Fen-Phen Kentucky Lawyers on Trial

There have been several reports lately about the mishandling of Fen-Phen settlement funds in Kentucky. Here are two excerpts. The first is from the Wall Street Journal Law Blog:

There are many bizarre aspects of the story behind the three Fen Phen lawyers on criminal trial for alleging bilking their clients out of $65 million of settlement money. The most well-reported oddity is that two of the lawyers used settlement funds to invest in the race horse, Curlin. But how about their decision to donate $20 million of the $200 million settlement to a charitable fund — called the Kentucky Fund For Healthy Living — that they created and controlled, and for which they allegedly paid themselves about $150,000 each to manage?

That part of the case came to light yesterday, as Joyce Brown, a plaintiff in the Fen-Phen case, testified in federal court that she specifically opposed the charity idea. According to this report in the Herald-Leader, Brown testified that she phoned the law office of William Gallion (pictured, right), one of three lawyers now on trial, to express her opposition, but a woman told her that the charity plan was going through, and that she had no choice in the matter. Another plaintiff, Connie Centers, testified that no one discussed a charitable contribution with her.

The second is from the Lexington Herald-Leader:

A Lexington woman who was a plaintiff in a $200 million fen-phen class action settlement testified in federal court Tuesday that she specifically opposed plans by three lawyers in the case to donate leftover settlement money to charity.

Joyce A. Brown said that when she telephoned the Lexington law office of William Gallion to express her opposition, a woman on the phone told her that the charity plan was going through, and that she had no choice in the matter.

Another plaintiff, Connie Centers of Lawrenceburg, said no one ever discussed a charitable contribution with her.

Gallion and fellow attorneys Melbourne Mills Jr. and Shirley Allen Cunningham Jr. ultimately placed about $20 million of settlement money in a charitable foundation they created and controlled. They also paid themselves about $150,000 each to manage the fund, called the Kentucky Fund For Healthy Living.

Mills, Cunningham and Gallion are on trial in federal court for conspiracy to commit wire fraud in their handling of the settlement, which grew out of a class-action lawsuit they filed in Boone Circuit Court in 1998 against American Home Products, the company that marketed fen-phen.

Prosecutors allege that the defendants unlawfully pocketed millions from the settlement, defrauding their clients out of about $65 million.

ECB