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Date set for fen-phen lawyers’ second trial

COVINGTON — Two Lexington-area lawyers accused of taking millions of dollars from their former clients in a diet drug settlement pleaded not guilty Thursday to eight new charges of wire fraud.

Last week, a federal grand jury indicted William Gallion and Shirley Cunningham Jr. on charges of conspiracy and eight new charges of wire fraud.

Shirley Cunningham Jr. (left), William Gallion (right)

Shirley Cunningham Jr. (left), William Gallion (right)

The men were charged in 2007 with one count each of conspiracy to commit wire fraud.

 

The two men were arraigned on the new charges Thursday morning in U.S. District Court.

Gallion signed paperwork for a $2.5 million property bond. He was released Thursday afternoon. Cunningham already had been released. Cunningham already had been released.

U.S. District Judge Danny Reeves set a trial date for Nov. 17.

A mistrial was declared in their first trial, in July, after a jury could not decide whether Gallion and Cunningham were guilty of conspiracy to commit wire fraud.

Gallion, Cunningham and a third lawyer, Melbourne Mills Jr., were charged with one count each of conspiracy to commit wire fraud in 2007.

A jury acquitted Mills of all charges in July. Cunningham was released from the Boone County Jail on bond on Aug. 27.

The lawyers sued fen-phen maker American Home Products in Boone Circuit Court and settled the case for $200 million in 2001. Federal prosecutors say Gallion and Cunningham took $94 million — an increase of nearly $30 million from the previous indictment — that should have gone to 440 former clients, according to the indictment.

The indictment outlines a series of monetary transactions between Cunningham’s and Gallion’s bank accounts and accounts designated solely for client money.

If convicted, Gallion and Cunningham could face a maximum of 180 years in prison. However, it is rare for someone to get the maximum sentence.

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Fayette schools lawsuit becomes public

By Brandon Ortiz
bortiz@herald-leader.com

A class action lawsuit accusing the Fayette County Board of Education of being indifferent to sex abuse allegations in the 1970s and 1980s has become public.

Plaintiff attorneys involved in the case said it relies heavily on testimony in Carol Lynne Maner’s high-profile sex abuse lawsuit, which led to a $3.7 million jury verdict last summer. (A judge later increased the verdict to $3.9 million.)

Some elements of the lawsuit are also intertwined with the Micro-City Government scandal, attorneys said.

Ron Berry, a longtime director of the jobs program for disadvantaged youths, was convicted of 12 counts of sodomy in 2002. Lawsuits have accused former city officials of ignoring the abuse for decades for political reasons.

Attorney Gayle Slaughter, who represents plaintiffs in the Berry and school board lawsuits, said some of the plaintiffs in the school board lawsuit were introduced to teachers by Berry.

The lawsuit was initially filed in Fayette Circuit Court. It was transferred to U.S. District Court in July.

The lawsuit names five plaintiffs who attended Winburn Middle School, Lexington Junior High School and Dunbar Junior High School in the early 1970s and mid-1980s.

It also seeks to represent all Fayette County students who were sexually abused from 1972 to 2007. That is at least 43 people, according to the lawsuit.

The lawsuit does not detail the plaintiffs’ abuse allegations. A federal judge has ordered the plaintiff attorneys to file a detailed listing of the allegations this week.

Attorney Chuck Arnold, who also represents the plaintiffs, said they came forward after Maner’s high-profile trial.

The lawsuit is based on deposition testimony by former Superintendent Guy S. Potts. He testified that he “probably” received one complaint of sexual abuse a month in the 1970s, but he added that he “could not attest to that,” according to court records.

Arnold, who also represents Maner, says the school board in that era had a policy of ignoring sexual abuse. He claims that the board destroyed records of sex abuse allegations several years ago.

He also alleges that Potts had a policy of not reporting suspected abuse to authorities, as required by law.

The statute of limitations for sex abuse lawsuits of this nature is one year. Arnold says that the plaintiffs can proceed with their lawsuits because the board effectively concealed the sex abuse allegations by not reporting them, an argument he made in Maner’s lawsuit.

A jury in her case found that the school board had ignored Maner’s allegations of sex abuse by six employees at Beaumont Junior High School and Lafayette High School in the late 1970s and early 1980s.

A school board spokeswoman referred questions to its attorney, Larry Deener.

Deener declined to comment Wednesday.

In Maner’s lawsuit, the school board argued that it vigorously investigated all allegations of sex abuse. It claimed that it was not aware of any alleged abuse of Maner.

Maner’s case is pending before the Kentucky Court of Appeals. The school board says the lawsuit is barred by the statute of limitations.

If the board succeeds in its appeal, the class action lawsuit will probably be dismissed on the same grounds, Arnold conceded.

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