June 15, 2007
COVINGTON, Ky. -- Two owners of Preakness winner Curlin have been indicted by a federal grand jury, charged with conspiring to commit wire fraud in representing more than 400 people in a lawsuit over the diet drug fen-phen.
Shirley A. Cunningham Jr., 52, and William J. Gallion, 56, along with another Lexington, Ky.-based lawyer, Melbourne Mills Jr., 76, could be sentenced to as much as 20 years in prison if convicted.
The grand jury also demanded that the lawyers give up $46 million in misappropriated funds and more than $21 million in fees put in a charitable fund.
Cunningham and Gallion have a 20 percent ownership interest in Curlin, and were in the winner's circle when the 3-year-old colt won the Preakness on May 19. They were the original owners, purchasing Curlin for $57,000. But after the colt won his first career start in February, the lawyers sold an 80 percent interest for a reported $3.5 million to Jess Jackson, founder of Kendall-Jackson wines; Satish Sanan's Padua Stables, and George Bolton, an investment banker.
Curlin finished third in the Kentucky Derby and second in the Belmont Stakes.
Angela Ford, an attorney who represents more than 440 people in a civil case against the three lawyers, said she is also seeking the lawyers' stake in Curlin to pay off the money the attorneys are accused of bilking from their clients.
The three were already found to have defrauded clients in the $200 million fen-phen settlement and were temporarily suspended from practice.
Mills' attorney declined comment Thursday. Cunningham also declined comment Thursday, and Gallion could not be reached.
A Boone County Circuit Court senior judge found last year in the civil case that the lawyers had breached their duties. In April, he said they would have to repay up to $64.4 million they misappropriated, minus legitimate expenses.
Judge William Wehr found that Cunningham, Gallion and Mills paid themselves millions more than what they were owed, more than $20 million apiece.
The 440 plaintiffs collected about $74 million of the $200 million settlement.
Cincinnati lawyer Stan Chesley negotiated the settlement. He was not charged in the indictment, and his lawyer, Frank Bentley IV, has said Chesley wasn't a grand jury target.
Chesley collected a fee of $20.5 million, which the plaintiffs said was $7 million more than he should have been paid.