charities in his

hometown, Williams College, the Fletcher School of Law and Diplomacy at Tufts

University, and the University of Chicago Law School.

Although Mr. Schulman's generosity and modesty are exemplary, his most

impressive quality may be his simple decency towards employees, staff and other

people who work for him, as evidenced by several letters submitted by those

individuals. This character trait is perhaps best captured by the letters of Debra

Neiderfer, who worked for a court reporting service, and Norma Familia, who was

the head housekeeper in Milberg Weiss' hospitality department for 17 years, more

fully described infra.

Saul Levmore, the Dean of The University of Chicago Law School, also took

note of Mr. Schulman's uncommon decency towards everyone he encounters:

After meeting [Mr. Schulman I made a point of talkin with him from # 5' time to time, reading some o the bnefs and other wor he had done, and then speakin with ~mployees and others who knew him. I was struck by the %umanity and perspective he brought to those relationships. In an industry where there are all too many people who do not notice those who are less fortunate, Mr. Schulman ave a eat

to the lives of low-level employees, as we1 f: as the F ives the streets. HIS perspective on the ideas we talked

everyday manner m which he dealt with peo le P impressed me. In my mind, $is person I had previously thought o as ' smart and hard workin became one who was more nuanced % and 'merelg w o was, most especially, ecent to those he encountered. This

decency towards subordinates and strangers, where it was not to his immediate advantage, is what causes me to write on his behalf. (University of Chicago Law School Dean Saul Levmore, Ex. S at 86.)


B. Mr. Schulman's Upbringing

Steven Schulman was bom on June 10, 1951 in Gloversville, New York

which was a small glove manufacturing community in upstate New York. (Amendec

Presentence Report ("PSR) 17 56, 59.) He was raised in a close, upper middle-clas5

family. (Id. at 7 59.) His father was an accountant and his mother was a homemakei

who volunteered at a local hospital and for local religious organizations. (PSR 7 59;

Sister Carol Schulman Lewkowicz, Ex. T at 87.) When it was time for him to attenc

high school, despite his parents' wishes, Mr. Schulman declined to attend boarding

school which he considered to be too "snobbish." (PSR 7 63.) Instead, Mr.

Schulman attended the public high school in Gloversville, where he was editor of the

school newspaper, had the lead role in several drama productions and from which he

graduated at the top of his class. (PSR 7 63; Sister Beverly Schulman Kohn, Ex. R a1

80.) During the summers, he worked at his father's accounting firm. (Sister Beverly

Schulman Kohn, Ex. Rat 80)

Mr. Schulman, along with his older sisters Carol and Beverly, was strongly

influenced by his father Jacob Schulman, who was a well-respected philanthropist

and community leader in Gloversville:

Jacob Schulman chaired the 'Community Chest' and the 'United I ewish Appeal' 21 ndraisers He was instrumental in havin a new temple built. continued to fimd it personally and f start[ed] an[] annua in his name at the Sarato a Performing Arts Center for Music and Dance. Since his death 8 e temple continues to have the annual Jacob Schulman concert in his memory.

(Id, at 2.) Jacob Schulman's involvement and leadership in the community "taught

[Mr. Schulman and his sisters] commitment to [their] community through

volunteering and generosity." (Id.) Indeed, according to a lifelong friend from law

school, "Steve's goal in life was to be the best law student and lawyer possible, and

to live his life in a way that would honor his father.. ." (University of Chicago Law

School Classmate Robert S. Garrick, Ex. J at 65.)


Mr. Schulman began college at the University of Michigan in 1969 but felt

I alienated due to the size of the school and the student protests. He subsequently

transferred to Williams College where he continued to participate in school plays in

which he learned to "speak well" and to "improvise." He graduated Williams

College Magna Cum Laude and Phi Beta Kappa in 1973. (PSR 77 64-67.)

Mr. Schulman's commitment to the community and public service led him to

volunteer in Israel during the Yom Kippur War in October 1973. Though he had

recently graduated from Williams College and was working for a congressman in

1 Washington D.C., Mr. Schulman felt compelled to quit his job and leave for Israel to

assist in any way possible when Israel was attacked by Syria and Egypt:

he loved the thrill of Washington in October of 1973, (even Israel was under attack by its neighbors) he felt he had to o

in Israel. He became a volunteer on a Kibbutz where f e for six months. He was extremely aware of the dangers but

knowin there men to man the Kibbutzes was a strong f raw to him. icking h i t , caring for the chickens and helped protect farm labor was not beneath him. He just wanted to help Israel any way he could. (Sister Beverly Schulman Kohn, Ex. R at 8 1 .)

Mr. Schulman pursued both government and foreign relations work and

obtained two master's degrees from the Fletcher School of Law and Diplomacy,

Tufts University in 1975 and 1976. (PSR 77 67,70, 106.) He then attended the

University of Chicago Law School, where he graduated in 1980 with honors and was

a member of the Order of the Coif. (PSR fl71-75, 105.) He proceeded to clerk for

Judge Robert L. Kunzig of the U.S. Court of Claims. (Id.)

After his clerkship, Mr. Schulman became an associate with the law firm of

Cravath, Swain & Moore in New York City where again he distinguished himself

both by his hard work and legal acumen. (PSR 77 76-77.) While at Cravath during

the early 1980s, he met Mr. Weiss when both were working on the Washington

Public Power Supply System Securities Litigation in Seattle. (PSR 7 77.) Although

Mr. Schulman was significantly junior to Mr. Weiss, they developed a great rapport.

(Id.) At that moment in the mid-1 980s, Mr. Schulman was an associate with


arguably the most prestigious firm in the country. He could have stayed put and led

comfortable and lucrative legal career. However, due to his rapport with Mr. Weiss

as well as his desire to do plaintiffs' side work, Mr. Schulman joined the Milberg

firm in 1986. (PSR 77 79-80.)

C. Mr. Schulman's Career

By all accounts, Mr. Schulman was a brilliant, tenacious and highly effective

attorney who aggressively advocated on behalf of ordinary people and investors.

Indeed, a number of attorneys who have worked extensively with Mr. Schulman

consider him to be one of the most gifted attorneys with whom they have ever

worked.

The Probation Office correctly notes as a significant mitigating factor Mr.

Schulman's "positive contributions to the legal profession and, arguably, to many of

the shareholders and other parties whom he has represented." (Recommendation at

3.) As exemplified by his work in the MicroStrategy and Disney cases, the

combination of Mr. Schulman's intellect, dogged persistence and hard work

produced exceptional results for ordinary investors who were misled or cheated by

corporations. In the MicroStrategy case, about twenty-five plaintiffs' firms

(including the Milberg firm which was subsequently appointed co-lead counsel) filed

class action lawsuits against MicroStrategy, its employees and

PricewaterhouseCoopers after MicroStrategy misstated its net income by almost $50

million due to serious accounting errors. Mr. Schulman led the plaintiffs' team and

defeated MicroStrategy's motions to dismiss filed by Williams & Connolly and

Arnold & Porter leading to a settlement of about $100 million for investors.

Subsequently, in the midst of heated discovery and only one week before trial,

PricewaterhouseCoopers settled for about $50 million, one of the largest-ever

settlements by an accounting firm in a class-action case. (Attorney Craig Reilly, Ex.

AA at 100-101.)


In the Disney litigation, after Disney paid off its then-president Michael Ovitz

with a severance package of approximately $140 million, several Disney

shareholders filed class action lawsuits, alleging the board of directors had not

discharged their duties in good faith in approving Mr. Ovitz's contract or his

termination package. The Milberg firm (led by Mr. Schulman) was ultimately

appointed lead counsel. Fighting significant odds, Mr. Schulman obtained from the

Delaware Supreme Court a reversal of the initial dismissal of the complaint, leading

the influential Delaware Chancellor William B. Chandler I11 to significantly

reinterpret the business judgment rule and allow the case to proceed to trial.

Although the plaintiffs did not ultimately succeed after five arduous months of

discovery and trial, the Disney litigation caused the Delaware courts to criticize

Disney's corporate governance practices and led to significant changes in corporate

governance. ("Stock Responses," ABA Journal, September 2003, attached hereto as

Ex. KK, "Boards Beware," Fortune Magazine, November 10,2003, attached hereto

as Ex. LL; "The Two Mikes," The Deal, October 18,2004, attached hereto as Ex. JJ

Attorney Norman M. Monhait, Ex. W at 92-94.) In fact, the post-trial decision by the

Court of Chancery (which lists Mr. Schulman as counsel of record) has become a

standard case studied in law school classes on corporations. See In re Walt Disney

Co. Derivative Litigation, 907 A.2d 693 (Del. Ch. 2005), a f d , 906 A.2d 27 (Del.

2006).

Several attorneys who have worked side by side with Mr. Schulman praise

him for his skills as a trial attorney and his tireless efforts on behalf of ordinary

investors. Jay Robert Stiefel, who has known and worked with Mr. Schulman for

more than twenty-five years, writes:

Throughout our quarter century of professional and personal dealings 1 have no hesitat~on in asserting that Steve was one of the most ified K lawyers with whom I have ever worked. Notwithstanding his re ative youth, his stature within the profession was recognized by lawyers on all sides and the judiciary. Steve's intellectual prowess was complimented by his powers of ex ression. Mark Twain is credited with having observed that: "The $ ifference between the right word


and the almost right word is the difference between lightning and a lightnin bug." Steve never conhsed the two. He was as articulate as he was f rilliant. (Attorney Jay Robert Stiefel, Ex. FF at 112.)

According to Norman Monhait, who worked with Mr. Schulman on the

Disney litigation in Delaware:

Mr. Schulman is one of the most talented attorneys with whom I have

The Disney litigation is an example of Mr. Schulman's professional commitment and abilities. Undaunted by the Court of Chancery's initial dismissal of the case, Mr. Schulman's advocac before the Delaware Supreme Court helped secure a reversal an 'l remand ... Extensive discove and motion practice followed culminating in a trial that lasted, wit 7 some breaks from October 2064 through January 2005. Mr. Schulman headed the trial team of approximately six attorneys and several paralegals, and spent most of hls time from mid- September 2004 through January 2005 in Southern Delaware prosecuting this case on behalf of the plaintiffs ... I saw the professionalism of Mr. Schulman's courtroom advocac and examinations, and I saw him regularly invest 10 to 15 hour $ ays in what eve one on the laintiffs' team understood to be an uphill battle. (Attorney 3 orman or on ha it, Ex. W at 93.)

