- The wages of addiction: former basketball star Roy Tarpley settles his $6.5 million ADA lawsuit against NBA and Dallas Mavericks [Randy Galloway, Fort Worth Star-Telegram, Sports Law Blog]
- One result of litigation-fed “vaccines cause autism” scare: parents turn to dangerous quack treatments [Arthur Allen, Slate; in-depth coverage at Kathleen Seidel's and Orac's sites]
- Julie Hilden on First Circuit “true statements can be defamatory” ruling [FindLaw, earlier here and here]
- More coverage of conviction of Kentucky lawyers for grabbing much of fen-phen settlement [Louisville Courier-Journal, earlier]
- Judge dismisses most counts in lawsuit against Richard Laminack of Texas’s O’Quinn law firm [Texas Lawyer, earlier; FLSA overtime claims remain]
- All but three of the outstanding 9/11 airline suits due to settle for $500 million [AP/NorthJersey.com]
- One needn’t make the Community Reinvestment Act a scapegoat for unrelated credit woes to recognize it as an ill-conceived law [Bank Lawyer's Blog]
- U.K.: Woman who plays classical music to soothe horses told she must pay for public performance license [Telegraph]
Posts tagged as:
Kentucky fen-phen settlement fraud
You may recall the earlier trial of the Kentucky fen-phen attorneys who had stolen tens of millions of dollars from their clients ended in a mistrial for two and an acquittal for their third compatriot. This time around, a federal court jury, after ten hours of deliberation, found William Gallion and Shirley Cunningham Jr. guilty of eight counts of fraud and one count of conspiracy. A streamlined prosecution case no doubt helped make a difference; defense attorneys sought to blame the matter on Stan Chesley, who negotiated the underlying settlement and received millions more than he was contracted to receive, and it remains mysterious why he was not charged. [Courier-Journal]
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The retrial of disbarred lawyers William Gallion and Shirley Cunningham began this week after an earlier jury deadlocked; a third defendant, Melbourne Mills, Jr., was acquitted. The three had diverted to their own use large portions of a $200 million settlement fund for fen-phen plaintiffs. We’ve covered the seedy saga in depth since it hit the headlines.
- NYC judge tosses injury suit against Lawyers Athletic League filed by a player on Milberg’s team [NYLJ]
- Kentucky fen-phen lawyers Gallion and Cunningham disbarred [Lexington Herald-Leader]
- Worker’s comp doc claims he noticed abnormal lab result and told patient to check with his primary doc. Patient didn’t and harm ensued. Malpractice? [CalLaw Legal Pad, KevinMD, Happy Hospitalist]
- Federalist Society publishes text of Judge Dennis Jacobs’s speech on pro bono, but Chemerinsky digs in rather than apologize [PoL]
- Are HIPAA privacy rules suspended during emergencies? No, and what lovely situations that’s likely to cause [HIPAA blog, more]
- One of the more unusual personal injury lawyer websites is “like a touchy-feely hybrid of Myst and The Office” [Above the Law]
- Gold-collar criminal defense work? McAfee decides $12 million too rich a sum for defending CFO Prabhat Goyal [Bennett & Bennett, Greenfield]
- Sounds promising: “Texas Supreme Court decision could end peremptory strikes in jury selection” [SE Texas Record]
- Speech tribunal in Alberta, Canada, acquits Ezra Levant over publication of Mohammed cartoons, and it only cost him C$100,000* [National Post, his site, Daimnation]
- Must not cover John Edwards-Rielle Hunter story … must not cover John Edwards-Rielle Hunter story … oh darn!
