Federal appeals court hears fen-phen lawyers case

Jessica M. Karmasek Jan. 17, 2012, 3:24pm


CINCINNATI (Legal Newsline) - A federal appeals court was expected Tuesday to hear the case of two attorneys sentenced to 20 years in a federal prison for their roles in duping clients out of millions in settlement money.

According to its oral arguments calendar, the U.S. Court of Appeals for the Sixth Circuit was scheduled to hear the case of Lexington, Ky.-area lawyers Shirley Cunningham Jr. and William Gallion Tuesday afternoon. Both are appealing their convictions.

Cunningham is due to be released from prison in 2025 and Gallion in 2029, The Associated Press reported.

In 2009, the two were convicted of defrauding their clients and taking millions from them in a settlement over the diet drug fen-phen. The drug was eventually pulled from the market after users started experiencing heart problems.

The attorneys, including Lexington-area lawyer Melbourne Mills Jr., received at least 50 percent of the $200 million settlement. Their 431 clients received the rest.

The clients later sued the lawyers for allegedly breaching their duties by diverting most of the settlement money to themselves.

Mills was acquitted of all charges.

All three have since lost their law licenses in Kentucky and Ohio. The two states have a reciprocal agreement.

More recently, the Kentucky Supreme Court disbarred David Helmers, who was a relatively new associate at the law firm Gallion, Baker and Bray at the time of the settlement.

The Court also permanently disbarred Joseph F. Bamberger, a senior status special judge who approved the settlement.

It was revealed that Bamberger, who had resigned, was paid $5,000 a month as a director of a phony charitable entity, The Kentucky Fund for Healthy Living, which was funded by the settlement and allegedly directed by the lawyers.

Prominent plaintiffs lawyer Stanley Chesley also is facing possible disbarment. Chesley, himself, collected a $20.5 million fee for negotiating the settlement.

He has maintained he was not co-counsel for the plaintiffs in a controversial class action lawsuit over the diet drug fen-phen. He also has said he was not aware that other attorneys were deceiving their clients. He contends he was simply brought in to negotiate the 2001 settlement.

The Kentucky Bar Association's Board of Governors recommended Chesley's disbarment in June.

The board also recommended that the Cincinnati trial lawyer, known for winning billions of dollars for his clients in other mass torts, should return $7.5 million in fees he received in the settlement.

However, Chesley filed a motion with the Kentucky Supreme Court last month to consider delaying the disbarment process.

His lawyers argue that his disbarment shouldn't be considered until they can find out why the KBA's chief disciplinary lawyer, Linda Gosnell, was fired in November. The KBA has refused to say why Gosnell was terminated.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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