Former federal prosecutor J. Daniel Sagarin also describes Mr. Schulman as a

brilliant attorney:

Most impressively, in his briefs and authority on both sides with an ease had occasion to read at least ten primary contributor. I have had him present those issues to federal judges in this district. Not only was Steve brilliant in that re ard, but a case was never miscited nor an opposin legal K d' ? rincip e omitted. Rather, the princi les in the cases were dea t wlth Forthrlghtl and u front. In short teve was a brilliant practitioner. (Attorney Y P . Danie Sagarin, Ex. CC at 106.)


Mr. Schulman's remarkable advocacy skills were recognized by judges and

academics as well as practitioners:

In literally dozens of cases, I worked close1 with Mr. Schulman who was Milberg's principal representative in Ehancery Court liti ation Mr. Schulman was an extraordinarily gifted lawyer, admired H or his advocacy skills not only by his peers among the plaintiffs' and defendants' Bar, but also, I believe it may accurately be stated, by the members of the udiciary before whom he practiced. At least one member of the c' ourt of Chancery, on several occasions, invited law clerks to observe Mr. Schulman in action to learn how a consummate exponent of the art of advocacy practiced his calling.

... I can say with the utmost confidence that Mr. Schulman never shirked in the slightest the demands ut upon him. He was at all times diligent, resourceful and totally sel !l ess in championing shareholder rights. (Attorney Joseph A. Rosenthal, Ex. BB at 104.)

I have known Mr. Schulman for approximately eight years. I worked with him as a consulting and litigation expert on several of his cases. At all times during my professional association with Mr. Schulman, I found him to be a person of outstanding personal and rofessional inte ri He is also an excellent attorney one of the best I % ave met in near? %iny years as a law professor. (deoffiey P. Miller - Professor at N& Law School, Ex. V at 91.)

D. Love for the Law and Loss of Law License

Not only did Mr. Schulman excel as an attorney, he loved his job. Other

defendants in this case were as much businessmen as they were attorneys and the 10s:

of a law license meant a painful diminution in prestige or income. Mr. Schulman,

however, was a trial lawyer and a scholar of the law. He lost something far more

precious: a profession to which he had been singularly devoted. Indeed, Mr.

Schulman's sister Beverly refers to the law as "the love of his life." (Sister Beverly

Schulman Kohn, Ex. R at 85.) Mr. Schulman's deep sense of satisfaction as a lawyer

stemmed in part from the fact that he was vindicating the rights of individuals who

had been wronged by powerful corporations. In this respect, Mr. Schulman's legal

:areer was a continuation of his public service:

I have known Steve and have been ersonall familiar with his 8 . K reputation, for more than two decades urlng a of that time Steve has always been viewed by me and other leaders of the plaintiffsfs' bar


as a tenacious litigator who repeatedly and successfully championed the rights of the individuals against corporate America on issues of corporate and consumer rotection. On a personal level, Steve is a R good man. He not only as a strong work ethic but an unparalleled commitment to his clients, famil and friends. k e is ve dedicated and always willing to lend a han . (Attorney Stanley M. (?besley, Ex. E at 56.)

(Y

During my rofessional dealin s with Mr. Schulman, I found him to be highly inte l'i igent, knowledgea % le, hard workin and assionate about the first of its kind legal issues he tackled on be 8 alf o f" wronged mutual fund investors, the working men and women and retirees of our country whose mutual fund investments were si honed and ri hts were violated durin the stock bear market from 20 0 to 2003. f ~ t t o r n e ~ Selva Ozelli, 8 x. Y at 97.)

8 Given his unquestioned dedication and skill as an attorney, the satisfaction he

derived from advocating on behalf of ordinary people and investors, and his

"absolute love for the law," disbarment was an extraordinarily painful and

humiliating loss for Mr. Schulman:

He already was disbarred - lost a profession that was the love of his life - lost his osition - and all financial income - which will really affect his chi1 3 ren. (Sister Beverly Schulman Kohn, Ex. R at 85.)

But please understand, that Steve's loss of his ability to ractice is a great loss. What came forth most from my dealings with 8 teve was his absolute love of the law. He could talk about cases for hours. Sometimes, we had to shut him up. Rarely do ou find one who loved the theories of the law as much as Steve di% (Attorney J. Daniel Sagarin, Ex. CC at 107.)

Mr. Schulman also described this profound loss in his own words:

Because of my misconduct, I have lost my good name. Wasted are all the hard work, sacrifice and creativity I put into achieving professional success. I stand disbarred and public1 repudiated by m peers. The satisfaction and stimulation I derived ? rom my work as a 7 awyer are in the past. Moreover, immersed for twenty years in the specialized practice of class action and shareholder lit1 ation I do not ossess a skill set that is readily adaptable to other fie ds ( teven G. chulman, Ex. A at 48.)

F s sP


E. Mr. Schulman's Personality and Character

Mr. Schulman is uniformly described by those who know him as a kind

modest person of exceptional character. His professionalism, civility anc

trustworthiness are recognized by adversaries and colleagues alike. Young lawyer:

praise his approachability and commitment to mentoring even while running ar

incredibly hectic office. Perhaps most impressively, Mr. Schulman is well-know

for his decency, kindness and consideration by administrative employees and

associates.

1. Employees and Staff

Throughout his life, Mr. Schulman has treated people from all walks of life

with decency and respect. In fact, some of the most impressive letters submitted in

support of Mr. Schulman describe both his random acts of kindness to employees,

staff and other lower level acquaintances, and the simple decency with which he

treated those individuals.

Norma Familia was the head housekeeper in Milberg Weiss' hospitality

department for 17 years and she interacted with Mr. Schulman often during that time.

She remembers Mr. Schulman for his kindness, consideration, thoughtfulness and

generosity:

I know Steven Schulman since he was an associate to the firm . . .. I used to interact a lot with Steven .... He was alwa s very polite and

felt mistreated or taken for granted . . . Y respectful towards me . . . I always felt like I was va ued by him, never

In my opinion, everyone knew that he was a good person to work for. For exam le, his secretaries always lasted a long time with Steven. During a1 the ears I worked at the firm Steven had [only] three secretaries .... I-f e was one of the few that noticed the hard work and dedication we gave to the firm and its employees .. . I consider him alwa s very grateful considerate, and a carin erson. (Milberg Weiss Hea l Housekeeper donna Fam~l~a, Ex. G at f860.)

Kara Buzga, who has been a paralegal at Milberg Weiss for the last twelve

years, is another employee who was touched by Mr. Schulman's kindness:


I recall being somewhat apprehensive about working with Steve because of his reputation as an a gressive hard working litigator who a held his team members to very hig standards . . .. I distinctly recall when a team member was assigned an unsatisfactory "grade" for their pu orted work, by Steve, on a particular case. Despite the substandard gra 'B e, Steve was willing to investigate the fact that the work attributed to this person was not correct and was also wise enough to realize that their performance "grade" should have been revised upwards. (It was, by him.) . . . . Steve] was not only fair minded, but F truly valued the contributions o everyone at the firm, both great and small. Steve inspired me to work that extra bit harder, to have pride in my work and accomplishments, all while advocating for the underdog

Years later I learned that Steve supported me professionally, unbeknownst to me, during a turbulent time at the Firm based upon my work on the Holocaust Reparations] cases - specificaily, the tlme that I devote b to these cases caused some internal political problems. However, Steve insisted that my time spent on these cases was not only valuable, but essential to their success. He didn't care about the money the firm lost to get these matters done properly. (Milberg Weiss Paralegal Kara Buzga, Ex. D at 54-55.)

Debra Neiderfer, who works for a court reporting service that does business

with Milberg Weiss, also praises Mr. Schulman's remarkable and selfless kindness.

In fact, Ms. Neiderfer credits Mr. Schulman with saving her husband's life when he

agreed to intercede on their behalf after an insurance company had refixed to pay for

a stem cell transplant for her husband:

On a personal level, m interaction with Steve saved - literall saved - my husband's 7 ife. My husband, Marc, was diagnosed wit Tl non Hodgkin's lymphoma several years earlier. Through years of chemo, radiation, ex erimental treatments at the National Cancer R Institute - his lymp oma kept retumin . Finally, when no other treatments were available, we were to1 8 the only thing that could potentially save his life was an experimental stem cell transplant. The only hospital in the entire country erforming such a uniquely specific transplant was Memorial Sloan Eetterin At the time, the on1 insurance we had was an HMO. M S ~ does not accept HM 6 insurance. MSK estimated the transplant could cost up to $1,000,000; depending on Marc's recovery and complications.

I took on the task of insurance com emotional toll kept directin us suggesting t f e life saving transplant . . . &is id arc got sicker


and sicker. The tension was rising. Marc even came down with "shingles" from the stress.

I wrote letters, I called them over and over. Things were reviewed by "Medical Directors" from the carrier. The doctors from Memorial Sloan Kettering called them to explain the s ecific type of trans lant required and to ur e them that Marc would ie without it. All o this K B P was to no avail. t is difficult for me to even brin these events out from my recent past - as they were so incredi ly upsetting and frustrating.

%

When everything had failed - and all of my strength was de leted - I had nowhere to turn I tried findin lawyers who could he? me - f but couldn't find any with this kind o specialty. I remember t !, e night like it was yesterday. A light bulb went off in my head. I remembered that Milber Weiss had won a lawsuit against this same insurance company. jrom the street on my cell hone, I called Steve Sehulman I was crying uncontrollably - so ! bin about the situation. I explained eve hing that was oing on. 1 s always, he listened very attentive1 . 2 e hung up. Wi 81 in a few hours, another artner from

help me. B Milberg &eiss phoned me. She told me she was directs by Steve to

I updated her on everythin that had transpired to date and sent her every sin le document I h a t Under Steve's direction, she participated in severa f' phone calls with the Medical Directors from the insurance company, as well as their legal department. Within a cou le of weeks

I% -they capitulated and agreed to pay for the transplant at SK. In the end, Marc spent 7 weeks in reverse isolation - and walked out with his brother's immune system. Today, 4 years later - he is cancer free. Our son is 11 years old - and it is hard to explain how it feels to see them playing baseball together.

