Formula for fen-phen money outlined

ATTORNEY SAYS PLAINTIFFS WERE OFFERED LESS

By Jim Warren

JWARREN@HERALD-LEADER.COM

COVINGTON --

An attorney who worked with the defendants in a $200 million fen-phen class-action suit testified Wednesday that he was told to offer plaintiffs in the case settlement amounts below those outlined in a funding formula he prepared.

David Helmers testified in federal court that he developed a formula allocating each plaintiff's share of the settlement, based on how much injury each suffered from taking the diet drug combination.

But Helmers said that when he began distributing money to plaintiffs, he was directed to offer amounts smaller than the formula outlined. He said he also was directed not to tell plaintiffs details about the settlement, including the $200 million amount.

Helmers worked on the fen-phen case as a member of William Gallion's Lexington law firm.

Gallion and fellow attorneys Shirley Allen Cunningham Jr. and Melbourne Mills Jr. are charged with one count each of federal conspiracy to commit wire fraud in their handling of settlement money from the class action, in which they represented about 440 plaintiffs. The case was filed in Boone Circuit Court in 1999 and was settled in 2001.

The federal government alleges that the three lawyers pocketed about $65 million in settlement money that should have gone to their clients. The defendants could face up to 20 years in prison if convicted.

Helmers said that although he was only a junior member of Gallion's firm at the time, he worked extensively on the fen-phen case. He no longer works for Gallion.

An unusual request

Another development on Wednesday concerned nationally known Cincinnati lawyer Stanley Chesley, who worked on the fen-phen case but is not a defendant in the criminal trial.

On Wednesday morning, attorneys for Gallion and Cunningham raised the possibility of having the court recognize Chesley as an unindicted co-conspirator, a move apparently intended to allow certain statements by Chesley to be introduced into evidence.

But U.S. District Judge William Bertelsman said he doubted he had authority to take such an unusual step. He noted that usually the prosecution, not the defense, asks for someone to be named an unindicted co-conspirator.

Bertelsman also questioned whether the defense would really want him to recognize the existence of a conspiracy, since the defendants are charged with conspiracy. More arguments on the matter are to be heard Thursday.

Cunningham and Gallion are part-owners of the racehorse Curlin, winner of last year's Preakness Stakes.

Rationale for offering less

Assistant U.S. Attorney Laura Voorhees asked Helmers about the agreement under which American Home Products, the company that marketed fen-phen, settled the suit.

Helmers said that shortly after the settlement was reached on May 1, 2001, he was called to a meeting at Gallion's Jessamine County home. Cunningham and Mills also were there, he said.

Helmers said he was asked to develop a formula for dividing the settlement among the 440 plaintiffs, based on their medical conditions. Gallion later asked him to modify the formula to give more weight to people with the most serious problems.

He said that when he began distributing settlement money to plaintiffs, the amounts he was told to offer were not the same as in the formula. "It was a lesser amount," he said.

Helmers said it was his understanding, however, that individuals would not get the amounts eventually listed in the formula.

Helmers testified that representatives of Mills and Cunningham, who also were distributing money to plaintiffs, also were supposed to offer reduced amounts.

Helmers said Gallion explained to him that the lesser amounts were part of a process to ensure that the settlement funds weren't used up before each plaintiff got his or her share.

Bertelsman asked Helmers from the bench whether he ever explained that process to plaintiffs. Helmers said he did not.

Voorhees asked about language that American Home Products demanded in the settlement agreement requiring that details be kept secret.

Defense attorneys contended Tuesday that Mills, Cunningham and Gallion couldn't give plaintiffs detailed information about the settlement because of that language.

But Helmers, reading from the settlement document, said it was his interpretation that the agreement provided an exclusion that would have allowed the attorneys to inform plaintiffs of such details.

Voorhees also questioned Helmers about Mills' conduct during the fen-phen case. Mills' attorney stated in court Tuesday that Mills suffered from alcoholism at the time and was not very involved in the case.

However, Helmers testified that he never saw Mills when he seemed to be drunk.