Wednesday, 9 November 2011

Lawyers you would never want to hire to represent your interests

Lawyers play an important role in our justice systems and when they are honest and competent, they are necessary to make sure that our interests are protected but when they are dishonest, they will rob us blind. Here is a story of three lawyers in Kentucky that tried to rob their clients blind and almost got away with it and of the fourth lawyer who tried to cover up the crimes of the other three lawyers.

In the mid-90’s, millions of Americans looking to lose weight lined up for the newest wonder drug called fen-phen. But, it’s not long before patients discovered to their horror that this so-called miracle drug was no miracle at all. Scientists linked the drug to heart disease and a rare but fatal condition called Primary Pulmonary Hypertension.

Across the country there were thousands of lawsuits seeking damages for people whose health has been ruined by fen-phen. In Kentucky, three lawyers of the lawyers I am writing about in this article decided to join forces to see if they could get in on the action by convincing hundreds of victims to let them represent them in a class action suit against American Home Products Corporation, the firm that had been marketing Fen-Phen.

The lawyers had their clients sign an agreement that out of the settlement each of the victims would get, they would pay the lawyers a third of the settlement to the lawyers as a contingency fee. This way, the clients wouldn’t have to pay any lawyer’s fees up front or any court fees.

The lawyers William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr. signed up 440 patients and represented them in the class action lawsuit. The attorneys were able to negotiate a $200 million settlement on behalf of their 440 clients. Each of the victims would receive an amount based on the severity of the suffering they each underwent as a result of taking the drug.

Now when you divide $200 million dollars by 3, you get a figure of $66,666,666 which is the amount of the settlement that was to go to the lawyers for their contingency fees and the remaining $133,333,333 was to be paid out to their 440 clients. Now admittedly, taking a third of the settlement for lawyer’s fees is really high but it isn’t unusual.

But what the clients actually received when they received their cheques was only $45 million dollars. The lawyers somehow had swindled the other $89 million dollars from their clients share of the settlement. What this meant was that their contingency fees were no longer a third but were in fact three quarters of the amount of the settlement. Needless to say, that is outright fraud.

Clients begin to receive checks but obviously the numbers didn’t add up. To make matters worse, none of them were given copies by the three lawyers of the settlement agreement that stated what each victim was to receive. This way, the lawyers were able to hoodwink their victims into believing that what the lawyers sent them was all that the award was going to be for each of the victims. The lawyers directed their staff to tell the clients not to tell anyone (not even their families) about the settlement as a way to cover up the theft. The victims were told that if they told anyone of what they received, they would be fined a hundred thousand dollars and be sent to jail. Of course such a threat was illegal.

The three lawyers had pocketing millions of dollars. Gallion, Cunningham and Mills went on a spending spree buying sports cars, thoroughbred horses and expensive homes. But eventually, their luck ran out. The federal government stepped in and the matter was investigated by US Attorneys.

The three lawyers were brought to trial in Covington, Kentucky. In April 2009, the jury found Gallion and Cunningham each guilty of one count of conspiracy to commit wire fraud and eight counts of wire fraud. At their sentencing hearing, their lawyers told the judge how wonderful the two men had been prior to them having committed their crimes of having stolen $98 million from the $200 million settlement payout that should have gone to their clients. Such pleas didn’t have the desired effect on the mind of their trial judge any more than listening to a dog owner tell you how wonderful his dog is after his dog repeatedly shit all over your lawn.

Judge Reeves said that neither Cunningham nor Gallion has shown a "grain of remorse." William Gallion, age 58 who was considered the ringleader of the scam was sentenced by the federal court to prison for 25 years. Shirley Cunningham Jr. age 54 (who is a man) was sentenced to 20 years in prison. Further, they were disbarred and Judge Reeves ordered that the two men were to pay $127 million in restitution to their victims and on top of that, they were to pay another $30 million to the federal government as a fine.

Both men asked to be released on bond pending their appeal, but Reeves denied the request. Both men also had requested to be placed in a minimum-security prison near Central Kentucky. That decision is up to the federal government, not the court.

Because their crimes were federal crimes, they cannot be released on parole but they can be given credit for good behavior. Today's federal prisoners are eligible to earn a maximum of 47 days per year of their sentence for early release by abiding by prison rules and regulations. This means that Gallion can shave off 1,175 days off his sentence (a little over three years). That also means that he will be approximately 80 years of age when he is finally released from prison. Cunningham Jr. can shave off 940 days off of his sentence (a little over two and a half years). That also means that he will be approximately 71 years and six months of age when he is finally released from prison.

They have destroyed their careers and when they are released from prison as old men, they will be broke and no doubt, still owe money to the government. It is even possible that these two shysters will actually die of old age in prison.

In Melbourne Mills' case, he was found not guilty because his staff told the jury that he was an alcoholic who was always drunk. The fact that Melbourne Mills’s defense was that he was too drunk to know what was going on when he and two other attorneys stole tens of millions of dollars, appears to have created reasonable doubt in the mind of his Kentucky jury. Nevertheless, he too was disbarred.

Did the jury believe the argument of Mills’s attorney that the three lawyers were too stupid to understand the settlement agreement and didn’t intend to steal any money (even though they transferred a lot of money from their personal accounts to their clients when they learned the bar—governing body of lawyers—was investigating, and lied to the bar about how much money their clients received)? Mills’ defence may have been helped by the revelation that his two cohorts tried to hide $50 million from him also, permitting his attorney to more plausibly blame the scheme on the other two lawyers.

