Dec. 15, 2014
Comes now the Petitioner, by counsel, and for the Reply to the United
States Opposition to Gallion’s Motion for Certificate of Appealability says as
The United States mischaracterizes the Petitioner’s Sect. 2255 Motion.
DEFENDANT’S REPLY TO THE UNITED STATES’ RESPONSE TO DEFENDANT’S MOTION TO VACATE SENTENCE AND DEFENDANT REQUEST TO CONDUCT DISCOVERY
Mr. Gallion requests the Court grant him leave pursuant to Rule 6 of the
Rules Governing Section 2255 Proceedings to conduct discovery in the interest of
justice so that he can establish further facts in support of his claims.
The Schaefer Interview was filed with the Section 2255 Motion. Did the
United States read the Interview? The Magistrate and District Court do not
mention the Schaefer Interview. The United States for the first time discusses
Schaefer in the Response in Opposition to the Petitioner’s Application for a
Certificate of Appealability. As discussed in the Application the Schaefer Interview
in light of Helmer’s trial testimony and the Petitioner’s explanation of the
Settlement to the KBA counsel on 2/28/02 corroborates the Petitioner’s
explanation of the Settlement
It was alleged in the Motion to Recuse that Ms. Graham was seen entering
Judge Reeves chambers on the evening before making the Motion for a Protective
Order. The reason the ex parte contact was not raised in the direct appeal was
due to Appellant Counsel reasoning that it was not known what Judge Reeves and
Ms. Graham discussed. Discovery of the billing records disclosed Ms. Graham
billed the KBA for work on the Phen-Fen trial on the same day she was seen
entering the Judge’s chambers. This information persuaded counsel that this issue
should be raised in the Sect.2255 Motion.
Chesley’s perjury was fully revealed by the Disbarment Order entered by
the Kentucky Supreme Court. Had the United States disclosed the KBA charges
against Mr. Chesley this issue would have been fully vetted in the Petitioner’s
trial. In support of the Petitioner’s argument that the United States knowingly
offered Chesley’s perjury to convict the Petitioner’s Reply to the United States
cites: Napue v. Illinois, 360 U.S. 264 (1959); See Also, Fall 2011 Penn State Law
Review, pg. 331-401-Convictions Based on Lies: Defining Due Process Protection.
On May 14, 2007 the Kentucky Supreme Court gave the United States access to “ the documents, evidence and information it has gathered or collected in connection with any disciplinary matter arising from the Darla Guard, et al, or Joneta Moore, et al v. A.H.Robbins, et al., Case No. 98-CI-796 “ by the Kentucky Bar Association. The Kentucky Supreme Court had a broader view of targets than the United States.
Gallion was indicted in June 2007 after this Order had been made. In May 2007 there was no defendants and no witnesses. The United States argument and the District Judge’s reasoning that somehow they were limited by a Rule applicable only to targets of their investigation in accessing and gathering such information was not true. It is unreasonable to believe the United States would not consider the KBA files of Chesley, Bamberger and Helmers relevant to the charges brought against the Petitioner, Cunningham and Mills.
The Motion to Recuse states the following:
Ms. Voorhees, AUSA, concerning the Jencks material given the defense relating to
Mr. Chesley, stated:“Your Honor, I’m sorry, it was given to us with much of it
blacked out. I don’t know if there was an investigation regarding Mr. Chesley. I
don’t know if it was in relation to an investigation of Mr.Cunningham or Mr.
Gallion. I’m not sure where it comes from.” 2/25/2009 Jury Trial, Vol. 7B.p. 4
Mr. Almand stated to the Court: “I think you can read it and get pretty quickly it is
a complaint against him [Chesley].” Id. “Now we would request that before Mr.
Chesley testifies that we be provided the whole document not just the redacted
version we have here.” Id. Ms. Voorhees also stated: “I believe the Supreme
Court, or Linda Gosnell, after she received the order allowing her to provide
documentation, and there were some limitations in it. My “guess” is that these
were things they needed to redact according to the order.” Id. p. 5.
