Diet-drug Lawyers Face Additional Charges
Filed under: News
A federal grand jury in Covington returned a new indictment yesterday against two lawyers charged with bilking their clients in Kentucky’s diet-drug case.
The indictment against suspended lawyers William Gallion and Shirley Cunningham Jr. adds new charges of wire fraud and seeks forfeiture of nearly $50 million more from them.
Gallion, Cunningham and Melbourne Mills Jr., were tried in July on a single count of conspiracy to commit wire fraud, but the jury was unable to reach a verdict in the case against Gallion and Cunningham.
Jurors acquitted Mills, whose lawyer said the defendant was too drunk to have participated.
The new indictment returned yesterday seeks $94.6 million from Gallion and Cunningham and adds eight wire-fraud counts.
Some former federal prosecutors and other defense attorneys said in interviews after the mistrial that the prosecution should have brought additional charges to give jurors more choices.
But Steve Dobson, an attorney for Cunningham, said he was disappointed that the government is adding charges, after the jury voted 10-2 to acquit his client and Gallion. «I hope they are not being vindictive.»
U.S. Attorney James Zerhusen could not be reached for comment. The case is set for trial Oct. 14 but is expected to be continued.
After more than a year in Boone County Jail, Cunningham was released last week when he posted a $1.25 million bond; Gallion remains incarcerated.
Judge Danny Reeves, who was newly assigned to the case, reduced Cunningham’s bond from $45 million and Gallion’s from $52 million to $2.5 million.
Gallion’s lawyer, O. Hale Almand, couldn’t be reached for comment yesterday, but Gallion’s release may be delayed because the former fen-phen plaintiffs have won a foreclosure judgment against his home in Jessamine County.
In the new indictment, Gallion and Cunningham are again accused of paying only about one-third of the $200 million settlement to the 440 fen-phen clients and paying themselves, Mills and other lawyers and clients most of the rest.
They are also accused again of placing more than $20 million in so-called leftover money into a charitable fund, called the Kentucky Fund for Healthy Living, that they paid themselves to manage.
The lawyers said they withheld money in case new claims arose. When none did, they said they were entitled to the money because their clients had been sufficiently compensated.
Lawyers for Gallion and Cunningham said in July that the jury was unable to find them guilty because they were innocent.
But some attorneys and others who followed the eight-week trial in U.S. District Court in Covington say a host of factors likely contributed, including mistakes by the prosecution.
More than 400 of the ex-clients also sued Gallion, Cunningham and Mills, along with Cincinnati lawyer Stan Chesley, who negotiated the $200 million settlement, and won a judgment for $42 million, plus the return of the money placed in the fund.
Angela Ford, a Lexington lawyer who represents the ex-clients, has been trying to collect on the judgment, including an attempt to force the sale of Curlin, the 2007 horse of the year, in which Cunningham and Gallion have a minority stake.
Reporter Andrew Wolfson can be reached at (502) 582-7189.
Source: Courier-Journal.com
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