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USA. v. S HIRLEY A. CUNNINGHAM , JR.

USA. v. S HIRLEY A. CUNNINGHAM , JR.

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Published by Lee Davis
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff-Appellee, Nos. 09-5987/5998 v. > , SHIRLEY A. CUNNINGHAM, JR. (09-5987) and WILLIAM J. GALLION (09-5998), Defendants-Appellants. N Appeal from the United States District Court for the Eastern District of Kentucky at Covington. Nos. 07-00039-001; 07-00039-002—Danny C. Reeves, District Judge.

Fen-phen decision from 6th cir. affirming conviction of two attorneys who defrauded clients out of nearly 2/3 of a 200 million settlement.
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff-Appellee, Nos. 09-5987/5998 v. > , SHIRLEY A. CUNNINGHAM, JR. (09-5987) and WILLIAM J. GALLION (09-5998), Defendants-Appellants. N Appeal from the United States District Court for the Eastern District of Kentucky at Covington. Nos. 07-00039-001; 07-00039-002—Danny C. Reeves, District Judge.

Fen-phen decision from 6th cir. affirming conviction of two attorneys who defrauded clients out of nearly 2/3 of a 200 million settlement.

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Published by: Lee Davis on May 06, 2012
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RECOMMENDED FOR FULL-TEXT PUBLICATION 
Pursuant to Sixth Circuit Rule 206File Name: 12a0113p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT_________________
U
NITED
S
TATES OF
A
MERICA
,
Plaintiff-Appellee,v.
S
HIRLEY
A.
 
C
UNNINGHAM
,
 
J
R
.
 
(09-5987)
 
andW
ILLIAM
J.
 
G
ALLION
(09-5998),
 Defendants-Appellants.
X----
>
,----N
Nos. 09-5987/5998
Appeal from the United States District Courtfor the Eastern District of Kentucky at Covington.Nos. 07-00039-001; 07-00039-002—Danny C. Reeves, District Judge.Argued: January 17, 2012Decided and Filed: May 1, 2012Before: BATCHELDER, Chief Judge; CLAY and GILMAN, Circuit Judges._________________
COUNSELARGUED:
T. Clifton Harviel, HARVIEL LAW OFFICES, Memphis, Tennessee, H.Louis Sirkin, SIRKIN KINSLEY & NAZZARINE CO., LPA, Cincinnati, Ohio, forAppellants. Vijay Shanker, UNITED STATES DEPARTMENT OF JUSTICE,Washington, D.C., for Appellee.
ON BRIEF:
T. Clifton Harviel, HARVIEL LAWOFFICES, Memphis, Tennessee, H. Louis Sirkin, Scott Ryan Nazzarine, SIRKINKINSLEY & NAZZARINE CO., LPA, Cincinnati, Ohio, for Appellants. Vijay Shanker,UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., Charles P.Wisdom, Jr., ASSISTANT UNITED STATES ATTORNEY, Lexington, Kentucky,Laura K. Voorhees, E.J. Walbourn, ASSISTANT UNITED STATES ATTORNEYS, Ft.Mitchell, Kentucky, for Appellee.
1
 
Nos. 09-5987/5998
United States v. Cunningham et al.
Page 2
_________________OPINION_________________
RONALD LEE GILMAN, Circuit Judge. Shirley Cunningham, Jr., and WilliamGallion were two of three Kentucky lawyers who represented several hundred Kentuckyclients in a mass-tort action against the manufacturer of the defective drug “fen-phen.”They settled the case for $200 million, which entitled them under their retaineragreements to approximately $22 million each in attorney fees. But rather than limitthemselves to what they had contractually earned, Cunningham and Gallion concocteda fraudulent scheme to take from their clients almost twice that amount. The scheme didnot work out as planned: Cunningham and Gallion were caught, subsequently disbarredfrom practicing law in Kentucky, and indicted on one count of conspiracy to commitwire fraud, in violation of 18 U.S.C. §§ 1343 and 1349.After a mistrial, a superseding indictment was issued that again chargedCunningham and Gallion with one count of conspiracy to commit wire fraud, but addedeight counts that specifically detailed the wire communications that were part of thescheme. The two men were convicted on all counts at their second trial. They haveappealed and now attack their convictions on numerous grounds. For the reasons setforth below, we
AFFIRM
the judgment of the district court.
I. BACKGROUNDA.Factual background
In the 1990s, the diet drug popularly known as “fen-phen” (named for thecombination of fenfluramine and phentermine) was used by an estimated six millionAmericans. Fen-phen was initially hailed as a miracle drug, yet turned out to beanything but when it was found to cause heart-valve dysfunctions in as many as a thirdof its users. These dysfunctions soon produced injuries, which in turn producedlitigation.
 
Nos. 09-5987/5998
United States v. Cunningham et al.
Page 3
One lawsuit in particular marks the factual starting point for this appeal. In 1998,a group of injured fen-phen users in Kentucky, represented by Kentucky lawyers ShirleyCunningham, William Gallion, and Melbourne Mills, brought a prospective class actionagainst American Home Products (AHP), the drug’s manufacturer. Also named asdefendants in the lawsuit were Rex Duff, a Kentucky doctor who had prescribed fen-phen to many of the injured plaintiffs, as well as the clinic that Duff owned and operated.The case was certified as a class action in May 1999, but no notice was given to potentialclass members.While the lawsuit was pending in Kentucky state court, another case against AHPwas proceeding as a federal multi-district class-action claim in Pennsylvania. Thefederal litigation eventually resulted in a nationwide class-action settlement in August2000, which was approved by the Pennsylvania district court supervising the case.Under the terms of the settlement, which defined the class as all persons in the UnitedStates who had used fen-phen, the Kentucky plaintiffs would have received a share of the total settlement amount in exchange for releasing their claims against AHP. But onthe advice of their lawyers, the Kentucky plaintiffs opted out of the nationwidesettlement, preferring instead to take their chances in the state-court action. A total of approximately 431 clients represented by either Cunningham, Gallion, or Mills optedout.As a tactical move, opting out made financial sense for both the clients and theirattorneys. The clients believed (correctly, as it turned out) that they would receive amore generous recovery by pursuing their own action in state court. And if theyreceived such a recovery, their attorneys stood to make huge amounts of money in feesbecause each attorney had entered into retainer agreements with his respective clientsentitling him to roughly a third of each client’s recovery.Because the state-court action remained quite large and complex—involvinghundreds of plaintiffs with injuries ranging widely in terms of scope and severity—theattorneys sought outside help. They brought in class-action specialist Stanley Chesley,an attorney based in Cincinnati, Ohio. Chesley’s role was to help negotiate a settlement

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