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Thursday, March 21, 2013

Kentucky Supreme Court Disbars Last Of Remaining Exceedingly Greedy And Fraudulent Fen Phen Lawyers, Stan Chelsey.

Famed lawyer Stan Chesley disbarred for fen-phen case misconduct

 
Famed Cincinnati plaintiffs lawyer Stan Chesley, who was dubbed the “master of disaster” for winning billions of dollars for victims of hotel fires, toxic spills, airplane crashes and defective products, has been disbarred by the Kentucky Supreme Court for misconduct in the state’s fen-phen case.

The high court’s decision Thursday could affect multiple cases in which the Cincinnati-based Chesley has a hand across the country.
By stripping his Kentucky license, the court in all liklihood ended his career.

Although Chesley, is also licensed in Ohio, it is virtually automatic he will be disbarred there as well; the Ohio Supreme Court’s disciplinary counsel has said no Ohio lawyer has ever been permanently disbarred in another state and not been disbarred in Ohio as well.
Forbes magazine once said that Chesley struck fear in the hearts of “even the biggest, most powerful corporate defendants.”

Chesley is the sixth lawyer to be disbarred for the role in the state’s diet drug settlement, in which Lexington attorneys William Gallion, Shirley Cunningham Jr. and Melbourne Mills Jr., were found to have defrauded their 440 clients by taking two-thirds of the $200 million diet-drug settlement for themselves and other lawyers and consultants.

Chesley claimed his only role was negotiating the settlement, for which he was paid paid a $20.5 million fee – and that he had no duty to the clients.
“I was not a lawyer for those people,” he proclaimed in a 2006 interview, after the first questions were raised about the deal.

But a hearing officer who recommended Chesley’s disbarment found that he was “fully aware” that most of the settlement didn’t make its way to the victims and should have known by “fifth-grade arithmetic” that he had been paid $7.6 million more than he was entitled to under his contract.
William Graham, a retired judge, said Chesley's "callous subordination" of his clients' interests to his own greed was "shocking and reprehensible” and covered up his colleagues' misdeeds and took $7.6million in excessive fees, which Graham said he should pay back to clients.

Graham found that Chesley was "fully aware" that the major part of the $200million settlement he helped negotiate for the 431 victims of the diet drug wasn't given to clients.
Graham found that Chesley lied to a judge, covered up his colleagues' misdeeds and took $7.6 million in excessive fees

The decision ends a career in which Chesley, the son of Ukrainian immigrants, amassed fabulous wealth as the lead lawyer in some of the world’s biggest class-action cases.
He and his wife, a federal judge, live in what The Cincinnati Enquirer has described as the most expensive home ever sold in greater Cincinnati, a 25-room, 27,000-square-foot French chateau that he bought in 2004 for $8 million. The sprawling slate-roof mansion on five acres is attached to an eight-car garage and a carriage house and surrounded by 300 acres of forest and fields.
Chesley's fleet of more than 20 cars have included Jaguars, Rolls- Royces, Ferraris, Aston Martins and Bentleys.

He raised millions of dollars for the Democratic Party and for former President Bill Clinton, who three times came to his home for fundraisers; Clinton appointed Chesley’s wife, Susan Dlott to the federal district bench in 1995.

Chesley has said that he worked for 17 years as an obscure products-liability lawyer until the May 28, 1977, fire at the Beverly Hills Supper Club in Southgate, Ky., which killed 165 people.
The nightclub's owner had only $1 million in insurance, but Chesley devised the novel strategy of suing the aluminum-wiring industry, whose product was determined to have caused the blaze, as well as more than a dozen other companies. He eventually won $49 million in verdicts and settlements.
The triumph helped catapult him to the leading ranks of disaster lawyers and into a prominent role in the litigation over the the 1980 MGM Grand hotel fire in Las Vegas, the 1985 Arrow Air crash that killed 248 Kentucky-based soldiers, and the 1988 bombing of Pan Am Flight 103 over Lockerbie, Scotland.

Gallion, Cunningham and Mills brought him into the fen-phen care to negotiate a deal with the manufacturer of fen-phen, a diet drug combination that was withdrawn from the market after it was shown to cause heart valve damage.

And Chesley boasted that he increased the original settlement offer from $20 million to the $200 million for which the case was finally settled in 2001.
Under their contingency-fee contracts, Mills, Cunningham and Gallion should have been paid about $60 million of the $200million settlement.
Instead, they took $94.6 million for themselves and others, including Chesley, and put $20 million into a foundation that Cunningham, Gallion and others paid themselves to manage.
Chesley should have collected about $14 million.

Angela Ford, a Lexington lawyer later hired by the clients, has said that Chesley was "up to his eyeballs" in the scheme.
Chesley's contract called for him to get 21 percent of the lawyers' gross fees, so his own take would have shown that the other lawyers took about $100 million, or half the settlement.
Gallion and Cunningham were convicted of fraud and sentenced to 25 and 20 years in prison, respectively, while Mills, who argued he was too drunk to have participated, was acquitted.
Chesley, who testified for the government against Gallion and Cunningham under a grant of immunity, was never charged. 
Ford won a $42 million judgment against Gallion, Cunningham and Mills but it was reversed last year by the Kentucky Court of Appeals, which said it should have been awarded without a trial. The case is now pending at the state Supreme Court.

Chesley joined five other lawyers who have been disbarred in the scandal. In additional to Gallion, Cunningham and Mills, they are David Helmers, who worked for Gallion, as well as former circuit judge Judge Joseph "Jay" Bamberger, who approved the settlement without reading it first, even though one of the beneficiaries was a close friend.

A hearing officer who had recommended Bamberger’s disbarment said he had sanctioned the “largest-scale fraud in the history of the Commonwealth of Kentucky” while the state Supreme Court said his conduct “shocked the conscience.”
Bamberger signed an order saying that payments to the 440 clients and their lawyers were fair and reasonable, even though he had never asked for, or been told, any of the settlement's details. He also personally benefited by accepting an appointment as a paid director of the nonprofit foundation into which the lawyers poured $20 million in leftover settlement money after telling clients the amount was minuscule.

In taking away Chesley’s licenses, the Supreme Court affirmed a decision of the Kentucky Bar Association’s board of governor’s last June to disbar him.
The bar accepted the recommendation of Graham, who found that Chesley led a “clandestine meeting" with Judge Joseph Bamberger in February 2002 to get the court's "stamp of approval upon this criminal enterprise" and his approval of fees totaling 49 percent of the settlement.
Graham said Chesley also responded with "misleading," "incomplete" and in some instances "outright falsehoods" when the bar association began investigating him.

"Clearly from the evidence, Chesley believed that he would be able to 'take his money and run' after the settlement and avoid any responsibility in the distribution of the settlement to the clients," Graham said.

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