By the way, the three lawyers claimed that they withheld the money that should have gone to their clients to be applied to new claimants if they came forward. That is pure bunk because the $200 settlement didn’t list new claimants. It only listed the 440 victims who should have got their money from that settlement paid out.

Pat Cunningham, Shirley Cunningham's wife, said that her husband has so little money that he probably will have to ask for a court-appointed lawyer to pursue his appeal. She then added, "I still believe that he is innocent." Give me a break.

It is conceivable that Cunningham and the others have some of the money spirited away somewhere. The court was told that it had been difficult to trace the two men's assets. Gallion and Cunningham have a series of limited-liability corporations and foundations.

Now I will tell you about the fourth lawyer.

The Kentucky Bar Association bar had accused famed Cincinnati trial attorney Stanley Chesley of violating attorney ethics rules pertaining to unreasonable fees, notification of fees, and making false statements to the court.

The Kentucky Bar Association’s board of governors recommended the disbarment of Chesley. The board also voted to follow the recommendation of a hearing officer who said Chesley should return more than $7 million in fees he received from a 2001 fen-phen settlement to his former clients.

The vote came after a more than hour-and-a-half oral argument before the board at its meeting at the Hyatt Regency in downtown Lexington. The board's recommendation will be sent to the Kentucky Supreme Court, which has final say on attorney discipline cases. Sheryl Snyder, a lawyer for Chesley, said after the board’s decision that he will ask the Supreme Court to hear oral arguments in the disciplinary hearing against Chesley. The court rarely hears such arguments. Kentucky and Ohio have reciprocal agreements. If Chesley is disbarred in Kentucky, he could also lose his law license in Ohio.

Chesley, one of the most well-known trial attorneys in the country, had been charged with violating nine ethical rules, including taking an unreasonable fee and making false statements to the bar association.

Chesley was one of four lawyers involved in a 2001 Boone Circuit Court settlement with American Home Products over damages caused by the diet-drug fen-phen. Chesley was never charged in the criminal case.

Chesley has maintained through the other three lawyer’s criminal and civil proceedings that he had no individual clients in the fen-phen settlement and was only acting as a lawyer for Mills, Gallion and Cunningham, who had little experience with class-action or mass tort cases. But William Graham, the hearing officer in the disciplinary case against Chesley, said Chesley was key to covering up misdeeds of Gallion, Cunningham and Mills.

Graham, who recommended disbarment and the return of $7.5 million in excess fees to the fen-phen clients, said in a February 22nd order that Chesley's callous subordination of the interests of his clients to his own greed is "both shocking and reprehensible."

Graham made the ruling in February after presiding over a multi-day trial regarding Chesley's misconduct charges in September 2010. The board of directors voted to accept Graham's recommendation.

Chesley's contract with the lawyers entitled him to receive about $13 million. Instead he received more than $20 million in fees.

"We deem ... Chesley to be reasonably conversant with fifth grade arithmetic," Graham wrote. "Even a rough calculation" would have told Chesley that he had received more than his contract said he should receive," Graham said.

Graham noted that Chesley even helped settle a lawsuit brought by one of Mills' former law partners in order to avoid testifying about the details of the fen-phen settlement.

Chesley also knowingly approved documents that were sent to the Kentucky Bar Association that showed inflated settlement amounts for the fen-phen clients in the original settlement, Graham said in his order.

But Snyder told the board during oral arguments on Tuesday that Chesley saw the document but did not know that the numbers were wrong or inflated.

Moreover, Snyder said that Chesley was not involved in the disbursement of the settlement proceeds to the clients and could not have known that the lawyers on the case were taking more money than their contracts with their clients said they should receive. All three of the lawyers — Gallion, Cunningham and Mills — had contracts that said they were entitled to either 30 or 33 1/3 percent of the client's settlement. Snyder said that Chesley says he did not know the amounts of the other lawyers' contingency fee contracts with their clients.

But members of the board questioned why Chesley did not question the additional $7 million in fees that he received. "Did he believe that was a reasonable fee?" asked Thomas Rouse, a board member.

Snyder said that Chesley was entitled to the fee because American Home Products had only agreed to give the 431 clients $20 million before Chesley entered the case. Chesley was able to get American Home Products to increase the settlement to $200 million, Snyder said.

But Linda Gosnell, chief bar counsel, argued that Chesley not only knew that the fee he received was unreasonable and excessive but was part of efforts to thwart investigators from determining what happened to the money.

For example, Chesley tried to get an attorney for American Home Products to send a letter that would help boost the fen-phen lawyers' case. The American Home Products lawyer has testified that he did not send the letter because what Chesley wanted him to write was false. "He helped them cover up the theft for a long time," Gosnell said.

Chesley, who first became famous representing families of victims in the Beverly Hills Supper Club fire in Northern Kentucky, has also been a lawyer on other high-profile cases, including lawsuits against Pan Am for the Lockerbie, Scotland, terrorist attacks and cases against the Archdiocese of Covington on behalf of sexual abuse victims.

The matter of his disbarment is still ongoing at the time of this writing however you can be sure that his reputation has gone so far down the toilet, the Roter Rooter Plumbing firm won’t be able to retrieve it. When I finally learn if his disbarment was approved by the court, I will put it in this article as an UPDATE.

Benjamin Franklin in his book, Poor Richard made a rather humorous comment about lawyers. In his book, he said, “God works wonders now and then. Behold! A lawyer, an honest man.

When lawyers partake in secret deals that feather their nests at the expense of their victims, the latter will snicker when they see their lawyers being led away in handcuffs and the tighter are the cuffs, the greater is the snickering.

1 comment:

Anonymous said...

cute blog....
i agree with you that Lawyers play an important role in our justice systems...
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