US says Milberg Weiss partner literally passed money “under the table”

In footnote 12 of a relatively obscure, 42-page legal memorandum filed by the government in the Milberg Weiss case yesterday, the prosecutors slipped in a zinger. They quote from testimony of a witness they refer to as “Stockbroker A.” The witness describes how defendant Steven Schulman — a former name partner at Milberg Weiss — would allegedly pass money to him in the process of “procuring individuals willing to serve as ‘named plaintiffs’ for Milberg Weiss.”

According to the testimony (for which, click here), Schulman and Stockbroker A would arrange to meet for breakfast at either a Holiday Inn or a Howard Johnson’s just off the thruway near Newburgh, N.Y. This drop point was selected because it was midway between Albany (about 90 miles to the north), where the stockbroker presumably worked, and Schulman’s New Jersey home (about 70 miles to the south). Stockbroker A would be accompanied by another man whose identity has been whited out in the copy of the testimony appended to the government’s papers. Here’s how the transcript goes from there:

A. We would be sitting at a table, having breakfast, and Mr. Schulman had a briefcase that was under the table, and I had my briefcase under the table. I would take out what was in his briefcase and put it into my briefcase, give him back his briefcase, close up my briefcase. And there were packages of hundred-dollar bills, packs of hundred-dollar bills.

Q. So the money was passed, literally, underneath the table?

A. Under the table.

[...]

Q. And then after you would receive the cash from Mr. Schulman, did you and [name whited out] do anything with respect to counting it or verifying that you had received what you had expected to receive from him?

A. Occasionally, there’s a men’s room that we’d go in and sometimes split it up right on the side.

This scene seems at odds with the one painted on the firm’s MilbergWeissJustice.com site, where it contends that: “Referral fees are an entirely legal, common and efficient way of ensuring that lawyers refer cases to specialists, such as Milberg Weiss, that have the resources and experience to handle complex litigation.” (See here.)

I’ve just emailed three of Steve Schulman’s attorneys seeking comment; I’ll print it when I get it.

(Thanks to Fortune editor at large Peter Elkind for noticing the footnote and telling me about it. )