- The Washington Times - Wednesday, April 1, 2009

FRANKFORT, KY. (AP) - Two disbarred lawyers accused of scamming their clients out of millions of dollars in a diet-drug settlement were simply following the advice of a nationally known class-action expert, their attorney told jurors at their second trial Wednesday.

Closing arguments wrapped up in U.S. District Court in the case of William Gallion and Shirley Cunningham Jr., who are accused of bilking some 440 clients who had been hurt by the diet drug fen-phen out of their rightful shares of a $200 million legal settlement.

“I submit to you that these defendants got caught with their hand in the cookie jar,” federal prosecutor E.J. Walbourn told jurors, who have heard evidence for the past seven weeks and are scheduled to begin deliberations Thursday morning.

Defense attorney Hale Almand told them the evidence simply isn’t sufficient to convict Gallion and Cunningham. Almand said the two followed the advice of a nationally renowned class-action expert in divvying up the money, and that it was done under the auspices of a northern Kentucky judge.

“I think the government is raising an optical illusion almost,” Almand said.

Gallion and Cunningham are charged with wire fraud and conspiracy to commit wire fraud. The case has been closely watched in the horse racing industry because Gallion and Cunningham are part-owners of 2007’s Horse of the Year, Curlin. The attorneys have since sold an 80 percent share of the horse, who has won the Preakness, Breeders’ Cup and Stephen Foster Handicap.

The criminal case against them was moved to Frankfort after a federal jury in Covington deadlocked last year on a verdict.

Prosecutors contend Gallion and Cunningham cheated their clients out of $94.6 million and paid themselves and others about two-thirds of a 2001 settlement with the maker of the diet drug, which was withdrawn from the market after it was shown to cause heart damage.

In the first criminal trial, 10 of the 12 jurors agreed with the defense, but because the verdict wasn’t unanimous, a judge declared a mistrial. A third defendant, Melbourne Mills of Lexington, was acquitted.

The case has earned attention both for the allegations of widespread misconduct and the complicated assets of the defendants, which include the remaining 20 percent share in Curlin, which is being held in a trust.

Although fen-phen was the subject of a massive national financial settlement, Gallion and Cunningham’s clients opted out of that agreement because their lawyers told them they could get more money pushing it on their own.

But prosecutors say the lawyers didn’t tell their clients, at least at first, that they were part of a group that settled en masse for $200 million, and that the lawyers _ not the drug manufacturer _ were deciding how to slice up the money.

In a separate civil case, Gallion and Cunningham were ordered to surrender $42 million to their clients.



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