- U.K. version of a story we’ve seen stateside: noise restrictions threaten roving musical ice cream trucks [Telegraph, Times Online, earlier from NYC]
- “Lawyer Who Says She Was Chastised for Not Being Sweet Is Allowed to Sue” [ABA Journal]
- More thoughts about “going on disability” [White Coat Rants]
- Willie Gary perhaps less than gallant (though undeniably hard-hitting) in countering woman’s claim of sexual assault [WPTV, ABA Journal, Ambrogi]
- Arguing against release, federal prosecutors say millions in assets of two Kentucky fen-phen defendants can’t be traced [Lexington Herald Leader]
- Virginia restaurantgoers looking forward to sangria on sultry evenings [Lindsay Nair, Roanoke Times]
- “It’s true that [veep-buzzed Sen. Bayh] sided with Republicans on tort reform … but do Democrats really want to be the kind of party that makes litmus tests out of those issues?” [Patashnik, TNR "Plank"]
- Third Circuit strikes down ban on “depiction of animal cruelty” as unconstitutional, protecting both bullfight travelogues and those bizarro-fetish “crush videos” [Volokh, our 1999 report]
- Sen. Lieberman brought an outspoken pro-legal-reform voice to the Democratic ticket [eight years ago on Overlawyered]
*Levant can recover nothing from his tormentors because the so-called human rights tribunals are given a special dispensation from the normally prevailing Canadian rule of loser-pays.
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- Judge Henry Lackey, who went to feds to report bribe attempt by Dickie Scruggs associate, gets award and standing ovations at Mississippi bar convention, says he was just doing a judge’s job [NMC/Folo]
- Related: should Ole Miss Chancellor Robert Khayat have used official university stationery for his letter pleading leniency for chum/ benefactor Scruggs? [Daily Mississippian and editorial via YallPolitics, continuing coverage at Folo; earlier]
- Stephen Dubner: if lawyer/subscriber can sue Raleigh News & Observer over perceived decline in its quality, who’s next? [NYT/Freakonomics blog, earlier]
- Maneuvering over retrial of Kentucky fen-phen defendants Gallion and Cunningham [Lexington Herald-Leader]
- A Fieger sideshow: though acquitted in recent campaign laundering prosecution, controversial lawyer fared less well in lawsuit against Michigan AG Michael Cox; Sixth Circuit tossed that suit and upheld order that Fieger fork over attorney fees to Michigan Supreme Court Justice Stephen Markman over subjecting the justice to unfounded vilification [ABA Journal; fixed typo on Circuit]
- Citing long history of frivolous litigation, federal judge in central Texas fines disbarred lawyer Charles Edward Lincoln and his client and bans Lincoln from bringing any more federal suits [SE Texas Record]
- Faced with $18 million legal-malpractice jury verdict, Indiana labor law firm stays in business by agreeing to make token payment, then gang up on its liability insurer for the rest [Indianapolis Business Journal, Ketzenberger/Indy Star via ABA Journal]
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I was quoted at length about the Kentucky fen-phen settlement fraud scandal; the article mentions our coverage, which we’ve been engaged in since the story broke years ago.
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After 52 hours of deliberation over eight days, a federal jury yesterday declared it was hopelessly deadlocked in deciding whether attorneys William Gallion and Shirley Cunningham Jr. defrauded clients of $65 million in Kentucky’s 2001 fen-phen settlement.
After the judge declared a mistrial, the jury foreman, Donald Rainone of Erlanger, said jurors were stuck at 10-2 to acquit the defendants, and had been at that vote for much of their deliberations.
“We felt the prosecution just didn’t have a strong enough case,” Rainone said in a phone interview in which he strongly criticized the prosecution for being unprepared and focusing its case on only Gallion, Cunningham and a third lawyer, Melbourne Mills Jr.
“There’s a lot of people that had their hand in this,” he said. “There’s a lot of people that should have been on trial that weren’t.”
Rainone declined to say who else should have been on trial, saying he didn’t want to “get sued.”
Of course, that the prosecution failed to indict participants in the fen-phen scam who also stole from tens of thousands to tens of millions doesn’t explain why one votes to acquit the criminal defendant attorneys who stole millions–except for the fact that the defendants were able to blame the empty chair for their actions. If the defendants’ allegations about Stan Chesley’s role are half true, the question remains why Ohio disciplinary authorities have not so much as opened an investigation, much less failed to disbar him. But we will perhaps learn more as the civil trial progresses. Meanwhile, as Peter Bronson writes, “giving immunity to someone so powerful, wealthy and politically wired was everything that destroys public trust in the justice system.”