The United States knew Chesley had advised Judge Bamberger that Excess
funds could be transferred to a Cy Pres Trust. Chesley’s trial testimony was
perjury that he told the Petitioner to hold back the Excess funds and if no further
claims were made to give the remaining funds to the claimants. The Petitioner’s
sentence was increased due to alleged perjurious testimony. The Petitioner did
not know the KBA accusations against Chesley. The United States and the District
The Inquiry Commission charged Mr. Chesley with ethical violations in
December of 2006. Mr. Chesley’s Response was made March 1, 2007. The
Petitioner was indicted in June 2007.
The Commission charged the following: (D.E. 139, 140)
F. COMPLAINT PARAGRAPH Several months after the funds from the Guard
settlement had been distributed to the plaintiffs and the attorneys, you
attended a hearing before Judge Bamberger in a room in the Boone Circuit Court
which was adjacent to the courtroom on or about February 15, 2002. At that
time, knowing that the case had been concluded and all funds distributed, you
provided the Court with material relating to the use of the cy pres doctrine in
class actions and suggested to the Court the propriety of its use in the Guard case.
You and your co-counsel also sought the Court’s approval of your collective plan
to distribute (from money that was described to the Court by you and your co-
counsel as having been “set aside”) an additional amount to the clients, retain
some funds for charitable purposes and to pay yourselves an additional amount
Judge Bamberger’s Grand Jury Testimony: (D.E. 340,341)
“I was in a jury trial, and we generally quit at 4:30, and I have this vague
memory that we quit a little bit later than that. It was in the old courthouse
and there was what they called a jury room, and it’s — you go down a long hall
past my secretary’s office and my office, a copy room, and there’s a room
that’s 25 percent the size of this room, and to my memory, Stan Chesley was
there, Bill Gallion was there, Shirley Cunningham was there, and I think
Mark Modlin was there. And so I got in the room, and to my memory this
was an occasion when we started to conversation with Stan Chesley speaking
about the Cy pres and his experience with Cy pres money, and he gave me a
memo relative to Cy pres and –“
The Inquiry Commission Complaints against Mr. Chesley was exculpatory evidence. The United States violated the Brady rule in failing to disclose the same to the defense.
Exhibit A to this Reply is Mr. Chesley’s perjured trial testimony offered by the United States.
Judge Bamberger and David Schaefer’s Judicial Conduct Commission Interviews in 2005 were discovered in Judge Bamberger’s KBA Investigative file. Both Interviews contained exculpatory evidence that the United States had access to and did not disclose. As noted in the Application (p. 14) it was discovered that the Kentucky Supreme Court on May 10, 2006 had given the United States access to the Judicial Conduct Commission file of Judge Bamberger. The Schaefer Interview filed with the Sect. 2255 Motion was paged KBA 2211, 2212.
The United States Response to the Motion to Vacate (Record No. 1408 p.16) states as follows: ” The United States was not provided with any other witness statements, impeaching, or exculpatory material by the KBA. Nor did the United States have the legal means to obtain such information.” The District Court relies on this argument to conclude the government did not withhold exculpatory evidence from the Petitioner. (Record No. 1433 p.16)
The District Court states: (Id.) “ Nor is there any support for the inference that the government had information that should have been disclosed to him.” (Id.)Accordingly there was no need for discovery.
The Petitioner filed the Schaefer Interview in the Sect.2255 Motion to Vacate. The District Court does not mention Schaefer or the Bamberger Interviews albeit these documents along with other critical arguments showing Gallion was denied a fair trial were in the supplemental filing in the Petitioner’s Objections to the Magistrates Report. (Docket # 1424, Attachments A & B)
The United States makes the alarming statement (id.) that “ There is no rule that allows disclosure of disciplinary information relating to a witness.” If the information is exculpatory evidence Brady v US mandates its disclosure.
In discussing Schaefer the United States does not refer to Shaefer’s statement “ there was talk by some of the plaintiffs’attorneys, of the establishment of a charitable fund to receive any left over monies as part of the settlement” in relation with the Helmer’s $50 million to Charity notation made during mediation or Gallion’s disclosure to Linda Gosnell in February 2002. Counsel for the Petitioner thought the Helmer’s notation was highly relevant to the defense. The District Court would not admit the Exhibit and instructed the Jury to disregard Helmer’s number $50 million because it was not discussed in the presence of the attorneys for American Home Products.
