Witness told to destroy Fen Phen records – Mills hospitalized

Witness says she was told to destroy fen-phen documents 


By Andrew Wolfson Louisville Courier-Journal May 30, 2008 

One of the three lawyers charged with plundering Kentucky’s $200 million fen-phen settlement told a legal assistant to destroy documents showing how the clients were paid, according to the aide’s testimony today.

Instead, Rebecca Phipps said she locked the records in a cabinet and hid the key after attorney William Gallion told her “to get rid of the documents.”

Phipps, who worked for another defendant, attorney Melbourne Mills Jr., but later turned government witness, offered the most dramatic testimony yet in the U.S. District Court trial of Gallion, Mills and Shirley Cunningham Jr., who are each charged with conspiracy to commit fraud.

Phipps, who was spared prosecution in exchange for her testimony, said that Mills “laughed” when she told him about a plan Gallion came up with to pay the lawyers based on the maximum each client could have received, rather than the much smaller amounts they were actually paid.

“He was very pleased,” she said.

But she said Mills was furious when he found out in January 2002 that the settlement was for $50 million more than the $150 million that Gallion had told him.
“I walked in his house and he was sitting slumped with his elbows between his knees,” Phipps recalled. She said Mills, then 71, asked, ‘“Have you ever heard stories about the elderly being scammed?’”

“He was angry, and I was scared,” Phipps recalled.

The next week, she said, when Gallion began to sing “Happy Birthday” to Mills at a party, Mills “called him a thief and a liar and told him to leave,” Phipps recalled.
She said he Mills later twice told Gallion that the additional $50 million was “the clients’ money.”

She said Gallion then said he would talk to the presiding judge about making a second distribution of money to the clients.

Her testimony, portions of which had emerged previously in a lawsuit filed against the lawyers by their former clients, undercut the defendants’ claims that they paid out the additional money after various “contingent liabilities” failed to arise.

The direct examination of Phipps by the government was to continue this afternoon. She hasn’t been questioned yet by the defense.

The three defendant lawyers, who have been suspended from practice and already slapped with a $42 million civil judgment, could be sentenced to 20 years in prison if convicted. 


The trial of three lawyers charged with fraud in Kentucky’s fen-phen case was postponed until tomorrow after one of the defendants, Melbourne Mills Jr., was hospitalized early yesterday. 


By Andrew Wolfson Louisville Courier-Journal May 29, 2008

Mills, 77, was taken from the Boone County Jail to a hospital near Covington after he developed swelling in his ankles. He was to be examined by a cardiologist and held for observation. 

U.S. District Judge William Bertelsman ordered the jury to return tomorrow morning. He said he will decide then what to do if Mills is still in the hospital. 

Mills, Shirley Cunningham Jr. and William Gallion Jr. are charged with one count of conspiracy to commit wire fraud for allegedly defrauding clients out of $65 million in Kentucky’s $200 million settlement over heart injuries caused by the diet drug. The settlement was reached in 2001. 

They have pleaded not guilty, and their attorneys have said they had no criminal intent to commit fraud. They could each be sentenced to 20 years in prison if convicted. 

The trial is in its third week. 

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