Legal Ethics

Fen-Phen Lawyer Defends Deposit of Settlement Funds Into Personal Accounts


One of three fen-phen lawyers on trial for allegedly defrauding their clients in a fen-phen case testified yesterday that he and a co-defendant deposited tens of millions of dollars of settlement funds into their own accounts for “safekeeping.”

William Gallion appeared confident and composed during testimony yesterday, the Louisville Courier-Journal reports. Gallion is charged with conspiracy to commit fraud along with lawyers Shirley Cunningham Jr. and Melbourne Mills Jr. They are accused of keeping $45 million in settlement money for themselves and putting another $20 million into a charity they controlled.

Gallion said he and Cunningham deposited funds into personal investment accounts because the settlement made the lawyers responsible for paying claims, the story says. The defendants have claimed they held back money in the settlement because they feared new suits would be filed that would have to be covered by the $200 million settlement.

Gallion also testified that a well-known plaintiffs lawyer who has not been charged in the case, Stanley Chesley, came up with the idea to put $20 million in excess funds into a charitable trust, according to the article. Chesley backed the idea as a way to “do something wonderful for the citizens of Kentucky,” Gallion testified.

Gallion denied that he had ordered a paralegal who worked for Mills to destroy documents. “That never occurred,” he said. Paralegal Rebecca Phipps had testified to the contrary, and said her boss believed Cunningham and Gallion had tried to cheat him out of his fair share of the fees.

Gallion described Phipps in negative terms, according to the Courier-Journal. “I hate to criticize anyone, but Rebecca Phipps believed she was a lawyer. She always wanted to step over the line and act like she had the authority and knowledge to make real decisions.”

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