In discussing Schaefer the United States does not refer to the argument that the Schaefer Interview challenges the District Court’s instruction on the Aggregate Settlement Rule. There are no Excess funds in an Aggregate Settlement according to the testimony of the United States expert witness.
In discussing Schaefer the United States does not realize that the Schaefer interview challenges the District Court’s matter of law interpretation of the Settlement documents that made Exhibit 3 monies allocated to 440 claimants.
The District Court prejudged Gallion.
Gallion’s Theory of Defense. (D.E. 177-179)
“Mediation was successful resulting in a settlementof $200 million dollars,
however conditions imposed by Defendant AHP upon the settlement made this
case unique without any equal in the case law and presented unique challenges to
the settling attorneyson how best to administer the settlement. Among the
conditions imposes was 1. decertification of the class, 2. a strict confidentiality
requirement with strict penalties for violation and 3. sweeping indemnities that
had to be assumed by the settling attorneys –indemnity of AHP for any claims
that might arise within the state of Kentucky for a one year period.
Additionally, stringent time limits were placed upon the attorneys to comply with
other requirements of the settlement, including, among other things, providing
proof of ingestion, medical conditions and acceptance of settlement by signed
releases. The settlement was a take it or leave it proposition. In compliance with
the terms of the settlement agreement, attorney’s for both the plaintiffs and
defendants appeared before Judge Bamberger on May 9, 2001 requesting
decertification of the class including dismissal with prejudice for all the claimant’s
who settled their case and dismissal without prejudice to those who did not.
Thereafter, the plaintiff’s attorneys devised a settlement mechanism for the
clients that resulted in each client receiving by many multiples an amount far in
excess of the value of their claim. Each claimant was required to sign a joint
release and confidentiality agreement on a form prescribed by Defendant AHP,
which contained a full release of AHP.
The government’s Exhibit #177 identified as Exhibit 3 to the Settlement
Agreement was not intended to reflect actual payments that clients would receive
from the settlement. Rather, it was a payment mechanism to comply with the
requirements of the settlement agreement relating to deadlines for the settling
attorneys to meet specific contingencies imposed upon them.
Exhibit #3 was prepared solely for the purpose of obtaining the funds from AHP in
accordance settlemen agreement. It was never intended or devised to be the
amount that each client would receive. You have heard testimony that AHP did
not care what each client received. It was a settlement for $200 million, it was
not a settlement based on individual amounts for these clients. There was a huge
continegnecy in that therewere potentially individuals who could have made a
claim. Mr. Gallion, Mr. Cuninhgam and Mr. Mills assumed a tremendous risk.”
Respectfully this Honorable Court is asked to reconsider its holding that the
jury had enough information to access the defense theory of the case.
Volume 26B pp. 14,15
MR. ALMAND: Your Honor, from what I understand you’re telling me, and it goes
back to something you said just a moment ago, is that because you’ve made up
your mind that what Professor Erichson said is correct, you are going to instruct
the jury as a matter of law. Now, Judge, in all due respect, I think that’s an
improper approach to for you to take in this case. We’ve got the right to present
both sides. You haven’t heard all of the evidence yet from our side. You have
made up your mind early before the conclusion of the case. You have done the
very thing that you have told the jury not to do.
THE COURT: “No, no, Mr. Almand, I have not done that. What I have done is I’ve
listened to testimony over the course — this is the seventh week now. I have
reviewed hundreds, if not thousands, of pages of documents in order to
understand the positions of the parties in this case. I have performed research on
these issues as to the legal issues in the case. I have considered all the testimony
that’s been presented to this point. And that testimony has allowed me to
conclude, as a matter of law, certain things. At certain points of this case, I have
been able to reach conclusions, legal conclusions, as to certain issues. At later
points in the case, I have been able to reach other conclusions in the case.”
During the Opening Statement of defense counsel the Court gave a limiting instruction to the Jury.
