Sunday, April 8, 2007

Alleged Plaintiff Counsel Fraud in Connection with Fen-Phen Settlement Money

Interesting article posted on American.com -- Fen-Phen Zen: Some of the lawyers who committed massive fraud are finally being brought to justice, by Ted Frank of the American Enterprise Institute.  Overlawyered.com has a follow-up post on Stanley Chesley's connection.  Here's an excerpt from the Ted Frank article:

It’s the hoariest of Hollywood clichés: adventurers discover a treasure, and then let greed overwhelm them as they try to split the proceeds. Here, three Kentucky lawyers, William J. Gallion, Melbourne Mills Jr., and Shirley A. Cunningham Jr., managed to snag for themselves a share of a $200 million settlement with American Home Products (now known as Wyeth) for 440 clients who claimed to be injured from their use of the diet drug fen-phen. But the lawyers weren’t satisfied with the tens of millions of dollars their contracts with their clients would have paid them, and administered the settlement to leave their clients with only $74 million, a fraction of what they were supposed to receive.

A “charity” was established with $20 million of leftover fund proceeds, with the attorneys hired as directors for $5,000 a month. $27.7 million more of that $74 million may have been intended to be diverted; it was distributed to clients only after the state bar started sniffing around in 2002. Of course, none of this could have happened had the judge not approved the settlement as “fair and equitable”—but Judge Joseph F. Bamberger was himself being paid $5,000 a month from the same charity as a director. Bamberger’s former law partner was paid a $2 million fee even as he was buying a Florida house jointly with the judge. (Bamberger’s defense is that he approved the settlement without reading it. Let’s hear it for judicial oversight.)

Some of the greed is farcical. Cunningham spent a million dollars to endow a chair in his own name at Florida A&M Law School—and negotiated to sit in his own chair for a six-digit salary. A school audit, according to a report in the St. Petersburg Times, says he never did any work. There was possibly even intramural greed: Court filings claim that Cunningham and Gallion at first hid $50 million of the settlement from Mills; Mills himself was sued by his secretary, who unsuccessfully claimed she had been stiffed of a promised Erin-Brockovich-sized share for her role in thinking up the business strategy of advertising for pharmaceutical plaintiffs.

BGS

http://lawprofessors.typepad.com/mass_tort_litigation/2007/04/alleged_plainti.html

Ethics, Fen-Phen, Settlement | Permalink

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