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Jury: Lawyers Guilty In Diet-Drug Settlement Scam

FRANKFORT, Ky. (AP) - A federal judge jailed two disbarred
lawyers who had been found guilty Friday of scamming their clients
out of nearly $95 million in a diet-drug settlement.
It was the second trial for William Gallion and Shirley
Cunningham. A federal jury in Covington last year was unable to
reach a verdict for Gallion and Cunningham but acquitted a third
defendant.
"It was a different day and a different jury," federal
prosecutor E.J. Walbourn said after a jury of seven women and five
men found the two guilty of mail fraud and conspiracy to commit
mail fraud Friday afternoon.
U.S. District Judge Danny Reeves ordered both men detained. They
had been free on $2.5 million bond each. U.S. marshals took them to
the Franklin County Detention Center.
"I do think justice has been done finally," said Connie
Centers, a Lawrenceburg woman who had been represented by the
Kentucky lawyers.
"We're sick people, and we don't have long to live," said
Centers, who had to have a mitral valve replaced in her heart after
taking the diet drug fen-phen. "All they're going to do is go to
jail."
Prosecutors charged Gallion and Cunningham with one count of
conspiracy to commit wire fraud and eight counts of wire fraud,
claiming they bilked some 440 clients who claimed they had been
hurt by the fen-phen, which was withdrawn from the market after it
was linked to heart valve problems.
The jury had been deliberating since early Thursday following a
trial that lasted about seven weeks. After reaching the verdict,
jurors were instructed to deliberate whether Gallion and Cunningham
will have to forfeit $94.6 million that prosecutors claim they
bilked from their clients.
Jurors went home Friday without reaching a decision on the
forfeiture. They're scheduled to return to the federal courthouse
in Frankfort to resume deliberations on Tuesday.
Steve Dobson, the attorney for Cunningham, said that he plans to
appeal the jury's guilty verdict.
"We really feel like there are a number of significant issues
that are appealable," he said.
Dobson said he has the utmost respect for Cunningham.
"He is truly a man of integrity based on everything I know
about him," Dobson said. "I am so disappointed for him and his
family."
Hale Almand, Gallion's defense attorney, declined to comment
after the verdict.
The case has earned attention both for the allegations of
attorney misconduct and the complicated assets of the defendants,
which include a 20 percent share of the thoroughbred Curlin being
held in a trust.
Almand claimed the two were simply following the advice of a
nationally known class-action expert whom they had hired as a
consultant for counsel in divvying up the $200 million settlement
with American Home Products. That settlement, reached in 2001, was
on behalf of 440 clients who claimed they had been hurt by the diet
drug fen-phen made by the company.
Almand also argued that the evidence simply wasn't sufficient to
convict Gallion and Cunningham, and that the settlement was
approved by a northern Kentucky judge.
"I think the government is raising an optical illusion
almost," he said in his closing argument.
Prosecutors painted a starkly different picture of
"extraordinary greed" and "absolute arrogance" of two attorneys
who were so intent on keeping most of the money for themselves that
they refused even to inform their clients of the total amount of
the settlement.
"I submit to you that these defendants got caught with their
hand in the cookie jar," Walbourn told jurors in his closing
argument.
The criminal case against them was moved to Frankfort after a
federal jury in Covington deadlocked last year on a verdict.
Prosecutors contend Gallion and Cunningham cheated their clients
out of the $94.6 million and paid themselves and others about
two-thirds of a 2001 settlement with the maker of the diet drug.
In the first criminal trial, jurors could not reach a unanimous
verdict on the charges against Gallion and Cunningham and a judge
declared a mistrial. A third defendant, Melbourne Mills of
Lexington, was acquitted.
Although fen-phen was the subject of a massive national
financial settlement, Gallion and Cunningham's clients opted out of
that agreement because their lawyers told them they could get more
money pushing their claims on their own.
But prosecutors say the lawyers didn't tell their clients, at
least at first, that they were part of a group that settled en
masse for $200 million, and that the lawyers - not the drug
manufacturer - were deciding how to slice up the money.
"These clients deserved more ... and they didn't get it,"
Walbourn said.
Gallion and Cunningham also have a $42 million judgment against
them in a separate civil case brought by the former clients.

(Copyright 2009 by The Associated Press. All Rights Reserved.)


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