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Thursday, October 31, 2013

Fen Phen Diet Drug Claims Another Victim, This Time It's Fraudster Lexington Lawyer Seth Johnston Who's Off To Prison.

A jailed Lexington attorney who helped collect a judgment for
victims sickened by the diet drug fen-phen pleaded guilty
Wednesday to six federal charges.

Seth Johnston pleaded guilty to two counts of mail fraud,
one count of wire fraud, conspiracy to obstruct justice,
conspiracy to distribute synthetic marijuana and tax fraud,
according to Kyle Edelen, a spokesman for the U.S.
Attorney's office. He entered the plea Wednesday in U.S.
District Court in Lexington.

Johnston had been the focus of a federal investigation into
his financial holdings. The attorney had been jailed on
criminal charges involving synthetic marijuana — the
catalyst for the federal investigation into his finances.

mong the items subject to forfeiture are a horse,
Woodland Dream, and its foal, which has been ordered to
be sold at the Keeneland November Breeding Stock Sale.
Also subject to forfeiture is the Glenn's Creek Beer Exchange
on East High Street, and the Glenn's Creek Brewer's Union
on McCracken Pike in Woodford County, according to court

The guilty plea involves allegations that he defrauded Angela Ford,
an attorney in Lexington, who represented plaintiffs in a civil law suit
in Boone Circuit Court.
That lawsuit alleges breach of fiduciary duties
related to fraud in handling the settlement obtained as a result of a
class-action lawsuit against the manufacturers of the diet drug Fen-Phen.

Ford obtained summary judgment against three attorneys in the lawsuit.
This summary judgment award was subsequently reversed in part and is
currently pending appeal in the Kentucky Supreme Court.

Ford hired Johnston to assist in the collection of assets to satisfy the
judgment, according to a court document.

Prosecutors said in a court document that Johnston perpetrated a scheme
to defraud Ford, the attorney representing the plaintiffs in the lawsuit, by
failing to report his collection of funds for purposes of satisfying the judgment
obtained to benefit plaintiffs, and instead used the funds for his benefit.
Johnston was also accused of using assets of an estate that he was hired to
distribute for his own benefit.
He represented that the estate contained cash assets of approximately
$731,601.38. In reality, he was aware that the estate consisted of
approximately $1.8 million in cash assets, prosecutors alleged in
court documents.
On other count, Ford hired Johnston to create three limited liability
companies. Ford was to be the sole member and manager of the LLCs,
and the LLCs were to be created solely for her benefit. Ford and Johnston
set up bank accounts for the three LLCs, and Ford deposited, caused to
be deposited, or intended to be deposited, a combined total of approximately
$3.5 million into the three bank accounts. Johnston was not to spend, invest,
or move the money without Ford's further instruction. Johnston was to bill
Ford for the time he spent creating the LLCs and any accompanying
formation documents.
Johnston also acknowledged a scheme to defraud Angela Ford and
misappropriated some of Ford's funds without her knowledge He provided
documents to hide the scheme regarding the status of her money, prosecutors
He also pleaded guilty to filing false income tax returns.
Johnston was being held at the Fayette County Detention Center.
Some of the offenses carry a maximum of 20 years in prison.
Johnston's attorney Bernard Pafunda declined to comment.
(Follow story source here.)

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