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Three attorneys facing federal criminal charges in a 2001 fen-phen settlement apparently violated "numerous" procedural and ethical rules in their handling of the class-action case, according to written reports from two legal experts filed by prosecutors in U.S. District Court at Covington.
"A Kentucky lawyer whom I greatly admire once referred to the misconduct of a lawyer in a legal malpractice action as 'this dog's breakfast of facts,'" wrote one of the experts, Edward Brewer III, a law professor at Northern Kentucky University. "If ever there were wrongdoing by lawyers that fit that description, then this case lies at the top of the bowl."
Richard Bales, another professor at NKU's Chase School of Law, wrote in less colorful prose, but concluded that defendants William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr. "violated several of the basic rules governing class actions" in the fen-phen case.
The reports by Bales and Brewer, filed by federal prosecutors in March, were under seal until this week. Brewer and Bales presumably will be expert prosecution witnesses in the criminal trial of Mills, Cunningham and Gallion scheduled May 12 in Covington.
In another development, a member of Gallion's defense team filed notice with the court that he had been suspended on Tuesday from practicing law in the federal Eastern District of Tennessee. A U.S. district judge found that attorney Herbert Moncier had engaged in unethical conduct during a November 2006 hearing.
Moncier declined to comment Wednesday on how that might affect Gallion's case, or whether he will continue representing Gallion. A pre-trial conference in the case is set for Thursday morning.
Cunningham, Gallion and Mills are charged with one count each of conspiracy to commit wire fraud in their handling of funds from the $200 million fen-phen settlement. They allegedly kept millions of dollars from the settlement that should have gone to their clients. The three could be sentenced to up to 20 years in prison if convicted, and they already are facing a $42 million judgment in a Kentucky state civil suit filed by their former clients.
Brewer and Bales based their reports on reviews of the original fen-phen class-action suit that Gallion, Mills and Cunningham filed in Boone Circuit Court in 1999 on behalf of clients who suffered heart damage after taking the diet-drug combination.
The two law professors said the attorneys violated procedural rules in such ways as failing to notify clients that a class-action had been certified; providing no notice that a settlement was being made; failing to request a hearing prior to settlement; and failing to get a court order approving all their fees.
Bales said that while a "reasonable fee" in the case would have been $40 million and $60 million, the lawyers actually "extracted a fee of approximately $106 million," plus another $20 million for a charitable trust which they created and controlled.
Brewer argued that the attorneys never gave Boone Circuit Judge Jay Bamberger a true picture of their fees; tried to convince individual clients to accept less money than specified in the fen-phen settlement; and never told clients that up to $20 million was being placed in the charitable trust.
