U.S. ATTORNEY SEEKS RECOVERY OF FUNDS ANGELA FORD SEIZED FROM FEN PHEN ATTORNEY DEFENDANTS. KBA Bar
Nov. 29, 2011 By LawReader Senior Editor Stan Billingsley
LawReader has reviewed correspondence between the U.S. Attorney’s office and Angela Ford in which the U.S. Attorney’s office has sought an accounting of $43,000,000 in funds
held by Angela Ford. These letters are exhibits in the record of the Federal Criminal trial against Gallion and Cunningham. The criminal convictions of Gallion and Cunningham are currently on appeal to the 6th. Circuit Court of
We have found a 2009 news story by Andy Wolfson of the Courier Journal quoting Angela Ford as saying at that time she had been paid $7.5 million for attorneys fees, but that
she shared this fee “with other lawyers“. These funds came from her seizure of the assets of the Ky. Fund for Healthy Living. This fund contained $23 million.
It has apparently been disbursed two years ago. The accounting sought by the U.S. Attorney would presumably list the names and amounts that “other lawyers”
received from this distribution and a total distribution of $43 million.
In a letter to Angela Ford, dated Feb. 16, 2011 the U.S. Attorney’s office warned her that:
“Since the judgment (i.e.Boone Circuit Court summary judgment) has been reversed and remanded to the Boone Circuit Court, any funds collected in the
state court case are now potentially subject to being reclaimed by the defendants pending further litigation. ”
“Therefore, it is essential that the government be given a complete accounting of all funds distributed, held in escrow for the benefit of the victims, retained or
distributed pursuant to fee agreements, or otherwise held. Since time is of the essence, we hope that you can provide this accounting expeditiously.”
“The authority for holding collected funds in the state case presumably lapsed upon reversal of the judgment.”
“We want to continue to work with you to protect the victims of the defendant’s crimes and advise the court that all appropriate steps are being taken to preserve
assets that will be used to compensate victims for their loss.”
In the letter to Ford, dated March 23, 2011 the U.S. Attorney’s office referring to Ford’s response to the U.S. Attorney letter of Feb. 16, 2011 requesting an accounting:
“…you have provided brief email responses indicating that defendants in the civil case will have to sue individual victims to recover money that was collected on the reversed judgment. ”
(LawReader: The forgoing sentence was apparently a reference to the effect that if Gallion et al won the civil case at the new trial ordered on Feb. 4, 2011 by the Court of Appeals, that Anglea
Ford argues that Gallion et al could sue the some 440 (??) Fen Phen plaintiffs to recover their assets she had distributed to them without the support of a valid court judgment.)
The U.S. Attorney’s office continued:
“…it may be appropriate to bring the recent developments to Judge Reeve’s attention, but we thought a discussion with you would better inform our future decisions.
Should you disagree, we will put this matter before the Court for its guidance.”
The U.S. Attorney’s office then cited five cases which had held that once a judgment was set aside on appeal it had no legal effect, and could not support
her right to hold any of the funds or to disburse any funds to her clients:
“Under Kentucky law, when a judgment is reversed on direct appeal, it is as though it never existed. Clay v. Clay, 707 S.W.2d 352, 353 (Ky. App. 1986). As the Kentucky Supreme Court of
Kentucky stated in a recent opinion, “(i)t has long been the law in Kentucky that the complete reversal of a judgment nullifies it and returns the parties to the positions they occupied before it was rendered…and the could
should not allow th party who procured (the judgment) to retain an advantage gained by reason of it.” See Marshall v. Goodwine, 2010 WL 3374404 (Ky. 2010); see also Knight’s Admr. V. Illinois Central Railroad Co. 136 S.W. 874
(1911); Drury v. Franke, 57 S.W.2d 969 (1933); Baker’s Heirs v. Duff, 238 S.W.2d 841 (Ky. 1951) (no rights can be derived from a reversed judgment).”
“…the party who executes on the judgment during the pendency of an appeal does so at her own risk because, if the judgment is reversed, any benefits obtained by virtue of the execution must be restored to the adverse party. Elk Horn Coal
Corporation v. Cheyenne Resources, Inc., 162 S.W. 3d 408 (Ky. 2005).”
“We have found no legal authority which would allow you to retain the funds you have collected when the judgment has been reversed. ” “…you
cannot continue to collect on a judgment that is no longer in existence, you cannot justify continuing to hold collected funds without providing an
accounting to the sole judgment creditor or obtaining an order of the court.”
“If we have not heard from you by March 29, 2011, we will file our motion with the court.”
Angela Ford responded on March 29, 2011 with a letter contesting the U.S. Attorney’s office understanding of the law:
“…you state that “(a)lthough (the civil case plaintiffs) have filed a motion for rehearing with the Court of Appeals, at present time the judgment remains
reversed(.)” This is incorrect. The judgment entered by the Boone Circuit Court stands unless and until the Kentucky appellate courts render a final
opinion vacating or reversing it. Plain, unequivocal black letter Kentucky law provides that “any reliance on a non-final opinion of an appellate court
is misplaced.” Kohler v. com. Transp. Cabinet_, 944 S.W.2d 146, 147 (Ky. Ct. of Appeals 1997; see also_Kentucky Nat. ins Co. v. Shaffer_, 155 S.W. 3d
738, 740 n5 (Ky.Ct. App. 2004) (chastising party for citing as authority opinion that was “not final due to pending motion for discretionary review
in the Supreme Court”) (See LawReader footnotes below for review of Ford’s authorities)
“I am not aware of any procedural rule or authority that would compel me to restore those funds to your office.”