I can say with 100% certaint without Steve Schulman - my husband would not be here. AeLwed absolutely nothing to me but saw his way clear to direct someone at his firm .to help my family. There is no greater thin I can think of - then using your knowledge and strength to help a 5 amily less able deal with a monster oliath insurance com any. Court Reporting Service Employee S e b r a Neiderfer, Ex. % at 95-9 b .) 2. Professional Colleagues

Mr. Schulman is praised by his professional colleagues not only for his

preparation, work ethic, skill, and dedication to his clients, but also for his character

and professionalism. Craig Reilly explains that those qualities were on display in the

hard fought in re MicroStrategy litigation where Mr. Reilly was liaison counsel for

the plaintiff class and Mr. Schulman was court-approved lead counsel:


Spearheaded by Mr. Schulman, a consolidated and amended class action complaint was filed and Mr. Schulman successfully argued in opposition to the defendants' motions to dismiss. See In re Microstrategy Znc. Sec. Litig., 115 F. Su p. 2d 620 (E.D. Va. 2000). As the opinion demonstrates, the District !' udge (Hon. T.S. Ellis, 111) 1s a enetrating thinker, who closely examines the issues and poses dihcult questions to counsel. Thus, counsel does not merely present an oral argument to Judge Ellis, counsel must be prepared for Socratic- method questioning by Judge Ellis. In my lon experience in that court, few have matched Mr. Schulman's master 5 1 oral arguments in the Microstrategy case, and none have surpassed them. (Attorney Craig Reilly, Ex. AA at 100- 10 1 .)

Keith Fleischman, a former partner at Milberg Weiss as well as a formel

Assistant United States Attorney, provides a similar assessment of Mr. Schulman:

I...spent over ten years at Partner, which afforded me a person and in the ractice of law. K conduct for whic he must and has conduct appears to be both isolated and It simply wasn't his style or part of h ~ s makeup to act unethically much less criminally. During my time at Milber , I always found Steve to be an ethical and brilliant lawyer and lega f thinker. Beneath a tough exterior was a warm and carin .father, colleague and friend. As part of ! the managing structure of the irm, Steve was a senytive human bein and a falr administrator. (Former Milberg Weiss Partner Keit Fleischman, Ex. I at 63.)

a 3. Adversaries

Even in the face of the high-stakes, contentious cases that characterized his

practice, Mr. Schulman won the respect of his adversaries. Steven Pesner, a defense

attorney at Akin Gump who was often the senior member of the defense team in

cases where Mr. Schulman was the senior member of the plaintiffs team, states:

[I]n all my professional dealings with him, I always found him to be courteous, reliable, smart and creative. I was involved in several consolidated cases with Steve involving numerous individual matters. The claims asserted b his clients as plaintiffs generally were for z alleged violations of t e federal securities laws, common law fraud claims, derivative claims and the like. Generally speakin , I was the % senior member of the team representing the defendants an Steve. was the senior member of the team representing the plaintiffs. At all tlmes in our professional dealings Steve was courteous and pollte; professional in all respects; but at the same time he.ajwa s was a tough 1 proponent for his clients' claims and rights. Addltlona ly, Steve was very creative as a legal thinker; in m vlew he never asserted a claim '? that he did not believe was valld; an he was very creative in crafting settlement proposals and negohatlng settlement agreements. Polite,


courteous, smart and creative are words that I associate with Steve and that is what a lawyer should be and that is who Steve was in all of his dealings with me. (Defense Attorney Steven Pesner, Ex. Z at 99.)

Jesse Finkelstein, an experienced defense attorney in Delaware who was an

adversary of Mr. Schulman on numerous occasions, shares Mr. Pesner's view

regarding Mr. Schulman's professionalism and sensitivity:

In all of my dealings with Steve, I have never had any question about his integrity or hones . Although I do not know him well personal1 he has always been 2 onorable and courteous as an adversary. dg demeanor in Court has been respectful and honorable. In one instance that comes to mind, Steve showed extreme sensitivity to a personal issue of one of m witnesses during cross-examination in the midst of a very heated trial

T]he Court should know that those of us who have dealt with Steve in t h e most adversarial of circumstances res ect him as an honest and ethical person. (Defense Attorney Jesse inkels el stein, Ex. H at 62.)

4. Young Lawyers

Despite the crushing demands of partnership at Milberg Weiss, Mr.

Schulman always found time to mentor young lawyers, and his advice was to

always take the high road with adversaries and the court. Ralph Stone, who as an

associate at Milberg Weiss spent more than half of his time working under Mr.

Schulman's supervision, describes him in the following manner:

Steve was an outstanding teacher and mentor. Despite running an incredibly hectic office, with associates and partners constantly checkin in with him throu out the day and his ju lin of a dozen % P' cases a ay, his door was a ways open. k e was unf%ing?iwilling to explain things to young lawyers; he never hesitated to take t e time.

His uidance was uniformly to take the high road, make only the most credi % le and res ectful presentation and to keep judges accurate1 b' informed about a the details of the si nificant matters in our cases. 3 d imparted respect for the judicia , an he taught me how to work with X adversaries rather than against t em. I know that Steve trained many lawyers similarly, and I am grateful for the training I received from him. (Former Milberg Weiss Associate Ralph Stone, Ex. GG at 113.)

Jennifer Hirsh is another attorney who is profoundly grateful for the training

and mentoring she received from Mr. Schulman when she was a young lawyer:

I write this letter to bring to light certain aspects of Steve's character that are hrthest from the prosecution's interest in revealing. Steve


I direct1 assisted and worked with Steve in his prosecution of the board o ? directors in In re Walt Disney Derivative Litigation, in Delaware Chancery Court in 2004-2005. Although I was previously well-aware of his archetypal work ethic, this trial brought to the fore his best ualities in practice - his fire-like determination, boundless energy,, s 1 arp brilliance - and made it a most memorable experience in my life.

... It is to Steve's credit that I maintain the highest professional standards in my personal practice and hold myself to the highest ethical standards imaginable. (Former Milberg Weiss Associate Jennifer Hirsh, Ex. 0 at 73.)

Ralph Sianni was an associate in the Delaware office of the Milberg

firm who worked frequently with Mr. Schulman on numerous cases. Mr.

Sianni similarly praised Mr. Schulman for being an excellent mentor for

younger attorneys:

During the time I worked with Steve, I always had the hi est respect for his skill as an attorney, but more importantly &as very impressed by the fact that Steve aid particular attention to my development as a young lawyer. &like many senior partners at large law firms, Steve was ulck to offer guidance and sup ort

'4' 9 R whenever a propriate. I reca 1 one instance in particular w en Steve calle to offer his personal congratulations after my first court appearance at the firm. I also know of several other attorneys who had slmilar ex eriences with Steve. (Former Milberg Weiss Associate Ralph 'i ianni, Ex. EE at 109.)

Reuben A. Guttman was of counsel to the Milberg firm. Mr. Guttman recalled

Mr. Schulman's keen intellect, loyalty and respect for his younger colleagues:

His intellect is unmatched and although at times he could be very demanding, the challenge of working with Steven Schulman is somethingthat I [I miss.

On a personal level, Steve has a good sense of humor and has always been extremely loyal to those he worked with and those who worked for him. He showed immense res ect for the less senior members of the firm. Milberg eiss Of Counsel Reuben A. Guttman, Ex. M at

4


5. Clients

Clients also took notice of Mr. Schulman's professionalism, diligence, and

trustworthiness-even when the litigation resulted in a defense verdict. For example

one of the lead plaintiffs in the Disney litigation, Richard E. Kaplan, praised Mr.

Schulman for his diligence and responsiveness. According to Mr. Kaplan, "over the

course of about eight years, Mr. Schulman conducted himself with diligence and

professionalism in pursing well funded and recalcitrant defendants who seemed to

employ every available technique and legal device to resist discovery and delay the

litigation." (Attorney Richard E. Kaplan, Ex. Q at 76-77.) Mr. Kaplan also

commended Mr. Schulman for his responsiveness, forthrightness and

professionalism. (Id.) Despite the Delaware courts' ultimate finding in favor of the

Disney board and officers, Mr. Kaplan was "entirely satisfied" by Mr. Schulman's

efforts. (Id.)

6. Friends

A number of Mr. Schulman's friends emphasize his exemplary character

trustworthy nature, modesty and dedication to public service:

Steve was a spectacular law student and lawyer, but he was an even better erson. He had the brains, the character, and the drive to succeel.

never obnoxious or liked in law school.

grown-up in the room. attention to himself or

to on a "most respected" would have won . . .

[Steve] wanted to be a model professional. He was not motivated by money or acclaim. He was roud of his achievements but never B bragged about them. He woul n't even mention that he was a lawyer unless he was asked. He never owned a car during the ears I lived d close, to him in Chicago Washington, and New York. e had a nice apartment but it was noding special. I bought a co-op in New York, but Steve rented. There were no flashy vacations or possessions. On a Friday night, Steve would be at home reading a book.

Steve was a monumental achiever, but he did it quietly. He was a scholar and a gentleman - a complete person. He always did things


the right wa . (Universit of Chicago Law School Classmate Robert 2 S. Garrick, x. J at 64-65.1

A iercingly sharp characteristic of Steve. ~ t k i l l i a m s he was for the faculty) as brilliant. and synthesizing vast amounts of it into a coherent and compelling very well in his eventual profession of the law. But well before the law, I knew Steve to be very committed to public service. Uncharacteristically for our generation of Vietnam-era raduates, Steve left Williams with a keen interest in public service. %e went to Washin ton after graduation, ?' intent (as I recall) on obtaining a position in the oreign servlce . . .. He pursued this commitment to ublic service by earning a masters degree in foreign olicy from Tu s. Although this, in turn led him to f 8 the law, I distinct y recall a continued commitment to public service

Steve's wonderful mind and wide-ranging intellectual interests cause him to think deeply about civic and cultural matters. Over the years we've had enlightening (to me conversations about civil rights, communism, Harold Pinter, the d iddle East and the nature of loyalty. Whatever the topic, Steve engages it deeply and with that intense sort of commitment so characteristic of him.

