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Lengthy Sentences for Fen-Phen Attorneys Who Stole Settlement Funds

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By Brian Kumnick on August 19, 2009 1:50 PM

Consider yourself deterred.

Two former lawyers were handed hefty federal prison sentences on Monday for stealing settlement funds from their clients. William Gallion and Shirley Cunningham had represented over 400 clients in a drug-injury lawsuit against pharmaceutical company American Home Products (now Wyeth) over fen-phen diet drugs.

Gallion and Cunningham were sentenced to 25 and 20 years, respectively, after their convictions for fraud and conspiracy.

When the attorneys agreed to a $200 million settlement with AHP, according to the Louisville Courier-Journal, they would have been entitled to a fee in the neighborhood of $60 million. Instead, they kept the settlement amount secret and managed to set aside over $100 million for themselves and others.
The attorneys claimed the money set aside was intended to pay any additional victims who might come forward, but none ever did, and the two apparently decided to keep it for themselves rather than distribute it to the plaintiffs.

At the sentencing, U.S. District Judge Danny Reeves accused the two of "unbridled greed," imposing the stiff sentences in part because the men had showed no remorse, and in part to deter othe lawyers from stealing settlement funds. The sentences were actually less than prosecutors had asked for.

The two were also hit with a restitution penalty. They will owe their victims another $127 million, on top of the $25 million judgment already levied in a civil proceeding. The lawyers' defense -- relative inexperience in handling large class-actions -- clearly did not hold water with the jury or with Reeves.

So, decades in federal prison, at least $150 million in monetary penalties, and for good measure, permanent disbarment. Obviously, this was an extraordinary theft involving tens of millions of dollars, but it will still be worth remembering the next time you are tempted, even a little, to mess with client funds.

  • Fen-Phen (from FindLaw's Accident and Injury Center)

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