Judge William O. Bertelsman, who has taken senior status, has recused himself from the retrial; the new judge, Danny Reeves, will likely be requested to lower the eight-digit bond for Gallion and Cunningham, who remain in jail. Melbourne Mills, who was acquitted, says he has already spent the $20 million he was paid for his role in the case–a case his lawyer told a jury that he was too drunk to work on and didn’t understand the underlying law. Nice work if you can get it.
Off-the-record reports I am receiving about the trial blame prosecutors’ performance (such as failing to object to defendant expert opinion that contradicted the facts) and Judge Bertelsman’s instructions to the jury; it also seems to me that the defendants were given far too much leeway to argue the law before the jurors when the judge should have given a straightforward instruction that the underlying case was or was not a class action covering all future Kentucky claimants rather than allow argument over that simple legal question. (Answer: it wasn’t. The settlement with AHP explicitly says it’s a lump-sum settlement for existing plaintiffs requiring the attorneys to comply with Rule 1.8, and there is no indemnification provision contrary to defense testimony arguing otherwise.)
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Melbourne Mills’s defense that he was too drunk to know what was going on when he and two other attorneys stole tens of millions of dollars appears to have created reasonable doubt in the mind of a Kentucky jury. Mills may have been helped by the revelation that his two co-counsel tried to hide $50 million from him, too, permitting his attorney to more plausibly blame the scheme on others. Or the jury may have believed the argument of Mills’s attorney that the three attorneys were too stupid to understand the settlement agreement and didn’t intend to steal any money (though they transferred a lot of money from their personal account to their clients when they learned the bar was investigating, and lied to the bar about how much money their clients received). (Jim Hannah, “One cleared in diet drug case”, Cincinnati Enquirer, Jul. 2; Beth Musgrave, “Fen-phen lawyer Mills is found not guilty”, Lexington Herald-Leader, Jul. 2; Beth Musgrave, “Jury hears closing arguments in fen-phen trial”, Lexington Herald-Leader, Jun. 24; AP/Kentucky Post, Jun. 23). The jury, today in its seventh day of deliberations, claims a deadlock on the other two attorneys, no doubt confused by why Judge Jay Bamberger and co-counsel and Democratic bigwig Stanley Chesley have not also been indicted. Defendants Cunningham and Gallion have sought to blame the tens of millions they stole on the fact that Bamberger (who was indirectly paid millions) judicially approved the settlement and Chesley (who was directly paid tens of millions) was allegedly the architect of the settlement that ensured lawyers would get far more than their contracts with their clients provided. Since there is no dispute that those two were indeed intimately involved in the scheme, the jury isn’t the only one confused why the Kentucky fen-phen three are being treated differently than the judge, the judge’s former law partner, and Stan Chesley, who all profited mightily.
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From the Cincinnati Enquirer columnist, a refreshingly acerbic account of the erstwhile Master of Disaster’s time on the stand in the Kentucky fen-phen trial, during which he compared himself to Tiger Woods in explaining why he should not be asked to stoop to taking an hourly fee:
Jurors have been anesthetized by six weeks of watching witnesses avoid the truth the way cats avoid a bath. …
…when [defense attorney O. Hale] Almand tried to make Chesley admit – yes or no – that he knew his own lawyer told prosecutors he would take the Fifth unless he got immunity, Chesley’s serial evasions made the courtroom squirm.
I counted at least nine tries. After the seventh, the judge twice ordered Chesley to answer yes or no.
He would not. He wheedled, ducked, swerved and danced. He blustered about attorney-client privilege, corrected the grammar of the question, and griped about how he has been mistreated by the press. …
If you’re hoping to hit a slip-and-fall lotto jackpot by suing Amalgamated Banana Peel Inc., Chesley is just the guy to take on herds of high-paid lawyers. But if you’re looking for a straight answer under oath, look somewhere else.