Subsequent to Ford’s letter to the U.S. Attorney’s office, they kept their promise and filed a motion for an accounting
with Federal Judge Danny Reeves. Reeves granted the government’s motion and ordered an accounting. Ford sought relief in the 6th. Circuit Court
of Appeals, but last week the 6th. Circuit denied her motion to avoid having to file an accounting.
LawReader has learned that the accounting is currently in the possession of the U.S. Attorney and “is being worked on”. LawReader’s request for a copy of the accounting has not been granted
at this time.
This correspondence raises several questions. In light of the actions by the U.S. Attorney’s office that began at least by December of 2010. The U.S. attorney objected to a judicial sale of William Gallion’s home in Jessamine County in which Ford used clients escrow money to purchase the home. The Jessamine Circuit Judge set aside the judicial sale, and later the U.S. attorney resold the home. (In Ford’s March 29, 2011 letter she criticized
the U.S. Attorney’s office handling of the sale.)
The Jessamine County sale and purchase of the Gallion home with client’s money was quickly acted upon by the U.S. Attorney’s office. We must ask, where was the KBA
Bar Counsel’s office? Stories were in the press regarding the sale of Gallion’s home.
LawReader read such a news story and called the Master Commissioner of Jessamine to confirm the story. One phone call confirmed the story! The U.S. Attorney’s motion is a public
record. Where was the Bar Counsel’s office?
The U.S. Attorney has sought an accounting from Angela Ford. We have not heard of any action by the Bar Counsel’s office to support the U.S. Governments motions.
Where was the Bar Counsel’s office?
There are confidentiality rules of the attorney discipline process which hide all charges from the public unless the defendant attorney waives the confidentiality rule.
We emphasize that we have no knowledge of any such pending action by the KBA against Angela Ford. The secrecy rules forbid the public from
knowing when charges against an attorney are pending. But this raises the question of why the Supreme Court Rules regulating the discipline of attorneys protect the
attorney’s reputation at the risk of harm to the clients?
Secondly, the main stream media has enjoyed almost a decade of condemning everyone connected with the Fen Phen case. Perhaps the actions of the U.S. Attorney’s
office will encourage the press to dig a little deeper.
They can begin getting this story right by seeking a copy of the Ford Accounting which is currently “being worked on” by the U.S. Attorney’s office. We suggest that the main stream media, “Follow the money!” The accounting may answer many questions.
If the confidentiality rules are being applied to this case by the Bar Counsel, then this demonstrates why such rules do not serve the public interest. The consumers of legal services should be protected by Bar Rules.
Footnotes – Examination of Ford’s authorities:
1. Kohler v. Com. Transp. Cabinet_, 944 S.W.2d 146, 147. LawReader comment: For god’s sake this is a DUI case! It is a criminal case and deals with a judgment that was “void ab initio” i.e. void from the beginning..and the
defendant cited another unrelated non-final case as authority. The defendant cited an unofficial (unpulbished) and unrelated case, but in the Ford case, the U.S. Attorney correctly cites the effect of a ruling on the
specific case being tried. Once the Court of Appeals reversed the Boone Circuit Court the reversal was effected. The judgment of the Court of Appeals against Ford’s position is in effect until overruled. Ford’s citation of the rule prohibiting the citation of an unpublished case simply does not support her argument.
2. Kentucky Nat. Ins. Co. v. Shaffer, 155 S.W.3d 738 (Ky. App., 2004). This authority cited by Ford deals with a bad faith insurance claim. Footnote No. 5 to that decision reads: . In its reply brief, Kentucky National relies on our recent
opinion in Knotts v. Zurich Ins. Co., ___ S.W.3d ___, 2002-CA-001846-MR, 2004 WL 221213 (Feb. 6, 2004), which held Kentucky’s UCSPA only applies to pre-litigation claims and conduct. According to Knotts, once litigation
has commenced, the UCSPA no longer plays a role, but instead the Rules of Civil Procedure provide “redress for improper conduct of litigants.” However, Kentucky National cannot rely on Knotts as it failed to
preserve this issue at the trial court level. Furthermore, although the Knotts opinion was designated for publication, it is not final due to pending motion for discretionary review in the Supreme Court. It is impermissible to cite Knotts
as authority. See CR 76.28(4)(c) (unpublished opinions “shall not be cited or used as authority in any other case in any court of this state”); Kohler v. Commonwealth, Transp. Cab.,
Ky.App., 944 S.W.2d 146, 147 (1997) (trial court cannot rely on nonfinal opinion of appellate court).
Ford does not mention in her letter to the U.S. Attorney that both of her authorities cited, dealt only with unpublished cases. She failed to mention that the Court of Appeals ordered that their reversal of Abbott v.
Gallion et al, should be published on Feb. 4, 2011. (See LawReader synopsis of Court of Appeals decisions for Feb. 4, 2011. )
A published case by the Court of Appeals remains in effect until overruled. A dismissed case remains overruled until an appeal reversals the Court of Appeals.
Conclusion, the U.S. Attorney’s office scores big in its authorities. Ford fails embarrassingly to support her claim that the reversed Boone Circuit Court case
provides authority for her to seize and distributed $42 million dollars.