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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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We hadn’t previously mentioned the testimony of American Home Products defense attorney Jack Vardaman that Stan Chesley tried to induce him to provide false testimony in the civil case, something else Chesley has suffered no consequences for.  (Jim Warren, “Witnesses detail fen-phen settlement”, Lexington Herald-Leader, June).  And we missed this fascinating negative pregnant exchange in Chesley’s cross-examination:

Gallion’s attorney, O. Hale Almand, asked Chesley if he believed he broke any law or rule of ethics.

Chesley said, “I certainly don’t know of any criminal law of the United States that I violated or that I’m guilty of.”

Nice dodge of the question about legal ethics, though the press doesn’t indicate if there was a follow-up question.  (Brett Barrouquere, AP/Lexington Herald-Leader, Jun. 18).  Chesley was given immunity to testify and promptly told the jury that it was appropriate for the defendants to withhold money from their clients in case new claimants came forward.  He also apparently lied in claiming not to be present at a settlement conference before Judge Bamberger where the fees were discussed.

And welcome readers of the Lexington Herald-Leader, which says, “Legal blogs and Web sites such as www.overlawyered.com have used the case to attack the legal profession as a whole.”  (Brandon Ortiz and Art Jester, “Jury still out on legal profession”, Jul.2). Of course, the Kentucky bar has done a perfectly good job of demonstrating itself worthy of attack for simply suspending attorneys that stole tens of millions of dollars from clients.  And Stan Chesley has faced no disciplinary consequences, much less criminal ones, for his role in the fraud, demonstrating the failure of legal disciplinary authorities to address the systematic problem of fraud in the plaintiffs’ bar.  When crime pays, one is justified in noting the problem of criminal behavior.

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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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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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