Three attorneys accused of bilking their clients in a diet drug settlement must repay at least $62.1-million in settlement funds and interest, a judge ruled Friday.
Special Judge William Wehr ordered William J. Gallion, Shirley A. Cunningham Jr. and Melbourne Mills Jr. to repay $42-million taken from the settlement and $20.1-million in interest.
The attorneys are being sued by about 400 former clients who claim the lawyers took too much money as part of a $200-million fen-phen settlement.
A federal grand jury indicted the attorneys last month, charging them with conspiring to commit wire fraud in representing more than 400 people in a lawsuit over the diet drugs. The lawyers, who were temporarily suspended from practicing law by the Kentucky Bar Association, pleaded not guilty. Federal prosecutors want the lawyers to forfeit any assets they have to pay restitution to their former clients.
Wehr had previously ruled that the three attorneys breached their duty to their clients. A trial to determine punitive damages has been delayed while the criminal case, scheduled for trial in October, is resolved.
Wehr, in a four-page ruling, said Cunningham, 52, Gallion, 56, and Mills, 76, overpaid themselves by misappropriating about $64-million from the settlement. Wehr said $20.5-million of that is still being contested, and another $1.5-million is justifiable legal fees.
Lawyers for Gallion, Mills and Cunningham had argued that having a civil damages trial before the criminal trial could force their clients to choose between their right to testify on their own behalf and their right not to incriminate themselves. The attorneys have previously testified in depositions and provided bank and financial records regarding the settlement in the civil case.
Wehr found last year in the civil case that the lawyers had breached their duties and paid themselves millions more than what they were owed, more than $20-million apiece. In April, he said they would have to repay up to $64.4-million they misappropriated, minus legitimate expenses.
The 440 plaintiffs collected about $74-million of the $200-million settlement.