Mr. Almand’s Opening Statement, Vol 2A, pp. 68,69
Also, the way they looked at the case, this was not a
3 case where you divide up 200 million among the clients. What
4 you did was you looked at each of the cases of the client and
5 evaluated the injury and the value of each case. And when you
6 did that and when you paid the full and fair value of the claim,
7 when you paid everything that the client could expect, then the
8 client had no further claim to the 200 million.
9 Now, there is dispute, there’s even dispute among
10 lawyers, about how this should be handled. But there will be no
11 evidence in this case, there will be no evidence, that each
12 client did not receive the full and fair value of his case; not
13 only the full and fair value as determined by the national
14 settlement, because that was considered by a court finding to be
15 full and fair, what the national settlement said, but these
16 lawyers paid the clients not what the national settlement said,
17 but 50 times more than that; 50 times more than that.
18 MR. WALBOURN: Objection, Your Honor.
19 THE COURT: I’ll sustain the objection. I’m going to
20 give a limiting instruction at this time.
21 Ladies and gentlemen, from time to time, the Court
22 rules on matters prior to the trial actually starting, and this
23 is one of those issues, and that is this matrix, this national
24 matrix. And let me give you an instruction that I will be
25 giving you later as to how you can consider evidence concerning
1 that matrix.
2 You will be hearing evidence the defendants used a
3 matrix to establish in the national — established in the
4 national settlement to base a payment structure in the Boone
5 Circuit Court action. This evidence will be admitted for the
6 limited purpose of determining whether or not defendants had the
7 specific intent to defraud. Whether or not a claimant would
8 have received more or less money in the Boone County action than
9 he or she would have received in the national settlement is
10 irrelevant and should not be considered by you. You must
11 determine whether or not the defendants had the specific intent
12 to defraud their clients, and you may use the evidence of the
13 national matrix, as well as other evidence which will be
14 admitted during the course of trial, in making that
16 MR. ALMAND: Thank you, Judge.
(Volume 15 B p. 50)
MR. ALMAND: May I make a proffer?
THE COURT: Yes, sir.
MR. ALMAND: What I want to ask him is is in July of 2002, was it his opinion as a
Judge that was dealing with this case that the claimants had already received
more money for their compensation than the injuries justified.
THE COURT: I have already in a pretrial ruling ruled on this issue. It’s a relevancy
MR. ALMAND: Your Honor, I’m sorry, I don’t know of that
opinion. Maybe I missed something on that.
THE COURT: It’s part of the ruling that the Court made.
Whether they would or would not have received more or less money
than they would have received in a National Settlement is not relevant. Same
criteria. This person’s opinion as to whether these folks received fair
compensation is not relevant. The issue in the case is whether they were
defrauded out of money that these defendants negotiated for them on their
The United States does not discuss the argument that the District Court interpreted the Settlement in Boone County the same as Judge Wehr in the civil case. Exhibit 3 was monies allocated solely for the known claimants subject to a set aside limited to $7.5 million for other potential claims.
The Jury did not consider the truthfulness of the Petitioner’s explanation of the Settlement. The Jury was instructed that the Petitioner’s explanation of the Settlement was an explanation of how he defrauded the claimants.
The Petitioner believed the claimants were fairly compensated. Exhibit B to this Reply are excerpts of cross examination on the medical conditions of the claimants called by the government. Was Tracey Curtis defrauded? She saw a physician once. According to Exhibit 3 Tracy Curtis was entitled to $181,000.
In the Petitioner’s Motion to Recuse Judge Reeves it is stated:
“ Ms. Graham was seen entering Judge Reeves chambers on 2/23/09. The
Petitioner is entitled to know the information shown by Ms. Graham’s billing
records. Gallion asks that a Subpoena be directed to the Kentucky Bar Association
to produce Ms. Graham’s unredacted billing records.” The United States does not
address this allegation.
The United States in multiple instances argues that the Petitioner’s
arguments were vague and conclusory overlooking that in the Sect. 2255 Motion
the Petitioner was seeking discovery and an evidentiary hearing.