NEW YORK (CNN/Money) - Federal prosecutors have stepped up their criminal investigation of Milberg Weiss, one of the nation's largest class-actions law firm in the field of securities litigation, according to a report published Monday.

The Wall Street Journal reported that federal investigators are granting immunity to two former partners of the firm as they intensify their scrutiny of a third, prominent litigator William Lerach.

The investigation is looking at whether the firm illegally made payments to plaintiffs to lead a series of shareholder suits, according to the Journal. Plaintiffs in such suits are not permitted to receive payments beyond those awarded by courts, to avoid conflict between their interests and those of the rest of the class, the paper reports.

In June, Seymour Lazar, a retired Palm Springs, Calif., lawyer who was a plaintiff in at least 50 Milberg Weiss securities cases, was charged with fraud, conspiracy and money laundering, with prosecutors alleging he had secretly been given $2.4 million for taking a leading role in those cases. His attorney denied the charge, saying the payment was legal.

The paper said that a federal grand jury in Los Angeles heard secret testimony three weeks ago from one of the former partners given immunity, Alan Schulman.

Prosecutors have informed Lerach and two other former partners, David Bershad and Melvyn Weiss, that they could face indictment for conspiracy, according to the paper's report.

Lerach, who split off from Milberg to form his own firm last year, is representing Enron Corp. investors who have sued the company for fraud, and so far has won more than $7 billion from Enron bankers including J.P. Morgan Chase (Research), Citibank (Research) and Canada's CIBC.

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