Fen-Phen Lawyers Finally Indicted

11/17/2008 | Legal Malpractice

Well, it finally happened. Three of the four Fen-Phen lawyers were indicted by for conspiracy to commit wire fraud by a federal grand jury for their role in a multi-million dollar drug settlement. If you are unfamiliar with the allegations, read them here. The Covington, Kentucky grand jury accused Melbourne Mills Jr., Shirley Cunningham Jr., and William Gallion each of one count of fraud and demanded that they forfeit $46 million in misappropriated funds and more than $21 million in fees that had parked in a charitable fund. The Courier Journal has been following the case since its beginning and reports "The civil case has been marked by some sensational disclosures. Mills testified in a deposition that the lawyers "tore up or burned" notes showing how much they paid themselves and their clients. He said that he and Gallion and Cunningham held a secret meeting at Gallion’s house in 2001 to divide an extra $10 million beyond what they’d already paid themselves from the settlement. Mills also said Gallion and Cunningham initially withheld another $27.7 million, which they turned over to their clients only after the Kentucky Bar Association began investigating the case, newly filed court records show. Mills said the additional payments also came only after he discovered that the settlement was for $50 million more than the other two lawyers had told him – and after he confronted Gallion at a party and called him a “thief.” A month later, Gallion and Cunningham sought and received a judge’s permission to distribute the additional money. The Courier-Journal also has disclosed that Modlin and Bamberger were partners in a real-estate business and that they now own a Florida home together, along with another judge.