The U.S. Attorney’s office has been seeking information about Angela Ford’s handling of some $42 million dollars in Fen Phen assets she has seized. She resisted the request for an accounting in a hearing before U.S. District Judge Danny Reeves almost a year ago.
Judge Reeves ordered her to file the accounting. Ford then appealed that ruling to the 6th. Circuit Court of Appeals. The 6th. Circuit sided with the U.S. Attorney and ordered Ford to provide the accounting to the Government by Nov. 9, 2012.
LawReader confirmed with the U.S. Attorney’s office that the filing “was in the possession” of the U.S. Attorney, and “they were looking at it.” Apparently this filing was not the complete accounting sought by the Government attorneys. (This conclusion is based on our review of her Dec. 1, 2012 pleadings filed with the 6th. Circuit Court of Appeals.)
Apparently Ford filed only a partial accounting which revealed the names of banks she dealt with but she did not deliver an accounting that fully described how the $42 million was distributed. She apparently failed to provide the names of the attorneys and other parties with whom she shared some $13 million in attorney fees.
Shortly after the incomplete accounting was delivered to the U.S. Attorney in early November of 2011, Ky. Bar Association Bar Counsel Linda Gosnell was summarily fired. The KBA President Maggie Keane, in a November interview with the Courier-Journal, denied that Gosnell’s firing had anything to do with the distribution made by Ford to “other lawyers”.
As of today, Jan. 21, 2012, it has been 60 days since Linda Gosnell was fired, and the KBA has not informed the 17,000 dues paying members of the Ky. Bar Association of the reasons the Bar Counsel was fired. A veil of secrecy clearly exists on why Gosnell was fired.
The reasons why it is being applied to this firing could be based on several reasons, some of which the author is not able to discuss due to the Supreme Court Rules. We do not purport to have any inside information on this subject. We do note that the KBA has a history of sealing information which concerns their administrative activities. We cite the sealed “Houlihan Report” as an example of the KBA’s refusal to inform their members of the actions of the KBA.
The firing of the Bar Counsel has been the basis for filings made by attorney Stan Chesley. Chesley is a party in the Boone County civil suit, and currently has an appeal pending before the Kentucky Supreme Court regarding the KBA’s prosecution of ethics allegations against him.
Chesley is seeking discovery of how the Fen Phen money seized by Ford was distributed. If anyone on the distribution list was involved in the discipline prosecution against him, then this may be relevant evidence and might provide a defense to him against the actions of the KBA.
On Dec. 1, 2012, Ford filed another appeal with the 6th. Circuit. She challenges the jurisdiction of the U.S. Government to inquire into her handling of these funds, she claims in her pleadings that the accounting order demands information about her personal assets. We don’t’ understand exactly from her pleadings what she means by the term “personal assets” but it suggests that she is saying the $13 million in legal fees she paid herself “and other lawyers”, are her “personal assets”. She argues that the Government has no jurisdiction to inquire into how she handled at least this $13 million dollars.
Ford has two ways she could justify a legal fee of $13 million dollars. If she gets a final order in the Boone County civil case, and if she has a contingent fee agreement with the Fen Phen plaintiffs, then the $13 million would represent about 33% of the total recovery of $42 million.
Does she have a signed contingent fee agreement with all 440 plaintiffs? Kentucky rules of practice require that all contingent fee arrangements be in writing.
In Ford’s December 1, 2012 pleadings to the 6th. Circuit she states;
“Ford collected and distributed $40.2 million to her clients, who in turn compensated Ford in accordance with their contingent fee agreements with her.” Her pleadings does not claim that the agreement was in writing. This suggests that up to $1.8 million may have been withheld by Ford for the 33 victims she does not represent.
Is this contingent fee contract signed? If she doesn’t have a signed contingent fee contract and gets a final judgment in her favor in the civil case, she could also ask the state court to set a fee based on her hourly rate, or on a quantum merit award. She does not state in her pleadings that she has a “signed” contingent fee agreement.
Her civil award was by Summary Judgment. That summary judgment order was appealed and was reversed by the Court of Appeals. The Court of Appeals ordered a new trial. Ford asked for Discretionary Review by the Kentucky Supreme Court, and recently the Supreme Court in fact granted Discretionary Review. But at this point, even though she has apparently distributed all of the $42 million, including her fee of $13 million, she has no final judgment.
A ruling by the Ky. Supreme Court could take a few months but is likely to take up to a year.
Another way Ford could be paid an attorney’s fee is by an order of the U.S. District Court awarding her a fee. The Federal Court ordered a substantial sum to be paid as restitution to the Fen Phen plaintiffs. We are informed that an award to Ford by the Federal Court for her work in the civil case is not automatic, and is a discretionary option of the Federal Judge. We are unaware of any fee award by Judge Reeves.