On a personal level, he's a good and loyal friend, uick to offer he1 in

X P difficul and gracious in his recognition of life's ittle triumphs. 8e.s always ad a great - if somewhat unconventional - sense of humor and when I think of him I always envision him with a smile on his face. He's a committed father and has built and maintained a very ood parental relationship in the face of some difficult challenges over

Phe years.

It's a cliche: to sa that Steve is someone to whom I would trust m life. But I wouli He's thoughtful, considered, reads peo le well enerous of spirit and com letel loyal and dependable. (billiams

Eollege Classmate Steven HPrty, Zx. N at 70-71.)

7. Family

Mr. Schulman is also generous, dependable and caring with his family. For

example, his niece Sheri Weiner explains how Mr. Schulman was there for her

during a time a need:

[Tlhe most wonderful moment in my life that has shown me what his commitment and generosity is all about was durin my divorce. 7 Steven Schulman was there for me when the emotiona and financial stress of being a single parent caring for two young boys alone, the


youn er being disabled, stopped what he was doin at work when I calle cf and stated I was in desperate need of a ood amily lawyer who d: fg could help protect the best interest of my chil ren. Before the day was over Steven had made an ap ointment for me with one of the best family lawyers in my area an !l had submitted a retainer on my behalf knowin that my finances at the time were limited. Needless to say my chi1 % ren are safe and with me and my new husband le ally ado ted my younger son this ast ear all thanks to Steven Schu man. ( iece Sheri Weiner, Ex. I d a t 1 r4.)

K I3 Mr. Schulman's sister Beverly - who is Sheri Weiner's mother - greatly

appreciated Mr. Schulman's intercession on behalf of her daughter:

Though most people see him as a tou h someone with a tough ersonalit . He is really a very soft, kin % and caring person, with a

Reart of "&old". He came to m daughter, his niece, when she needed cY the best lawyer in a complicate custody case. Not only did he retain a lawyer for her he helped her financially to handle the case. Thankfully this[ ended with her new husband adopting her disabled son. (Sister Ll everly Schulman Kohn, Ex. R at 84.)

Mr. Schulman's sister Carol describes Mr. Schulman as a loving son and

brother who the family depended on when their father died and who has been the

primary caretaker of their elderly mother:

In 1987 our father passed away. This was a tremendous loss for our family. Steven was ap ointed executor of m father's estate.

a P Althou h he was working ong houy, at Milberg, ge iss and raising a family e managed a very complicated settlement of my father's estate. In addition, he cared for my mother and made sure she was well taken care of and was able to maintain her home in Gloversville as well as goin to Florida in the winter . . . My sister and I appreciated f all the time an effort he put into takin care of my father's estate and f also his care of our mother. He was a ways thoughtful of m mother 7 and visited her in Gloversville and Florida. They speak week y on the phone. Steven now stays in touch with our mother who lives in an assisted living facili in New Jerse . He takes care of her financial investments and nee 2 s. She will be !J 1 years old in June. (Sister Carol Schulman Lewkowicz, Ex. T at 88-89.)

Mr. Schulman's sister Beverly also marvels at her brother's dedication to

their parents:

It was on ~ovember 23, 198[7] that his life rea!ly changed. Ouy father suddenly died of a massive heart attack, leaving Steven in his early 30's to be Executor of an extremely complex estate which involved many le a1 affairs and moneta distributions. At the same time he was just % eginning his career at%ilberg, Weirs, which also demanded a great deal of his time and talent.


He was literally left with no help and no road map on how to handle this estate.

He has spent years handling the affairs for our mother, making sure she had money, health insurance, long term insurance and to care for all her financial interests. He continues to handle her affairs very competently.

He arranged for the sale of our father's art collections, the sale of my arents home and found permanent housin for our mother in Florida.

h is devotion was unbelievable. He travele man times to visit her in Florida and took her on many vacations K wit his children. He continued to visit her in Florida until we moved her up to New Jersey two years ago due to her health. He is still in close contact with her. (Sister Beverly Schulman Kohn, Ex. R at 82-83.)

Beverly also credits her brother with saving her from potential financial ruin:

After my father's death I discovered I was res onsible for a major liability involving a building in Johnston, New e ork I did not know was still in my name. Steven helped me negotiate the stop payments of the mortgage to the bank, which I was unaware my father was paying. He hired la ers and helped financially with a bankru tcy 7 l! case involving this bui ding. Without his help financially I could ave lost my house to the City of Johnston for back taxes, sewer and water bills. After the case was finalized he handled all the negotiations. The debt was aid off and I ke t m home thanks to Steven s help. (Sister Beverly 2' chulman Kohn, &. diat 83.)

F. Mr. Schulman's Philanthro~ic and Charitable Endeavors

Mr. Schulman's charitable spirit extends beyond the acts of kindness to

subordinate employees and relatives; he also gives generously to the places and

schools that became a part of him over the years, from Gloversville to the University

of Chicago Law School. The Probation Office correctly states that Mr. Schulman's

notable generosity is a significant mitigating factor. (Recommendation at 4.)

According to his sister Beverly, Mr. Schulman has maintained his connection with

Gloversville even after his father's death:

Steven still to this day has a great connection to Gloversville and yearly contributes money to the Y.M.C.A. and the Knesseth Israel Synago ue a so they both can continue to serve the people of Gloversville whic is now in a ve de ressed state due to the loss of many glove factories. (Sister Bever 7 y Sc ?I ulman Kohn, Ex. Rat 80.)

Mr. Schulman has also generously contributed to both Williams College and

the University of Chicago Law School. According to Stephen Harty, a good friend


from college, Mr. Schulman was one of the top donors in his Williams College class

and frequently cajoled classmates by telephone or letter to support the college.

(Williams College Classmate Stephen Harty, Ex. N at 70.) Law school classmate

Robert S. Garrick stated that Mr. Schulman had a "habit" of giving money away but

"never talked about it." (University of Chicago Law School Classmate Robert S.

Garrick, Ex. J at 65) According to Mr. Garrick, he only knew of Mr. Schulman's

generosity to the University of Chicago Law School because the law school

published a list of donors and Mr. Schulman was "always the most generous person

in [their] class, usually by a huge margin." (Id.)

Mr. Schulman has also generously supported the Fletcher School by funding a

scholarship program for students who would otherwise not have the financial

resources to study at Fletcher. The Fletcher School dean and faculty attested to the

critical value of Mr. Schulman's support and active involvement. Dean Stephen W.

Bosworth, for example, stated that Mr. Schulman gave back to the school that

educated him and his support went to students "who otherwise would not have had

the resources to study at Fletcher." (Stephen W. Bosworth, Dean, The Fletcher

School, Tufts University, Ex. C at 53.) Similarly, Professor Michael J. Glennon

stated that Schulman Scholars went on to become human rights leaders who "are

going to make this a better world" due to Mr. Schulman's generosity. (Michael J.

Glennon, Professor of International Law, The Fletcher School, Tufts University, Ex.

K at 67.)

Two "Schulman Scholars" at Fletcher wrote letters to express their

appreciation for Mr. Schulman's generosity and his willingness to meet them in

person and discuss their career goals ("Schulman Scholar" Nirmalan Wigneswaran,

Ex. I1 at 11 5; "Schulman Scholar" Marley Pedroso Gonzalez, Ex. L at 68.) Mr.

Wigneswaran, an attorney in Sri Lanka, a country that has been ravaged by civil war,

notes that:


My tenure at Fletcher would not have been possible without the financial assistance received by me in the form of scholarships. Mr. Schulman was a generous donor and I am deeply indebted to him. I was particularly impressed by Mr. Schulman's desire t o r l l y meet with the student beneficiaries and et to know them. letter from me, thanking him for a is generosity, he too I?" the receipt trouble Of to a visit Medford and meet me (and two other students who were also beneficiaries) over lunch. His philanthropy and the personal touch that he adds to it, are greatly appreciated by me and others at Fletcher. ("Schulman Scholar Nirmalan Wigneswaran, Ex. I1 at 115.)

Marley Pedroso Gonzalez, a Cuban attorney who now works at The World Bank

Group, also appreciated Mr. Schulman's generosity, his sincere interest in her career

and his offer of assistance in the future. ("Schulman Scholar" Marley Pedroso

Gonzalez, Ex. L at 68.)

Furthermore, Mr. Schulman supported charitable causes that were important to

the staff at the Milberg firm:

Also Steven was very enerous when it came to non-for rofit activities. 'f K He always contribute to all the events I posted in the itchen. Eve?' year I participate in the walks and events with different non-for pro it

organizations such as: American Cancer Society and Susan Komen Foundation walk for breast cancer. In addition, he always donated towards the Local Dominican Republic Associations for Poverty and with any other promotions or beneficial groups in the community. M

K K 2 church in particular1 was very rateful to him for contributing towar s local activities (healt Fairs, hea th - screenings, ect) for the community. (Milberg Weiss Head Housekeeper Norma Familia, Ex. G at 60.)

It is precisely because of his lifetime of good works and his lifelong dedication

to and love for the law that Mr. Schulman so deeply regrets his conduct in this case

and promises to rededicate himself to leading a lawful, worthwhile life.

IV. THE COURT SHOULD FOLLOW THE PROBATION OFFICE'S RECOMMENDATION AND ADOPT A FOUR-LEVEL BOOKER DOWNWARD VARIANCE TO AVOID UNWARRANTED SENTENCING DISPARITY AND FOR OTHER SIGNIFICANT MITIGATING FACTS

For numerous compelling reasons, the Court should adopt the Probation

Office's recommendation and adopt a Booker downward variance of four levels to a


"starting point" of an offense level 14 and a pre-5K1. 1 advisory Guidelines range o

15 to 21 months imprisonment. Unlike Messrs. Weiss, Lerach and Bershad whc

were the chief architects of the conspiracy and paid numerous plaintiffs for decades

Mr. Schulman was only involved with one paid plaintiff, Howard Vogel, for i

limited period of time. Also, unlike any of his co-defendants, Mr. Schulman ha:

compelling family circumstances which strongly militate in favor of sentencing Mr

Schulman below the Guideline range: especially when considered together with thc

impressive history and characteristics outlined in the letters in support of Mr

Schulman, see supra. Finally, there is no need for a significant custodial sentence or

top of the forfeiture and fine in this case which, together with the loss of his lau

license, will financially ruin Mr. Schulman and seriously impair his ability to suppon

his children.

