Federal prosecutors say two lawyers accused of taking millions of dollars from their clients should not be released from jail because the two men's assets cannot be traced.
William Gallion and Shirley Cunningham Jr. filed motions earlier this month asking a federal judge to release them from the Boone County Jail so they can help their attorneys prepare for a second trial. Their first trial ended with a deadlocked jury on July 3.
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Gallion argued in his earlier motion that he has little money for bond or to flee because his assets have been garnisheed by a civil lawsuit over his handling of a $200 million fen-phen class action lawsuit settlement.
Gallion and Cunningham also argued that they should be released from jail because the first jury couldn't decide whether the two men were guilty of conspiring to commit wire fraud. The jury foreman later said that the vote was 10 to 2 to acquit the two men.
The men are accused of taking millions of dollars that should have gone to 440 former clients in a 2001 fen-phen settlement in Boone Circuit Court. A third defendant, Lexington-area attorney Melbourne Mills Jr,. was found not guilty by the same jury.
Gallion and Cunningham have been held at the Boone County Jail since August 2007. The U.S. Sixth Circuit has upheld U.S. District Judge William Bertelsman's decision to jail the two men and to set bond for Gallion at $52 million and bond for Cunningham at $45 million.
Bertelsman declined the two men's request to be released after the mistrial was declared. But Bertelsman later stepped down from the case and U.S. District Judge Danny Reeves, who was assigned the case, will now decide whether the two men should be released.
In their motion, federal prosecutors point out that Bertelsman, who oversaw the six-week trial, said that there was even more evidence and concern that the two men would flee.
“Nothing has changed. The evidence is even stronger in my mind,” Bertelsman said before denying the men's motion for bond after the mistrial.
In her motion filed in federal court in Covington, Assistant U.S. Attorney Laura Voorhees attached an affidavit by Angela Ford, who is representing Gallion, Cunningham and Mills' former clients in a civil lawsuit. A judge has ordered that the three men must repay their clients at least $42 million.
Ford said that her efforts to collect on the $42 million judgement have been thwarted by various delaying tactics and that only $2 million in assets have been located and garnisheed. Ford said that much of the two men's assets are sheltered in at least 10 limited liability companies, making it difficult for Ford to collect on the assets.
However, the clients have received $20 million of the $200 million that Gallion, Cunningham and Mills placed into a non-profit.
“There continues to be no verification of what assets the defendants have at their disposal which may afford them the ability to flee,” Voorhees said in the motion.
O. Hale Almand, an attorney for Gallion, could not be reached for comment.
Stephen Dobson, an attorney for Cunningham, declined to comment.