FRANKFORT — Federal prosecutors say two disbarred lawyers should serve more than 30 years in prison for bilking millions of dollars from a $200 million fen-phen settlement that should have gone to their former clients.
But defense lawyers, family and friends of disbarred Lexington-area lawyers William Gallion and Shirley Cunningham Jr. argue in court documents that the two men should receive little or no prison time because they are nearly broke, have already served 18 months in jail and have helped many people over the years.
U.S. District Judge Danny Reeves will sentence the two men on Monday in federal court in Covington, closing the latest chapter in one of the most-watched and longest-running legal dramas in recent Kentucky history. Reeves also will decide how much money the duo should have to repay their former clients.
Questions over what happened to the $200 million fen-phen settlement have spawned a civil lawsuit, a Kentucky Bar Association investigation, a judicial misconduct inquiry and two criminal trials over the past five years.
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Monday's sentencing might not end the saga. Both men have said they will probably appeal their convictions.
Gallion and Cunningham were convicted in April of conspiracy and wire fraud for their part in taking $94 million that should have gone to more than 440 clients in a 2001 Boone Circuit Court settlement over damage caused by the diet drug fen-phen.
It was the second criminal trial for the two men. In July 2008, a federal judge declared a mistrial after a jury deliberated for eight days without delivering a verdict. A third defendant, Melbourne Mills Jr., who originally was charged with Gallion and Cunningham, was acquitted by the same jury.
In court documents, federal prosecutors argue that the two men should receive what would probably be life sentences — 35 years for Gallion, 58, and 30 years for Cunningham, 54.
Assistant U.S. Attorney Laura Voorhees wrote that theirs were "the most deplorable and lucrative white-collar crimes prosecuted in this district" and that the two used the judicial system to commit what was "tantamount to the robbery of 440 victims."
During the trial, prosecutors showed that the two men and other attorneys on the case took the bulk of the settlement and that only $74 million went to the 440 clients who alleged that the diet drug fen-phen had damaged their hearts and lungs.
The lawyers on the case sealed the 2001 Boone Circuit Court settlement, threatened their clients with jail or fines if they talked about the settlement and lied to the original judge and the Kentucky Bar Association, prosecutors said.
"The fraud that he committed upon unsuspecting individuals is unspeakable," Voorhees wrote in an Aug. 4 court document referring to Gallion.
Voorhees said that Gallion and Cunningham used the proceeds from the fen-phen settlement to fuel a lavish lifestyle that included "luxury homes, trips, extravagant cars, Thoroughbred horses and horse racing."
Gallion and Cunningham were part owners of Curlin, the 2007 and 2008 Horse of the Year.
Hundreds of their former clients have written letters to Reeves, saying that Gallion, Cunningham and other lawyers on the case threatened them not to tell anyone — including their spouses — about the settlement. Many victims wrote that they could have used the money taken by the lawyers to help with medical bills or to help pay for homes that were in foreclosure.
The names of the victims were redacted in court documents.
Meanwhile, letters written by dozens of relatives, associates and friends of Gallion and Cunningham, show a different side of the two men.
Both grew up relatively poor and worked hard to get through college and then law school. Gallion, his brothers and sisters said, looked after his elderly mother, took care of all of her expenses and never asked his siblings to contribute. Gallion also has been a caretaker and advocate for his disabled son, now 30.
Cunningham did pro bono work, particularly for the elderly, allowed charities to use his box at the Lexington Legends for free and has been the main adviser and caretaker of his 89-year-old mother.
Cunningham's ex-wife, Carol Cunningham, even wrote a letter in support of her former husband, saying that he has been a devoted son to his mother and father to his sons. "Shirley has helped hundreds of people in his lifetime," Carol Cunningham said.
Defense lawyers argue that the two men have already paid for their crimes. They have spent about 18 months in jail. They were jailed right after the April verdict and spent a year in jail before the first criminal trial in 2008.
"He's gotten a lot of support not just from family but from a wide variety of colleagues, friends and community members who recognize that he has contributed greatly to his community and that he has many positive attributes," said David Davidson, an attorney for Cunningham.
Lawyers for Cunningham argue that probation would be appropriate. Cunningham has lost his law license and is nearly broke, his lawyers argue. Cunningham was not experienced in class-action law and was following the advice of others in the distribution of the $200 million settlement, they say.
The other lawyers that he relied on have not been charged, Cunningham's lawyers argue.
Gallion's lawyer, O. Hale Almand, also noted that Gallion has lost his law license. Gallion's lawyer concedes that probation is unlikely but says that a sentence of 35 years would be excessively punitive.
"Further incarceration would serve no legitimate purpose," Almand wrote.