A. The Court Should Avoid Unwarranted Sentencing Dis~aritr,

Between Mr. Schulman and the "Big Three" of Messrs. Weiss

Lerach and Bershad and Calculate a Pre-5K1.1 Sentence for Mr,

Schulman Below a Range of 18 to 30 Months

As set forth below, Messrs. Weiss, Lerach and Bershad were known as the

"Big Three" of the Milberg firm. They were in positions of control in the firm

decades before Mr. Schulman ascended to these positions. They reaped the lion's

share of profits. They also initiated and administered the cash fund and bonus system

that was used to make cash payments to paid plaintiffs and brokers and to reimburse

attorneys for making such payments. Mr. Weiss and Mr. Bershad were involved

with every single paid plaintiff used by the firm, while Mr. Schulman's only

significant involvement with a paid plaintiff was with Howard Vogel. Even with

respect to Mr. Vogel, Mr. Weiss exercised ultimate control over the amount oj

payment.

' The Addendum rovides further detail on the power and influence of the "Big P Three," Mr. Schu man's com elling family circumstances and the serious negative collateral consequences on I&. Schulman and his family resulting from this case.


Notably, both the Probation Office and the government concur as to Mr

Schulman's lesser culpability. According to the Probation Office, Mr. Schulmsu

became a participant in the conspiracy approximately two decades after Messrs

Weiss, Lerach and Bershad, and the Court should avoid unwarranted sentencini

disparity between Mr. Schulman and Mr. Bershad "whose participation in thc

scheme occurred over a longer period and in which he was substantially morc

involved than Schulman." (Recommendation at 3, 5.) Likewise, the govemmen

concedes that a Booker downward variance is warranted based in part on Mr

Schulman's "somewhat lesser culpability" compared to Messrs. Weiss, Lerach anc

Bershad. (Gov't Position Paper at 6.) According to the government, the other threr

co-defendants "participated in the conspiracy for a longer period of time and derivec

substantially more overall financial benefit from such participation than dic

Schulman." (Id. at 6.) Given Mr. Schulman's comparatively limited involvement ir

the offense conduct, it would not be just if Mr. Schulman's pre-5K1.1 sentencing

range is in the same general range - 18 to 30 months - applied against the "Big

Three" of the firm.

1. Messrs. Weiss, Lerach and Bershad Initiated the Conspiracy, Set up the

Cash FundBonus System and Controlled the Conspiracy Decade8

Before Mr. Schulman Was Significantly Involved

The Probation Office states that, since approximately 1981, Messrs. Weiss,

Lerach and Bershad engaged in the conspiracy to pay lead plaintiffs in class actions.

(Recommendation at 3.) Mr. Weiss and Mr. Bershad were involved in making

payments to paid plaintiff Seymour Lazar as early as 1987 and Mr. Bershad was

involved with Mr. Lazar as late as 2001. (First Superseding Indictment ("FSI"), DR

# 63, filed May 18,2006, attached hereto as Ex. QQ, pp.291-92,306.) Mr. Weiss

and Mr. Bershad were also involved with the two other paid plaintiffs described in

the FSI, Steven G. Cooperman and Mr. Vogel, (see Ex. QQ generally,) as well as a

number of additional paid plaintiffs in Florida in the 1980s. (Bershad Factual Basis,


DR # 283, filed July 9,2007, attached hereto as Ex. RR, 7 6; Weiss Factual Basis,

DR #478, filed March 20,2008, attached hereto as Ex. SS, 7 7.) As early as 1989,

Mr. Lerach was involved in making payments to paid plaintiff Cooperman, (Ex. QQ

at 320-21 ,) and by his own admission, Mr. Lerach was still involved with concealing

such payments to Mr. Cooperman in 1996. (Lerach Factual Basis, DR #381, filed

October 17,2007, attached hereto as Ex. TT at 383, 7 13.1~

Perhaps most important, the "Big Three" were responsible for setting up the

cash fund / bonus system which h d e d and repaid amounts paid to the paid plaintiffs

and brokers. As set forth in the Milberg Statement of Facts, the "Big Three" pooled

their personal cash into a fund that Mr. Bershad maintained in his office to be used to

pay paid plaintiffs. (Statement of Admitted Facts, Exhibit A to Milberg LLP Case

Disposition Agreement, DR # 5 15, filed June 16,2008, attached hereto as Ex. PP, 7 13.) The "Big Three" caused the Milberg firm to pay them bonuses as

reimbursement for the cash payments they had made and to cover the taxes payable

on such bonuses. Id. The "Big Three" caused the Milberg firm to write in these

bonuses into the firm's parbnership agreement. (Id.) There is nothing in the Milberg

Statement of Facts stating that Mr. Schulman was involved at all in initiating or

administering this cash fund / bonus system.'

2. Mr. Schulman Became Involved in the Paid Plaintiff Conspiracy

Decades Later than Messrs. Weiss, Lerach and Bershad and Only with

Respect to Mr. Vogel

Unlike the "Big Three" who controlled the firm in the '80s and early '90s, Mr.

Schulman only joined the firm in 1986 and did not even become an equity partner

Additional details regarding the power and influence of the "Big Three" are set forth in the Addendum. Mr. Bershad's statement that Mr. Schulman declined to contribute to the fund

citin a lack of funds is wrong. (Bershad Factual Basis 7 12(c).) No other witness corro % orates this statement in any way. Moreover it is nonsensical that Mr. Schulman would be asked to contribute to the fund when it was used in the 1980s or early 1990s since Mr. Schulman was either not et employed by the firm or not

YI even an equity partner at the firm during much of t is time.


until 1991. (Ex. QQ 7 3.) The "Big Three" controlled the firm's Executive

Committee and, at times, used it at as the engine to advance the conspiracy. Mr.

Schulman did not become a member of the six-person Executive Committee (along

with Patrick J. Coughlin and John J. Stoia who were not indicted in this case) until

1999 and did not become a named partner until 2004. (Id.) Even after the firm's

split in 2004: Mr. Schulman was only one of a 1 1-person management committee

and, while Messrs. Weiss and Bershad could exercise a veto, Mr. Schulman could

not. (Ex. SS at 7 3; Ex. QQ at 7 4.) In sentencing Mr. Weiss, the Court emphasized

that Mr. Weiss "was involved in this conspiracy for over 20 years," and was "one of

the chief architects of this fraudulent scheme." (Weiss Sent. Hearing Transcript of

June 2,2008, attached hereto as Ex. 0 0 , at 198,208.) Nothing similar can be said of

Mr. Schulman.

Mr. Schulman only became significantly involved in the firm's management

and the conspiracy decades after the start of the conspiracy in 198 1. (See, e.g.,

Recommendation at 2 ("It appears that Schulman did not know about the scheme to

pay lead plaintiffs until approximately 1999. And, it also appears that he did not

directly participate in the scheme until approximately 2003.")) Although Mr.

Schulman made payments to certain stockbrokers in Albany in the late 1980s or early

1990s, (Ex. PP, 7 18,) at that time, Mr. Schulman was not even an equity partner or

member of the Executive Committee. The First Superseding Indictment also states

that Mr. Schulman performed some ministerial tasks in 1989, 1992 and 1995 related

to paid plaintiff Cooperman, (Ex. QQ, Overt Acts 192,220,228, pp. 324,329-30,)

but none of these tasks involved payments to Mr. Cooperman. Mr. Schulman had no

definitive knowledge of any payments to Mr. Cooperman and again was not in a

position of authority in the firm at this time. Mr. Schulman only became

substantially involved in the conspiracy after he became one of the contact persons

'After the s lit, Mr. Schulman remained on the Executive Committee which then consisted o f five members; however, much of the decision-making authority was transferred to the management committee.


for the Howard Vogel relationship because another senior partner, "Partner E" in the

FSI, was leaving the firm. (Ex. QQ at 3 1 1 (overt act no. 135)) Partner E (who was

not indicted) was responsible for the relationship with Mr. Vogel from the early

1990s to 1999. (Ex. QQ at 309-10.)

3. Even with Respect to Mr. Vogel, Mr. Bershad and Mr. Weiss, Rather

than Mr. Schulman, Controlled the Relationship

Along with Partner E, Mr. Bershad was also instrumental in setting up the

relationship with Mr. Vogel. (Ex. RR at 7 25.) Mr. Bershad was one of Mr. Vogel's

primary contacts at the beginning of his relationship with the Milberg firm.

According to Mr. Vogel, in 1992, Mr. Bershad along with Partner E met with Mr.

Vogel and established the amount owed to Mr. Vogel and directed Mr. Vogel to

enlist an attorney intermediary because direct payment from the firm to Mr. Vogel

would create a "possible conflict of interest." (Vogel Factual Basis, Ex. UU at 77 5,

7.) Mr. Bershad therefore knew of the illegal payments to Mr. Vogel for almost 15

years -more than twice the period that Mr. Schulman was involved with Mr. Vogel.

Even when Mr. Schulman became one of the contact persons for Mr. Vogel,

however, Mr. Weiss still exercised ultimate control over the relationship. In the

Oxford Health case, for example, when the exact amount of the payment to Mr.

Vogel became an issue in late 2003, Mr. Weiss told Mr. Schulman that, due to the

pending criminal investigation, Mr. Weiss did not want to negotiate the fee over the

telephone with Mr. Vogel's attorney (Vogel Intermediary A in the FSI). (PSR T[ 24;

Schulman Factual Basis, Ex. W 7 13.) Consequently, Mr. Weiss directed Mr.