We can see no way the Federal Court could award a fee to Ford until the criminal case is final. On Jan. 17th. Oral arguments were made to the 6th. Cirt. by Gallion and Cunningham contesting their conviction in the criminal case. So the criminal conviction is not final. It is possible that the 6th. Circuit could order a new trial in the criminal case.
The author attended the oral arguments and substantial arguments were submitted by the defense attorneys. The argument for a new trial decision is of course at the discretion of the 6th. Circuit panel, but there were at least three arguments made by the defendants, and any one of the three claimed errors could justify a new criminal trial.
Perhaps we are missing something, but it appears highly unusual for $42 million dollars to be seized and distributed without a final order in either the civil case or the criminal case.
In pleadings filed by Ford on Dec. 1, 2012, her second appeal to the 6th. Circuit, challenged the jurisdiction of the Federal Court to examine her “personal” assets. In the pleading she admitted that “the Mandatory Victim’s Restitution Act of 1996, 18U.S.C. Section 3663A, 3664, provided the U.S. District Court jurisdiction over post-conviction proceedings against defendants William J. Gallion and Shirley A. Cunningham, Jr.”
Ford stated in her December filing to the 6th. Circuit:
“In June 2011, the district court ordered Ford, the lawyer for 407 victims in a Kentucky state-court lawsuit, Abbott v. Chesley, “to provide a full and complete accounting, including the location, “of all funds collected by her in (Abbott)…and not distributed to victims.”
Note: She admits to representing only 407 of the approximate 440 so called victims.
On September 9, 2011, the district court denied Ford’s motion to “alter, amend, or vacate” the District Court’s order for an accounting.
“On September 23, 2011, Ford appealed the order requiring her to provide the location and an accounting of her fees and the order denying her motion to alter, amend, or vacate.”
Note: She uses the word “fees’, which can only mean her attorney fees paid out of the $42 million dollars in assets she had seized.
She is appealing the order which directed her to “provide the United States with an accounting of funds “collected by her in (Abbott) and not distributed to the victims.”
Note: Funds not distributed to the victims clearly means attorney fees she retained or any funds she has withheld from distribution to the victims. This could be up to $1.8 million dollars..
We have not seen any proof or admission about a distribution by Ford of assets she seized to the some 33* victims she does not represent. The U.S. Attorney apparently wants to know if she is still holding funds for victims she does not represent. Did she distribute the $42 million only to herself, other attorneys, and only to her clients, or did she hold some money back for the 33 victims she does not represent?
(Footnote: *The actual number of victims not represented by Ford is unclear as we have seen citatins of different numbers in various articles and pleadings.)
Chesley’s pending motions filed with the Boone Circuit Court earlier this week, are apparently supportive of his desire to learn the names of the “other attorneys” with whom Ford shared her $13 million dollar legal fee.
It is possible that the Civil Court may approve Ford’s fee of $13 million if there is ever a final judgment in the Boone Circuit Court case. It is possible that the Federal Court could grant her a fee, which may or may not be $13 million, as a part of its restitution order in the criminal action, but it is also possible, that even if there is a new criminal trial and a subsequent conviction, that the Federal court may award a small fee or no fee. That option appears to be within the Federal Judges discretion.
Ford’s pleadings quote an argument by the U.S. Attorney’s office that, “The government stated that it was concerned that as a result of the (Kentucky) Court of Appeals’ opinion, the Abbott plaintiffs might be required to repay amounts collected to satisfy the Abbott judgment.
One issue raised by Ford is that the $20 million seized from the Kentucky Fund for Healthy Living (KFHL) cannot be ordered to be refunded because the KFHL did not appeal the Boone Circuit summary judgment order. It is reported to the author that the Boone Circuit court trial judge, William Wehr, ordered that the charitable trust was not to expend any additional funds for its attorneys. In other words, the KFHL was denied the right to defend itself on an appeal.
Ford argues in her brief that at least the $20 million seized from the KFHL is not in dispute and she was entitled to distribute those funds and to pay herself a fee out of these funds.
We can only speculate as to whether or not a new trial in the Boone Circuit case would reopen the claim of the KFHL to defend itself. In the author’s 41 years as a lawyer, we have never heard of an order by a trial judge that a defendant could not defend itself, but we weren’t there and we have not seen Judge Wehr’s findings or order.
The main argument by Ford is that the District Court has no jurisdiction to obtain an accounting her funds. She argues that the Mandatory Victim’s Restitution Act of 1996, 18U.S.C. Section 3663A, 3664, applies only to “judgment debtors” and does not apply to her.
We can imagine that the U.S. Attorney may argue that it’s duty is to look out for the interest of all 440 victims, and this may require an examination of the handling of all funds coming through the hands of Angela Ford.