Attorneys Convicted Over Diet-Drug Settlement Sentenced to Jail, Ordered to Pay $127 Million

Brett Barrouquere

The Associated Press

August 18, 2009

A pair of former attorneys have been sentenced to decades in federal prison and ordered to pay $127 million in restitution for defrauding hundreds of clients in a diet-drug settlement.

U.S. District Judge Danny Reeves also on Monday ordered William Gallion and Shirley Cunningham Jr. each to pay another $30 million forfeiture to the government.

Gallion, 58, received 25 years in prison and would be at least 83 years old at the end of his sentence. Cunningham, 54, received 20 years in prison and would be 74 at the end of his prison term. Both men announced plans to appeal.

Gallion and Cunningham, the original owners of 2007 Horse of the Year Curlin, were convicted of scamming more than 400 clients out of $94.6 million while representing them in a case involving a $200 million settlement involving the diet drug fen-phen. They were found guilty in April of eight counts of wire fraud and one count of conspiracy to commit wire fraud.

"At bottom ... this case involved unmitigated greed," Reeves said.

Prosecutors contended Gallion and Cunningham cheated their clients out of the money and paid themselves and others about two-thirds of a 2001 settlement with the maker of the diet drug fen-phen, which was pulled from the market after users had heart problems related to the drug.

Former clients of Gallion and Cunningham, some carrying oxygen tanks and bearing scars of health issues, packed the courtroom as Reeves passed sentence on the men. After the hearing, Lisa Swiger of Magoffin County, Ky., said both the attorneys and their former clients have suffered because of the swindle.

"There's no winners or losers in this case," Swiger said. "There's only victims on both sides. May God have mercy on us all."

Connie Centers of Lawrenceburg, Ky., was less forgiving. If Gallion had handled the settlement correctly, Centers said, everyone would have come out ahead.

"He'd have been rich, I'd have been rich," Centers said. "I wouldn't have been well, but I'd have been rich."

After the hearing, Cunningham's wife, Pat Cunningham, said she hoped an appeals court would free her husband.

"I still believe my husband is innocent," Pat Cunningham said.

Neither Gallion nor Cunningham, both of whom have been disbarred, spoke during the sentencing hearing. Instead, they opted to let attorneys and friends tell Reeves about their pre-fen-phen careers, as well as their community service.

O. Hale Almand, Gallion's attorney, told the judge a good legal career and life are gone for his client.

"His life, essentially as he knew it, is over," Almand said.

Bill Johnson, an attorney for 52 years who represented Cunningham before the Kentucky Bar Association, said Cunningham never showed an inclination to harm his clients and he should receive credit for setting up foundations to help children and taking many cases for the poor without fee.

"I can simply ask what I've asked all my life: That is to do justice under the circumstances," Johnson told the judge.

Assistant U.S. Attorney Laura Voorhees told Reeves neither man has apologized to his former clients and both have lied throughout the proceedings.

"This case was driven by arrogance, by greed," Voorhees said. "They should be sorry."

Gallion and Cunningham are also being pursued by their former clients in civil court. In the civil suit, a judge awarded 400-plus former clients $42 million.

Angela Ford, a Lexington, Ky., attorney representing the former clients in the civil suit, said $23 million has already been collected, but she doesn't expect to find the full $127 million because Gallion and Cunningham have not been forthcoming about their assets.

"We'll be lucky to collect half that amount," Ford said.

Stephen Dobson, a Tallahassee, Fla.-based attorney for Cunningham, hoped for a smaller judgment from the judge because neither Gallion nor Cunningham have the money to pay full restitution.

"I can assure you they don't," Dobson said. "But, they never had that much to start with."

The two men were the original owners of 2007 Horse of the Year Curlin before selling an 80 percent interest in the horse to a group led by winemaker Jess Jackson.