Schulman to set up a face-to-face meeting between Mr. Weiss and Vogel

Intermediary A at the Milberg firm's office. (Id.) After Mr. Schulman contacted

Vogel Intermediary A and referred him to Mr. Weiss' secretary, he had no further

dealings with Vogel Intermediary A on the matter. (Id.) When Vogel Intermediary

A visited the Milberg firm's office, he met personally with Mr. Weiss, rather than

Mr. Schulman. (Ex. QQ, Overt Act 14 1, pp. 3 12-1 3.) Mr. Schulman was excluded


1 from the meeting. It was only after Mr. Weiss negotiated the exact amount of the

1 payment and communicated that amount to Mr. Schulman that Mr. Schulman

reentered the picture to perform the administrative task of sending the check to Voge

Intermediary A. (PSR fi 25; Ex. QQ, Overt Act 142, p. 3 13; Schulman Factual Basis,

Ex. W fi 14.) Therefore, even as late as 2003, Mr. Schulman did not have the

desire, nor was he trusted by the "Big Three," to negotiate a significant payment

owed to Mr. Vogel.

For these reasons, as both the government and Probation Office agree to

varying degrees, Mr. Schulman was a less culpable participant in the conspiracy than

Messrs. Weiss, Lerach or Bershad. Mr. Schulman was involved in the conspiracy for

a much shorter period of time and, even with respect to the one paid plaintiff with

which he was involved, exercised less authority than Mr. Bershad and Mr. Weiss.

Thus, the Court should grant a four-level Booker downward variance to avoid

unwarranted sentencing disparity between Mr. Schulman and Messrs. Weiss, Lerach

and Bershad.

B. Mr. Schulman's Comuellinp Family Circumstances Suuport a

Below-Guidelines Sentence

I. Legal Background

After Booker, the Ninth Circuit has approved significantly below-Guidelines

sentences based on compelling family circumstances. In United States v.

Menyweather, 447 F.3d 625 (9th Cir. 2006), the district court ordered an eight-level

downward departure - from a Guidelines range of 21 to 27 months to probation -- based on, among other things, compelling family circumstances. Id. at 628. The

district court found that the defendant was the sole parent and "primary source of

financial support" for her 11-year-old daughter. Id. Although the pre-Booker

caselaw required a finding that the defendant was an irreplaceable caretaker, Section

3553(a) imposed no such test and permitted a broader analysis:


In the "broader appraisal," available to district courts after Booker, courts can justi consideration of family res onsibilities, an as ect of the defendant's %istory and characteristics," l! U.S.C. 5 3553(a)fl for reasons extending beyond the Guidelines. "District courts now. . . ave the discretion to weigh a multitude of that existed at the time of mandato deemed 'not ordinarily relevant,' skills, mental and emotional ties and res onsibilities." 1093 (9th d r . 2005) (en dissenting in part (em appropriate care d or a c R against factors such as deterrence to criminal public, 4

Id. at 634. Moreover, the Ninth Circuit stated that a one to four level downward

departure based on family circumstances was customary even prior to Booker. Id. at

635 ("Downward departures for extraordinary family circumstances most often fall

within a . . . range [of one to four levels].")

2. Mr. Schulman is the Primary Source of Financial Support for his Thret

Young Children

As in Menyweather, Mr. Schulman is the primary source of financial support

for his three young daughters: Dylan, age 15; Lyris, age 12; and Campbell, age 5.

Due to the diminution in his income (caused by the retaliatory actions of the Milberg

firm as described below), Mr. Schulman has only been able to meet his "heavy"

financial obligations by "dissipating assets, liquidating investments and going

increasingly into debt." (Steven G. Schulman, Ex. A at 48.) As specifically

described in the Addendum, given these obligations and rapidly depleting assets, Mr.

Schulman's ability to financially support his children will soon be j e ~ ~ a r d i z e d . ~

The above scenario would be devastating for Mr. Schulman's three young

children. The first two children have already undergone the disruption and turmoil of

a divorce and contested child custody proceedings. The lives of all three children

will be further destabilized and injured if, at this critical juncture in their lives, Mr.

Such a calculation does not even consider significant risks to Mr. Schulman's remaining assets particularly various lawsuits including a $450 million counterclaim by the ~ i l b e r ~ firm in his arbitration case against the firm. PSR 7 134.


Schulman is incarcerated and all h d s for their schooling, medical care and basic

child care disappear. It is also completely uncertain how his children could obtain

basic necessities such as room and board if Mr. Schulman's support was eliminated.

Mr. Schulman's requested sentence of 6 months imprisonment would be particularly

helpful to Mr. Schulman's young children as it would ensure that he could try to

obtain work and bring in income as soon as possible.

3. Mr. Schulman is a Loving Parent to All of His Three Young Children

Mr. Schulman's absence would detract from the lives of his three children?

According to Mr. Schulman's sister Beverly, Mr. Schulman is a wonderful father to

his three young daughters, and it would be devastating in particular to Dylan if Mr.

Schulman is sent to prison:

[Hlis greatest job is that of a "Father.", After a divorce, besides having joint custody he was determined to be total1 involved with hls daughters' llves. Besides seeing them eve X Jednesda night and every other weekend, he attends all school nctions, a1 ?' doctor and dentist ap ointments. He has even spent nights in the hospital with each dau&ter when surge was needed for broken bones. He has hired tutors and therapists ?' or the girls when needed. He now has his oldest dau hter Dylan age 15 living with him due to on going ma or a

dg i problems s e has with her mother. It would be devastatin to Dy an

emotionally if he had to o prison. He is her rock an protector. (Sister Beverly Schulman I?ohn, Ex. R at 84.)

Mr. Schulman's sister Carol calls Mr. Schulman's love and attentiveness to his

daughters "his greatest achievement" and explains that Dylan in particular relies on

him and needs his care:

My most vivid thou hts of Steven today are his role as a loving parent and son . ... ~ f t h o u h his marriage ended he has remained a very wonderful father to &lis daughters. He has been a constant presence in their lives. Steven shares custody of both irls who are now fourteen and eleven years of a e. They stay wit him every a 7, Wednesday evening and on most wee ends. Steven attends all school conferences and is ve involved in their lives. Most recently, Dylan has not been getting a 7 ong with her mother and she has moved into my brother's apartment in New York. Dylan feels very secure with him and through his guidance has been tryin to improve in her studies. Dylan relies on m brother and nee s his care .... It is 1 % important for then1 to be wit him as they are still very young and

Additional details regarding Mr. Schulman's family circumstances are provided in the Addendum.


require his care .. .. I feel that with all the success he experienced in his law career . . . [hlis role as a father is the most impressive and most important to him. I am roud of his academic achievements but more importantly his love an $ attentiveness to his daughters and family is his reatest achievement. (Sister Carol Schulman Lewkowicz, Ex. T at 8 8 .) According to Mr. Schulman's daughter Lyris (age 12), Mr. Schulman is a

loving and caring father who has "done a lot of [I things that are good, for me, and

for others." (Daughter Lyris Schulman, Ex.DD at 108.) She states that Mr.

Schulman made sure she got a good education and looked after her when she broke

her leg. (Id.) She also states, "I love him very much, and he loves me very much,

too. Please do not keep him from me too long." (Id.)

As stated above, even prior to Booker, the Ninth Circuit authorized courts to

grant downward departures of 1 to 4 levels based on exceptional family

circumstances. Under the broader analysis now authorized by Booker, Mr.

Schulman's compelling family circumstances justify at least a similar variance from

the Guideline range, particularly given the problems described in the Addendum. It

is imperative for the financial and emotional health of Mr. Schulman's three young

children that Mr. Schulman be incarcerated for as little time as possible.

C. The Forfeiture and Fine in This Case Will Financially Devastatr

Mr. Schulman, Es~eciallv In L i ~ h t of the Loss of His Law License

Unlike the "Big Three," who will remain very wealthy men, Mr. Schulman is

not. As set forth in more detail in the Addendum, the forfeiture and fine in this case

will significantly reduce Mr. Schulman's pre-plea liquid assets. Even conservatively

estimating Mr. Schulman's expenses and assuming that the Milberg firm's

countersuit against him is dismissed, this case will cause Mr. Schulman's financial

ruin. In addition, both Mr. Weiss and Mr. Lerach received unprecedented deals from

the Milberg firm and the Coughlin firm, respectively, which ensure that, unlike Mr.

Schulman, their prison sentence and financial penalties will not affect their ability to

emerge from prison to an extremely wealthy and secure future, whether they decide


to retire or renew their careers. By contrast, the Milberg firm's retaliatory

countersuit against Mr. Schulman could impose crippling debts on Mr. Schulman,

thereby devastating Mr. Schulman's ability to recover financial stability after serving

his sentence and provide for his three children.

The Court has assessed the financial situation of Messrs. Weiss, Lerach and

Bershad and is in the best situation to compare the effect of the financial penalties on

Mr. Schulman as opposed to Messrs. Weiss, Lerach and Bershad. Although those

three co-defendants paid larger financial penalties, they accrued significantly more

wealth from this conspiracy than Mr. Schulman. (Gov't Position Paper at 6.) Those

three co-defendants will continue to have substantial personal wealth after paying

their respective fine and forfeiture. By contrast, as specifically described in the

Addendum, Schulman's personal wealth will be decimated by the financial penalties

in this case.

The contrast between the financial futures of Mr. Schulman and Messrs. Weiss

and Lerach is particularly stark. Recently, the New York Supreme Court approved a

request by Mr. Weiss to confirm an agreement by which the Milberg firm agreed to

give Mr. Weiss approximately 15% of the net fees earned in the fbture by the firm in

some of its most high-profile and potentially remunerative cases and which, with but

few exceptions, remain in active litigation or are not yet finally resolved. (See Weiss

Order, attached hereto as Ex. NN; Order to Show Cause, attached hereto as Ex. WW;

"The Milberg Double Cross," The Wall Street Journal, July 14,2008, attached hereto

as Ex. XX.) The payout to Mr. Weiss "could well add up to tens of millions of

dollars." (Ex. X X . ) ~ Based on Mr. Schulman's knowledge of the firm's economic

As indicated on the list of cases submitted as an attachment to Mr. Weiss' Order to Show Cause (see Ex. WW,) such cases include cases such as Enron where the

firm is current1 counsel but the Milberg firm was counsel prior to the T the firms. n these Coughlin firm cases, Mr. Weiss's deal would receive 15% of the Milberg firm's agreed-u on share of the fees

8 R awarded to the Cou hlin firm. In Enron alone, the Coug lin firm,obtained a fee award of about $70 million. (See "Cou hlin Stoia Bags $688 M~llion in Enron Fees," The National Law Journal, Sept. 5f 2008, attached hereto as Ex. MM.)


structure until Mr. Schulman resigned on December 3 1,2006, Mr. Weiss' continuing

economic interest, which gives him a priority to payment on the firm's premium

cases over that of the remaining partners, will continue to afford him one of the

largest, if not the largest, continuing economic interests in the firm, without suffering

as can other current partners, any right on the part of the firm to reduce his share for

any reason.''

