Counsel: PI Lawyer's Aide Was FBI Mole

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A former legal assistant to one of three jailed personal injury lawyers accused of bilking $65 million from clients in diet drug litigation allegedly spied on her boss for the FBI and wore a wire to confidential attorney-client meetings.

In a federal-court filing in Kentucky last week, counsel representing Melbourne Mills Jr., 76, says the Federal Bureau of Investigation persuaded Mills’ assistant, Rebecca Phipps, through her own counsel, as far back as 2006, to spy on him, reports the Lexingon Herald-Leader. An Associated Press article reprinted in New York Lawyer (reg. req.) says Phipps wore a wire.

This intentional violation of the attorney-client privilege between Mills and his own counsel, in meetings about civil litigation against Mills over his handling of the diet drug litigation, violated Mills’ right to counsel, contends James Shuffett, one of the lawyers currently representing Mills.

The federal court filing says the spying by Phipps is grounds to bar much of the evidence the prosecution now plans to introduce against Mills at his upcoming January 2008 criminal trial for conspiracy to commit wire fraud, according to the newspaper. Mills and his counsel apparently found out about the role Phipps played for the FBI through material disclosed by prosecutors in discovery.

A lawyer for Phipps reportedly confirmed that she has cooperated with the FBI.

Mills and two other Kentucky lawyers, Shirley Cunningham Jr., 52, and William Gallion, 56, remain in jail in Boone County following a federal judge’s revocation of their bond at an Aug. 10 hearing. reports the Cincinnati Post. U.S. District Judge William O. Bertelsman did so out of concern that they might flee with their assets, and says he won’t consider setting bond until the three account for their income and expenditures since 1999.

Gallion and Cunningham contend that the order to account for their expenditures during that time violates their Fifth Amendment right against self-incrimination, the newspaper reports. They, like Mills, each face one count of conspiracy to commit wire fraud.

Additional details of the case are discussed in an earlier ABAJournal.com post.

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