COVINGTON — A federal judge declared a mistrial Thursday in the case of two Lexington-area lawyers accused of taking millions of dollars from former clients in a diet-drug settlement.
That means Shirley Cunningham Jr. and William Gallion will face a second criminal trial. A date for the trial has not been set.
U.S. District Judge William Bertelsman rejected efforts by the men's attorneys to have them released pending a second trial, so they will remain for now in the Boone County Jail.
Bertelsman declared the mistrial after jurors had indicated for three days that they were deadlocked on whether Cunningham and Gallion were guilty of conspiring to commit wire fraud. The mistrial came after eight days of deliberations and in the eighth week of the trial.
The jury acquitted a third defendant, Lexington-area lawyer Melbourne Mills Jr., of a conspiracy charge earlier this week.
Defense attorneys said the hung jury was a clear sign that there was reasonable doubt in the much-publicized case.
“If a jury looks at a case and they don't find a reason to convict, that in itself says there is reasonable doubt,” said Stephen Dobson, an attorney for Cunningham.
Assistant U.S. Attorney Laura Voorhees said prosecutors were disappointed in the outcome, but “we respect the jury's decision.” Voorhees said prosecutors will look at all the evidence in coming weeks to prepare for the second trial.
Earlier this year, Bertelsman set bond for Gallion at $52 million and Cunningham at $45 million. Attorneys for the suspended lawyers balked at the bonds, arguing that they were higher than those for any other white-collar crime case in the country. The 6th U.S. Circuit Court of Appeals upheld the bond.
In denying requests Thursday to release Gallion and Cunningham on their own recognizance, Bertelsman said they had an even greater incentive to flee now that a mistrial has been declared.
Each has been charged with one count of conspiracy to commit wire fraud, which carries a maximum penalty of 20 years in prison and a $250,000 fine.
Dobson and O. Hale Almand, Gallion's attorney, said they would examine all their options to get their clients out of jail, where they have been for nearly 11 months.
Shortly after lunch Thursday, jurors sent word that they were not able to come to a unanimous decision.
What kept the seven women and five men from making a decision may remain a mystery. Jurors' names were sealed, and they declined to comment to the news media about the deliberations.
Former clients of the defendants said they were disappointed that the jury could not come to a unanimous decision.
Lisa Swiger, a former Cunningham client who attended all but three days of the trial, said she thought the evidence against them was overwhelming, and she thinks a second jury would probably feel the same.
“I feel that justice will prevail,” Swiger said.
Connie Centers, who testified during the trial and was a client of Mills, said she, too, was disappointed that there was no final decision.
“I am glad that they didn't get bond,” Centers said. “They should suffer just like we suffered.”
But defense attorneys and family members said the defendants have been vilified over the past few years when few people knew the facts of the case. Twelve people who heard their side of the story acquitted one of the men and couldn't reach a verdict on the other two, defense attorneys noted.
Pat Cunningham, Shirley Cunningham's wife, said her husband, Gallion and Mills worked hard on behalf of their clients, getting settlements “10 to 100 times” higher than other fen-phen users who sued.
“These guys were not the villains,” Pat Cunningham said.
Gallion, Cunningham and Mills represented about 440 people who sued fen-phen maker American Home Products in Boone Circuit Court. Many who took the diet-drug combination complained of heart or lung damage.
Fen-phen was taken off the market in 1997, and the suit was settled for $200 million in 2001.
Prosecutors said the three men intended to take the bulk of the settlement. The three attorneys received $65 million that should have gone to their clients, the indictment alleged.
Defense attorneys said the three men made some mistakes but those were ethical violations at most and the lawyers never intended to defraud their former clients.
What happened to the $200 million settlement has been the subject of a Kentucky Bar Association investigation, a Kentucky Judicial Conduct Commission inquiry and a civil lawsuit. A judge in the civil lawsuit has already said the former clients are entitled to at least $42 million, plus $20 million of settlement money that was placed in a non-profit that the lawyers controlled.
The three lawyers have been temporarily suspended from the practice of law but could face further disciplinary action from the Kentucky Bar Association.