Fen-Phen Fraud Lawyers Lose Sixth Circuit Appeal

Shirley Cunningham and William Gallion are down, but they still aren't out.

The Sixth Circuit Court of Appeals rejected the infamous fen-phen lawyers' appeal this week, finding that the pair "participated in a massive scheme to defraud their clients."

Cunningham and Gallion represented 440 clients in a class action lawsuit over diet drug fen-phen. The attorneys were convicted in 2009 of taking more than their agreed-upon rate of 30-to-33 percent plus expenses. While the clients should have been divvying up approximately $135 million, they only received $74 million.

In January, the two disbarred Kentucky attorneys challenged their wire fraud and wire fraud conspiracy convictions before the Sixth Circuit Court of Appeals, arguing that the district court made them “look like bad guys” by releasing 22 findings from the Kentucky Supreme Court against them, even though the high court never held a hearing. Cunningham and Gallion complained to the appellate court that they were deprived their right to a fair trial.

The lawyers asserted three claims regarding the ethics findings evidence:

• Their admissions to the Kentucky Bar Association were barred by Rule 403 of the Federal Rules of Evidence.
• The recitation of the factual findings from the disbarment decisions was hearsay and violated the defendants’ Sixth Amendment right to confront witnesses.
• The charging allegations contained in the disbarment decisions were inadmissible under Rule 403.

The Sixth Circuit Court of Appeals disagreed with Cunningham and Gallion. The court found that the probative value of the Kentucky Supreme Court’s findings was high, and it was not substantially outweighed by a danger of unfair prejudice, confusing the issues, or misleading the jury. While the pair made a stronger argument that the recitation of the Kentucky Bar Association’s factual findings constituted inadmissible hearsay, the court ruled that the defendants’ argument would still fail because any error was harmless.

Finally, the charging allegations challenge also failed based on harmless error. Though some of the Bar’s charging allegations were briefly shown to the jury during a witness’s testimony, the witness did not read the allegations aloud, the allegations were redacted from the jury’s copy of the disbarment decisions, and the other evidence of guilt was overwhelming.

While the Sixth Circuit Court of Appeals decision was a major defeat for Shirley Cunningham and William Gallion, we will probably hear more appeals from the pair. Attorneys for the fen-phen lawyers say they are considering their next steps, which will likely include an en banc rehearing request, reports Bloomberg.

Related Resources:

• U.S. v. Cunningham, Gallion (Sixth Circuit Court of Appeals)
• Attorney Misconduct to Wire Fraud Appeal: Fen-Phen Lawyers Return (FindLaw’s Sixth Circuit Blog)
• Lengthy Sentences for Fen-Phen Attorneys Who Stole Settlement Funds (FindLaw’s Strategist)