(”Tiger Woods of Torts”, Cincinnati Enquirer, Jun. 19).
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Perfectly jaw-dropping testimony at the ongoing Covington, Ky. trial:
Attorney William Gallion testified yesterday that he and his co-defendants would have been “legally justified” in taking as much as $170 million from Kentucky’s $200 million fen-phen settlement — because, he said, their clients’ cases were worth only $30 million.“We were like an insurance company where the hurricane didn’t strike, so we got to keep the premium,” the suspended Lexington lawyer testified in his diet-drug fraud trial in U.S. District Court.
The lawyers, it seemed, had structured the settlement so as to reserve the gigantic helping of gravy in question for the supposed disposition of certain contingencies which then conveniently failed to materialize. Judge William Bertelsman immediately told the jury that Gallion’s interpretation of the law was wrong. (Andrew Wolfson, “Judge, lawyer clash at fen-phen trial”, Louisville Courier Journal, Jun. 14).
And on Monday, famed Cincinnati attorney Stan Chesley — who has been given immunity — testified, assailing the conduct of the three defendants and conveying his complete shock that they would structure the settlement so unfavorably to clients. (Jason Riley, “Chesley rakes diet-drug trio”, Courier-Journal, Jun. 17; Jim Hannah, “Chesley: Fen-phen role slim”, Cincinnati Enquirer, Jun. 17). For a different viewpoint, see Peter Bronson, “Where’s Chesley?”, Cincinnati Enquirer, Jun. 12. More: Herald-Leader.
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William Gallion takes the stand in the Kentucky fen-phen settlement criminal trial:
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The press is starting to catch on to the scandal of Judge Bamberger not being charged in the Kentucky fen-phen settlement scandal, and we have criminal trial updates after the jump.
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Judge Joseph Bamberger rubber-stamped a Kentucky fen-phen settlement agreement where plaintiffs’ attorneys cheated class members out of tens of millions of dollars. In the process, his former law partner was paid millions by the settlement, which he used to buy a Florida house with Bamberger, and Bamberger himself received a $5000/month sinecure. At trial of the three lead attorneys yesterday, jurors were shown a videotape where one of the plaintiffs questioned the judge on how low her settlement was and the validity of her release; the videotape shows Bamberger browbeating the plaintiff, but then awarding her an additional $100,000 and a $1200/month life annuity on the condition that she cease talking about the settlement and her objections to it. (Jim Hannah, “Judge dressed down victim”, Cincinnati Enquirer, May 24) (h/t R.U.). For some reason yet undisclosed by prosecutors, Bamberger is on the witness stand rather than in the dock with Gallion, Mills, and Cunningham.
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The name does have a clean, daisy-fresh smell to it, like a good laundry. In this case the laundering being done was of settlement money in the Kentucky fen-phen scandal. (WSJ law blog, Louisville Courier-Journal, Lexington Herald-Leader, Krauss @ PoL).
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Here’s your $3 million bonus, young man, and whatever you do, don’t tell the clients how much the case settled for (Jim Hannah, “Fen-phen lawyer details bonus”, Cincinnati Enquirer, May 15; earlier)(via Slater, WSJ law blog).
We’ve extensively covered the scandal over charges that attorneys William Gallion, Shirley Allen Cunningham Jr. and Melbourne Mills Jr. siphoned off $65 million or so in settlement money due claimants in the diet drug litigation, using the proceeds to buy, among other things, the Preakness-winning race horse Curlin. Ted notes the latest developments over at Point of Law, as does Carter Wood. (Wolfson/Courier-Journal, WSJ law blog).
More from WSJ law blog: Mills’ lawyer tells jury his client “was hospitalized for an ‘alcoholic seizure’ a month after the case was settled, didn’t take part in any court hearings and was too drunk at the time to be responsible,” while prosecutor says “that Mills ’sat back and laughed’ when the other two described a plan to overcharge the clients.”
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