The Wall Street Journal also previously reported that Mr. Lerach reached an

agreement for similar preferential treatment from his own firm, Coughlin Stoia. Like

Mr. Weiss, Mr. Lerach's deal with the Coughlin firm also allowed him to share in

roughly 15 to 20% of fees earned in the future by the Coughlin firm in certain cases.

(See "Lerach May See $50 Million in Enron Fees," The Wall Street Journal Law

Blog, November 21,2007, attached hereto as Ex. YY.) According to the Wall Street

Journal, the deal permits Mr. Lerach to be "in line to recover as much as $50 million

in fees from the securities litigation against Enron Corp." alone. (Id.)

These special deals are in sharp contrast to the Milberg firm's treatment of Mr.

Schulman. From January 1,2007, the first date of his departure from the Milberg

firm, through April 30, 2008, the Milberg firm paid out less than half the monthly

post-retirement capital and base account distributions and other contractual benefits

to which Mr. Schulman was entitled, for which he commenced an arbitration seeking

payment of his retirement benefits." (Steven G. Schulman, Ex. A at 49.) At the end

of May 2008, the Milberg firm ceased making such payments at all, after it reached

its agreement with the government terminating the criminal case against the firm.

(Id.) Moreover, unlike Mr. Weiss, the Milberg firm has refbsed to pay any attorneys'

lo The special arrangement made by Mr. Weiss is without precedent in the Milberg firm's histo . Active partners have historically been denied any direct interest in the profits o y particular cases and, instead have been restricted to their percentage interest in the firm's overall net income. horeover, unlike Mr. Weiss, retiring partners have been paid capped and base account payments which b now can extend to over 20 years corresponding to their partnership interests &ecedlng their ~etirement or resignation) in the firm as a whole.

The arbitration recently completed, although no findings have been issued to date.


fees in Mr. Schulman's criminal case post-plea and is now trying to recover all such

attorneys' fees advanced by the firm. (Id.) In fact, the Milberg firm pointed to Mr.

Schulman's status as an admitted felon in cutting off and trying to recover the

attorneys' fees that he incurred in his criminal case - at the same time the firm agreec

to continue hnding Mr. Weiss' attorneys' fees despite his same status as an admitted

felon. In addition, the Milberg firm has opposed any recovery in Mr. Schulman's

arbitration and filed a counterclaim against Mr. Schulman seeking damages for the

full $75 million owed by the Milberg firm to the government in the criminal case,

doubled to $150 million to reflect its non-tax-deductibility, plus trebling of that

amount to a total of $450 million. (Id.) The Milberg firm has also sought

disgorgement of all that Mr. Schulman ever earned at the firm, cancellation of all of

his retirement benefits and return of all the attorneys' fees the Milberg firm paid

under the indemnification of his criminal costs.

The financial fortunes that have accrued and will continue to accrue to Mr.

Weiss and Mr. Lerach highlight their superior influence, power and control as

compared to Mr. Schulman. Mr. Schulman has no special deal with the Milberg

firm, will pay more than half of his liquid assets to satisfy the financial penalties in

this case and has had to use a significant portion of his remaining assets to battle the

Milberg firm to recover any of the payments owed to him. Mr. Schulman's

arbitration has not only drained Mr. Schulman's funds but also may impose on him

enormous debts if the Milberg firm is successful in any part, thereby impairing Mr.

Schulman's ability to support his three young children.

In sentencing Mr. Weiss and Mr. Lerach, the Court emphasized the loss of

their law licenses as an important factor in determining the adequacy of their

sentences. (See, e.g., Weiss Sent. Hearing Transcript of June 2,2008, attached as Ex.

0 0 , at 206-07.) The impact of the loss of Mr. Schulman's law license is exacerbated

by the financial devastation caused by the forfeiture and fine in Mr. Schulman's case.

Both the Probation Office and government recognize these enormous collateral


consequences as significant mitigating factors that warrant a Booker downward

variance. (Recommendation at 3; Gov't Position Paper at 5.) Unlike Messrs. Weiss,

Lerach and Bershad, Mr. Schulman does not have the financial assets to retire after

completing his sentence. To cover his expenses and the expenses of his three young

children, Mr. Schulman will have to find another profession and continue working.

The inability to practice law is thus a heightened negative consequence for Mr.

Schulman, as compared to his co-defendants.

Moreover, it would be inaccurate to conclude that Mr. Schulman, like Messrs.

Weiss, Lerach and Bershad, equally profited from the conspiracy and, unlike them,

simply squandered his share. Mr. Schulman generated significant taxable income

fiom 2002 to 2006, but his taxable income grossly overstated any cash actually paid

out by the Milberg firm to Mr. Schulman. A significant portion of these finds were

not paid to Mr. Schulman but were used by the Milberg firm to pre-pay taxes. More

important, as a younger partner, Mr. Schulman was required to contribute a

significant portion of these funds to the Milberg firm's capital account to allow the

firm to self-finance. (Steven G. Schulman, Ex. A at 49.) While the Milberg firm

freely distributed its profits to the "Big Three" in the 1990s, by the early 2000s, the

firm had committed itself to capital reinvestment. In August 2007, Mr. Schulman's

capital account was $16 million (among the largest capital accounts in the Milberg

firm) but he could not access these finds and they were designed to be paid out after

retirement over time in monthly distributions. (Id.) When Mr. Schulman separated

from the Milberg firm, he hoped to receive a significant one-time payout as well as

monthly distributions over 40 years. (Id.) Instead, the Milberg firm declined to

make the one-time payout and limited Mr. Schulman's monthly distributions to about

half of what he expected. (Id.) The distributions have since ceased altogether. At

the same time, Mr. Schulman was locked into alimony and child support payments

based on his prior earnings at the Milberg firm and was not able to modify them.

Unlike Mr. Schulman, in the latest stages of the conspiracy, the "Big Three" had


already spent decades contributing to their capital accounts and they realized

enormous cash distributions from the Milberg firm. Mr. Schulman only acquired a

sizable share of the profits of the Milberg firm in its latest stages -just in time to

receive the lion's share of the Milberg firm's liabilities, rather than its cash

distributions.

In sum, both the government and the Probation Office have independently

determined that a Booker downward variance is warranted based on Mr. Schulman's

compelling family circumstances, the significant adverse collateral consequences

caused by Mr. Schulman's plea and the need to avoid unwarranted sentencing

disparity. Because the financial penalties and concomitant loss of law license have

such a greater real-life negative effect on Mr. Schulman than his three co-defendants,

an offense level of 14, i.e, a pre-SKI. 1 range of 15 to 21 months imprisonment, is

sufficient but not greater than necessary to adequately punish Mr. Schulman.

V. ADDITIONAL CONSIDERATIONS UNDER SECTION 3553(A) SUPPORT IMPOSING A SENTENCE BELOW THE SENTENCING GUIDELINES RANGE

Under Section 3553(a), relevant sentencing factors include: (a) the nature and

circumstances of the offense and the history and characteristics of the defendant;

(b) the need for the sentence imposed to achieve each of the enumerated purposes of

sentencing; (c) the kinds of sentences available; (d) the applicable statute, guideline

range and policy statements; and (e) the need to avoid unwarranted sentence

disparities among similarly situated defendants. 18 U.S.C. $ 3553(a). The Court

must "impose a sentence sufficient, but not greater than necessary," to comply with

the sentencing purposes enumerated in Section 3553(a), and provide the defendant

with needed educational, medical, or other correctional treatment in the most

effective manner. Id.


A. History and Characteristics of the Mr. Schulman

As the Probation Office notes, Mr. Schulman's history and characteristics arc

significant mitigating factors in this case. Mr. Schulman's compelling family

circumstances especially militate in favor of sentencing Mr. Schulman below the

advisory Guidelines range. (Recommendation at 4.) The Probation Office also cites

to other significant mitigating factors described in more detail above, including the

benefits that he has provided to shareholders and other clients, his law-abiding past,

his health problems and his charitable contributions. (Id.) The impressive historj

and characteristics outlined in the letters in support of Mr. Schulman also bear

heavily on this analysis. (Id.)

B. Nature and Circumstances of the Offense

The nature and circumstances of the offense also support a sentence that is

below the applicable Guidelines range.

Mr. Schulman takes full responsibility for his role in the offense. He knew

that secretly paying Howard Vogel and causing false statements about that

arrangement to be made to the court and his adversaries betrayed his professional

duties and, in his letter to the Court, expressed his deep regret for his misconduct:

I wish to express my profound remorse and contrition for the criminal conduct in which I engaged. I enlisted in a wrongful scheme, failed to disengage or extricate when I should have and participated in concealing the wrongful acts that fac~litated the scheme. These were sins of omission no less than commission for which I take full responsibility. By these actions, I.vdated the law and my enhanced duties as an attorney. I also violated the specialized duties and responsibilities undertaken by class and derivative counsel. There is not a day that goes by when I do not inwardly replay, with much sadness and regret the events and fateful decisions that have led me to my current state. (steven G. Schulman, Ex. A at 48.)

Due to many factors, Mr. Schulman at first sought to "persevere" in his defense, but

he eventually "came to accept that [he] had committed a crime." (Id. at 51 .) Mr.

Schulman fully understands the gravity of the deception perpetrated against the

courts and how he has failed the persons and institutions that shaped him, including

the judges before whom he appeared, the universities that educated him, the judge


for whom he clerked, the younger attorneys he mentored and his young children.

(Id. at 49-50.) He also expresses how his actions in this case contradicted his own

work ethic and professional standards which took him a lifetime to build. (Id, at 50.)

C. Sentencin~ Goals Under Section 3553(a)(2)

The requested sentence of six months' imprisonment is also appropriate in

light of the sentencing goals set forth in 18 U.S.C. 9 3553(a)(2) for several reasons.

