Stan Chesley Held Liable to Pay Millions in Fen-Phen Case
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Stan Chesley, 78, sometimes called the father of modern class-action litigation was disbarred in Kentucky last year and allowed to permanently retire from the bar in Ohio. Also called the "master of disaster" Chesley had been found guilty of violating eight ethics rules by the Kentucky Bar Association including engaging in dishonesty, deceit and fraud and obtaining an unreasonable fee.
Most of the action against Chesley revolved around the Fen-Phen case settlement where Chesley was supposed to collect about $13 million but took more than $20 million. In the Fen-Phen matter, the three involved lawyers, William J. Gallion, Shirley Cunningham Jr. and Melbourne Mills were found to have taken about half of the $200 million judgment, while their contracts allowed them to take only one-third.
Chesley was hired by the lawyers on record in the matter, but Boone Circuit Court Judge James Schrand held this week that Chesley is also jointly and severally liable for the actions of the lawyers and the uncollected portion of the $42 million judgment previously awarded against them.
Two of the lawyers are in prison and aren't due to be released any time soon. Gallion, 63 is doing 25 years for fraud in Louisiana and Cunningham is serving 20 years in Mississippi. Even though Chesley argued that he had not been part of the matter after negotiating the settlement, Schrand noted that he had assumed the same ethical duties as the other lawyers when signing on as co-counsel. The court also found that he allowed the misconduct to happen with full knowledge and thus ratified it.
Chesley had saved himself from prosecution earlier in the case by testifying for the government at the criminal trial of the other lawyers. The new order puts Chesley in a position where he might have to pay up to $25 million as only $17 million of the amount awarded to be collected from the lawyers in the case have been realized.
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