Kentucky Heart Charity Takes Center Stage in Fen-Phen Trial

[WSJ_law_blog]

There are many bizarre aspects of the story behind the three Fen Phen lawyers on criminal trial for alleging bilking their clients out of $65 million of settlement money. The most well-reported oddity is that two of the lawyers used settlement funds to invest in the race horse, Curlin. But how about their decision to donate $20 million of the $200 million settlement to a charitable fund — called the Kentucky Fund For Healthy Living — that they created and controlled, and for which they allegedly paid themselves about $150,000 each to manage?

That part of the case came to light yesterday, as Joyce Brown, a plaintiff in the Fen-Phen case, testified in federal court that she specifically opposed the charity idea. According to this report in the Herald-Leader, Brown testified that she phoned the law office of William Gallion (pictured, right), one of three lawyers now on trial, to express her opposition, but a woman told her that the charity plan was going through, and that she had no choice in the matter. Another plaintiff, Connie Centers, testified that no one discussed a charitable contribution with her.

On direct examination by AUSA E.J. Walbourn, Brown and Centers said they joined the class-action suit after suffering heart damage from taking Fen-Phen in the late 1990s. Both women initially were represented by Mills, with Gallion and Cunningham joining the suit later.

Brown, according to the Herald-Leader, said a representative from Gallion’s office told her about the charitable contribution in 2002, and stated that the amount of leftover money involved “wouldn’t be much.” She said she asked what kind of charity it was and was told it was a “heart charity.” Brown said she stated that she was opposed because she didn’t want to give away money she ultimately might need for her own heart problems.

Brown testified that she ultimately received two checks totaling more than $640,000. Centers also received two checks, but the total amount was not revealed in court.

Centers identified the person she spoke with at Gallion’s firm as David Helmers, Gallion’s former associate who testified for the prosecution last week. Centers testified Tuesday that when Helmers turned over her settlement money he suggested that she might need investment assistance, and recommended that she see his brother for financial advice. Brown said the man she talked to also referred her to his brother for financial consultation.

The defense does not deny some of the allegations in the case, but maintains that Cunningham, Mills and Gallion acted without criminal intent and therefore are not guilty.