First, the requested sentence accurately reflects the seriousness of the offense.

On one hand, the instant offense is a felony and merits a sentence of imprisonment.

The parties also agreed that Mr. Schulman would pay an additional $1.85 million to

the U.S. Treasury as well as a $250,000 fine, further evidence of the seriousness of

the offense. As stated above, these financial penalties have had a disproportionate

impact on Mr. Schulman as opposed to the "Big Three." Furthermore, Mr. Schulman

faces a number of collateral consequences as a result of his plea, including

disbarment, which also has a substantial punitive effect.

On the other hand, as both the goverynent and Probation Office recognize,

Mr. Schulman's role in the offense was limited in comparison to that of the "Big

Three," and it constitutes his first conviction of any kind. Messrs. Weiss, Lerach and

Bershad were the architects of the scheme; Mr. Schulman, on the other hand, joined

the conspiracy much later than his co-conspirators. Accordingly, as a matter of

fairness, Mr. Schulman's punishment should be less severe than that of Messrs.

Weiss, Lerach and Bershad.

Second, the requested sentence promotes respect for the law because it

reinforces the fact that unlawful payments to a plaintiff is a serious offense, and

highlights the serious consequences the law imposes for such conduct. Mr.

Schulman's felony plea, his sentence of imprisonment, his diminution in reputation,

his disbarment and the $2.1 million in fines and forfeitures all attest to the fact that

this type of conduct will be severely punished.


Third, the requested sentence (together with the serious collatera

consequences outlined above) is a just punishment for the offense at issue. AlthougJ

involvement in a conspiracy to secretly pay named plaintiffs and cause falsc

statements to be made about that arrangement to the court and adversaries is a seriour

offense, a heavier sentence, such as the Guidelines-range sentence, would bc

excessive because Mr. Schulman is less culpable than the "Big Three." A

Guidelines-range sentence would also tend to disincentivize cooperation with thc

government because Mr. Schulman - who pleaded guilty and agreed to cooperate

with the government - would be sentenced in the same general range as Messrs

Weiss and Lerach, who did not cooperate with the government.

Fourth, a below-Guidelines sentence will unquestionably deter Mr. Schulmar

from any further criminal conduct. Mr. Schulman has never before been convictec

of a crime, and he is extremely remorseful for his misconduct. Moreover, as s

practical matter, the fact that Mr. Schulman was disbarred will prevent him from

committing a similar crime in the future. Imposing the requested sentence oj

imprisonment is more than adequate to ensure that he will not commit an offense ir

the future.

In addition, given the substantial press coverage that this case has garnered and

the guilty pleas by prominent attorneys, class action attorneys will understand thal

any unlawful payment to a named plaintiff and accompanying false statements to the

court will be severely prosecuted. In these circumstances, the goal of general

deterrence has been addressed and will not be furthered by imposing a Guidelines-

range sentence on Mr. Schulman.

Fifth, a sentence substantially below the Guidelines range is also appropriate

because there is no need to protect the public from future crimes. Mr. Schulman's

total lack of criminal history, the regret he feels for his actions, and the non-violenl

circumstances of the offense in question support this point.


VI. THE COURT SHOULD GRANT THE GOVERNMENT': RECOMMENDED DOWNWARD DEPARTUFCE OF FOUR OFFENSI LEVELS FOR MR. SCHULMAN'S SUBSTANTIAL ASSISTANCE

In addition to the four-level Booker downward variance recommended by th

Probation Office, Mr. Schulman respectfully requests that the Court grant the four

level Section 5Kl.l downward departure recommended by the government. Thl

Sentencing Commission has encouraged courts to depart downward based on thl

defendant's cooperation with the government. Specifically, section 5Kl.l of thl

guidelines provides that "[ulpon motion of the government stating that the defendan

has provided substantial assistance in the investigation or prosecution of anothe

person who has committed an offense, the court may depart from the guidelines.'

U.S.S.G. S5Kl.1,p.s. (Nov. 2007).

The Court should adopt the government's recommended departure of four

levels. First, Mr. Schulman's assistance has been particularly useful to the

government. As the government states, Mr. Schulman's cooperation significantly

assisted the case against both Mr. Weiss and the Milberg firm and was a substantial

cause of the guilty pleas by both defendants. (Gov't Position Paper pp. 3-5.) In the

factual basis for his plea agreement, Mr. Schulman provided specific detail regarding

Mr. Weiss' discussions with Mr. Schulman regarding Mr. Vogel and his request to

negotiate directly with Mr. Vogel's intermediary attorney in light of the pending

criminal investigation. (Id. at 3-4; Schulman Factual Basis, Ex. W 7 13) Most

importantly, Mr. Schulman attested to Mr. Weiss' knowledge that he was negotiating

"Vogel's share" of the fees rather than any funds owed to the intermediary attorney.

(Schulman Factual Basis, Ex. VV 77 13-14.) Mr. Schulman provided additional

information about these discussions in his proffer session of September 14,2007,

including Mr. Weiss' sources for cash for the cash payments made to brokers. Mr.

Bershad could not provide any detail regarding Mr. Weiss' discussions concerning

Mr. Vogel, had no direct knowledge of these discussions and could only attest to


hearsay statements that Mr. Bershad said he had heard from Mr. Schulman. (Bershac

Factual Basis, Ex. RR 7 30.) Ultimately, two of the four false statements to which

Mr. Weiss pleaded guilty related to Mr. Vogel's cases. (Weiss Factual Basis, Ex. SS

7 13.) Therefore, Mr. Schulman's assistance was extremely useful to the

government.

Furthermore, all information provided by Mr. Schulman has been truthful,

complete and reliable. The nature and extent of Mr. Schulman's assistance has also

been significant considering that his information was a substantial cause of the guilty

plea of the top defendant in this case.

Moreover, although Mr. Schulman met with the government a few months

after Mr. Bershad did in July 2007, Mr. Schulman did not do so in any attempt to

inconvenience the government or the Court. Mr. Schulman filed numerous pretrial

motions all related to issues of law, sincerely believed they had merit and wanted to

have them heard by the Court in this case. The Court conducted this hearing in

August 2007, only one month after Mr. Bershad cooperated and only one month after

which Mr. Schulman cooperated. Mr. Schulman is a trial lawyer by training. As the

Court recognized with respect to Mr. Weiss, Mr. Schulman is a "fighter" and should

not be "punished" simply for exercising his rights. (Weiss Sentencing Hearing

Transcript of June 2,2008, attached hereto as Ex. 00 at 192.) As soon as his

motions were denied, Mr. Schulman immediately cooperated truthhlly and

completely. Although he now regrets the stubbornness of his insistence, (Steven G.

Schulman, Ex. A at 5 1 ,) he should not be penalized for his desire to have his motions

determined as a matter of law.

In addition, up to August 2007, Mr. Schulman still felt a misguided loyalty to

Mr. Weiss. It was Mr. Weiss who brought him into the firm in 1986 and promoted

his advancement through the ranks. (Id. at 2.) Mr. Schulman now understands that

his loyalty to Mr. Weiss was misplaced. (Id. at 2; see also University of Chicago

Law School Classmate Robert S. Garrick, Ex. J at 65 ("Beyond his father, Steve was


extraordinarily respectful of and deferential to other authority figures, such as law

professors and more senior lawyers. Perhaps Steve was a bit too deferential, some of

the time."))

Finally, it was not unreasonable for Mr. Bershad to decide to cooperate before

Mr. Schulman. Mr. Bershad was the "money man" of the Milberg firm who had two

decades of detailed financial and management information to provide to the

government, while Mr. Schulman's information, while valuable, was restricted to

Mr. Weiss' cash sources and his knowledge regarding the Oxford Health case. Mr.

Schulman's few months' delay was therefore reasonable under the circumstances and

should not lessen the impact of Mr. Schulman's assistance.

Furthermore, a four-level downward departure is reasonable considering the

six-level downward departure that the Court approved for intermediary lawyer

Richard R. Purtich. While Mr. Schulman's assistance was always truthful, Mr.

Purtich repeatedly lied before the grand jury on material issues. (Purtich Sent.

Transcript, Ex. ZZ at 464-67.) By contrast, Mr. Schulman was the only percipient

witness who could testify as to Mr. Weiss' knowledge that the Oxford Health fees

were "Vogel's share." He did so completely and truthfully.

For all of these reasons, Mr. Schulman's substantial assistance justifies a four

level downward departure.

VII. CONCLUSION

On the "spectrum" of culpability proposed by the government, Mr. Schulman

was not one of the "Big Three," nor was he a paid plaintiff or intermediary attorney.

Although he was not a "chief architect" of the conspiracy, he was responsible for the

Howard Vogel relationship near the tail end of the conspiracy. As recognized by

both the government and the Probation Officer, Mr. Schulman fell somewhere in

between the two extremes of the spectrum. Therefore, the Court should follow the

Probation Office's recommendation and grant a Booker downward variance of four

levels to a pre-SKI. 1 offense level of 14 and Guideline range of 15 to 2 1 months


which is below the sentences imposed on Mr. Weiss and Mr. Lerach, one level below

the pre-SKI. 1 offense level of 15 recommended by the Probation Office as to Mr.

Bershad, and more commensurate with Mr. Schulman's responsibility. This four-

level downward variance is also fully justified by other mitigating factors relied upon

by the Probation Office including Mr. Schulman's compelling family circumstances,

his health problems and the devastating impact of the financial penalties in this case

and the loss of his law license. The Court should also grant the government's

requested downward departure of four levels for Mr. Schulman's substantial

assistance, which has been both truthful and valuable. For these reasons, the Court

should sentence Mr. Schulman to a sentence of six months imprisonment.

Dated: October 14,2008 Respectfully submitted,

STERN & KILCULLEN, LLC McDERMOTT WILL & EMERY LLP

By: Is1 Herbert J. Stem Gordon A. Greenberg Jeffre Speiser ~ o y t S ze Attome s for Defendant STEVE& G. SCHULMAN


PAGE 47 INTENTIONALLY OMITTED


Documents

STEVEKT s for Defendantonline.wsj.com/public/resources/documents/schulmansentencing.pdffrom "the Me1 Weisses and the William Lerachs and the David Bershads, perhaps at one extreme"