Indian-American lawyer Sandeep Baweja has agreed to plead guilty on fraud charges relating to a scheme whereby he funneled more than $2 million awarded to his clients in a class action suit, and lost the money on the stock markets.

Sandeep Baweja now faces possible criminal charges carrying a statutory maximum penalty of 30 years in federal prison, as well as action by the State Bar of California. To cover his losses, he has said that he was able to raise $500,000, mostly from friends and family, to pay off some plaintiffs, but that he still owes about $2 million and has run out of money.

Baweja had filed a class action suit on behalf of current and former real estate agents of ZipRealty, Inc. in May 2007. In 2007, Baweja reached a settlement with ZipRealty in which the company agreed to pay $3.55 million as compensation, and to pay the attorney's fees and other costs. Baweja was the sole proprietor of Baweja Law Group, which was based in Los Angeles until August 2008, when he relocated to Irvine. Baweja's share of the attorney's fees was $660,000. The balance of $2,525,000 was to be paid to approximately 800 class member claimants on a pro rata basis. After the settlement money was deposited into a bank account that Baweja controlled on behalf of the class, Baweja set up his own online stock brokerage account and began transferring most of the settlement proceeds into that trading account.

Baweja is represented by Jeffrey Rutherford of Crowell & Moring. Luan Tran of Lee Tran & Liang filed the negligence and fraud lawsuit against Baweja. Luan, who is now representing some of the 800 class member claimants in the current action, was also Baweja's co-counsel in the class action suit against Zip Realty. The Court papers indicate that Baweja lost almost all of the money betting on high-risk stock investments and is now left with $54,800 of the original sum.