William Gallion takes the stand in the Kentucky fen-phen settlement criminal trial:

Gallion alleged that Chesley forced his way in by using his influence with the fen-phen maker’s counsel to stifle proposed settlements that Gallion, Mills and Cunningham had on the table with the drug maker.

“We knew that if we were ever to get our cases settled, we’d have to come to an agreement with Stan Chesley,” Gallion said.

Chesley isn’t charged in the case but is a defendant in a civil suit filed by more than 400 of the former clients against their ex-lawyers. The other lawyers lost a $42 million judgment in that case; a jury will decide how much of Chesley’s $20.5 million fee he must return.

Chesley’s counsel has indicated he will refuse to testify in the criminal trial, citing his right not to incriminate himself.

Yesterday’s most explosive testimony came from a former lawyer for Gallion and [Shirley] Cunningham who said his clients approved a filing with the Kentucky Bar Association that grossly exaggerated the amount of money they had paid to their clients in the fen-phen case.

Lawyer Whitney Wallingford said he made a calculation error in 2002 that led him to tell the bar association that the clients had been paid more than $116 million of the $200 million settlement. In fact, they got only about $73 million.

Wallingford said in a letter to the bar association that Cunningham and Gallion had “approved” the filing.

In court, Wallingford said he had sent a copy of it to both of them and heard nothing back from either. He said Chesley eventually called him and told him to file it.

(Andrew Wolfson, “Gallion doesn’t address charges”, Louisville Courier-Journal, Jun. 7). Gallion will return to the stand Monday; defendant Melbourne Mills is expected to testify, and Cunningham has not yet decided whether to testify. (Beth Musgrave, “Fen-phen lawyer testifies”, Lexington Herald-Leader, Jun. 7). The attorneys continue to blame everything on Chesley and Judge Joseph Bamberger.

Attorney Whitney Wallingford testified there was nothing unethical about having the Kentucky Fund for Healthy Living–created by a court order by Judge Bamberger–pay Bamberger $5,000/month to sit on its board. (Andrew Wolfson, “Witness praises lawyers’ managing of nonprofit fund”, Louisville Courier-Journal, Jun. 6). Which says something either about Wallingford or about Kentucky legal ethics.

Meanwhile in the civil case, one is inclined to call shenanigans on the attorneys’ lease of a million-dollar racehorse to one’s wife and another’s girlfriend. (Andrew Wolfson, “Horse pulled from stakes race”, Cincinnati Enquirer, Jun. 6) (h/t R.U.).

The court is struggling to maintain control over the trial; the first prosecution witness was cross-examined for a full week when the judge started putting time limits on the parties. (Jim Hannah, “I had to include Chesley”, Cincinnati Enquirer, Jun. 7).

And the question remains: why hasn’t Stan Chesley been indicted?

Filed under: cy pres, ethics, Joseph Bamberger, Kentucky fen-phen settlement fraud, scandals, Stan Chesley