UPDATE ON FIRING OF LINDA GOSNELL – LAWREADER SEEKS ANGELA FORD “DISTRIBUTION LIST” OF FEES PAID OUT OF FEN PHEN FUNDS

 
Nov. 22, 2011

Sources close to the KBA report that the distribution list in Angela Fords Fen Phen accounting ordered by U.S. District Judge Danny Reeves lead to the firing of KBA Bar Counsel Linda Gosnell.  Today it was reported that the KBA President Margaret Keane denied this report.   Release of the accounting to the public could answer this question.  LawReader is seeking a copy of the accounting.

LawReader has confirmed that Fen Phen plaintiff’s lawyer Angela Ford was ordered to provide an accounting to U.S. District Judge Danny Reeves by Nov. 9, 2011.  The accounting of her handling of clients funds was requested by the U.S. Attorney’s office.

In December 2010 the U.S. Attorneys Office obtained a court order from the Jessamine County Circuit Court setting aside the judicial sale of the home of Fen Phen defendant William
Gallion.  The U.S. Attorney’s Office alleged that Angela Ford bought the Gallion home with money she was holding in escrow for her clients.   The U.S. Attorney argued successfully that at least twelve of the client’s Ford was
holding money for were not her clients.

Several months ago the U.S. Attorney’s Office sought a motion for Angela Ford to provide an accounting of the $42 million dollars she was holding in escrow for her clients.;

Sources close to the Ky. Bar Association have reported to LawReader that the KBA Chief Ethics Prosecutor, Linda Gosnell, was fired on Monday Nov. 21,  as a result of information
contained in the accounting.  (Another source says the actual firing occurred on Saturday Nov. 19th.)

Gosnell’s name has been removed from the KBA website which previously listed her as KBA Bar Counsel.

The Clerk’s Office for the Eastern District of Kentucky (Covington) reports to LawReader that as of Nov. 22, 2011, Angela Ford has not complied with that court order to provide the accounting. The Clerk does not
have a copy of the ordered accounting. We are trying to get a copy of that accounting.

Another source reports that the U.S. Attorney’s office has a copy of that accounting and apparently shared the report with officials of the KBA.  The KBA reportedly fired Linda
Gosnell shortly after reading the distribution list of parties who received payment out of clients funds. Lawreader has requested a copy of this accounting from the U.S. Attorney’s office.

Any further action regarding the release of the financial accounting must be taken by Judge Reeves, or presumable by the U.S. Attorney’s Office.

It is reported from sources close to the KBA that the accounting contains a “distribution list” of persons who received payments from Angela Ford, presumably paid out of client’s money held in
escrow.

The money held by Angela Ford was seized by her after she obtained a summary judgment in 2010 in the Boone Circuit Court.   That summary judgment was appealed to the
Court of Appeals.  The Court of Appeals reversed the summary judgment, and Ford appealed to the Ky. Supreme Court where the decision is still being considered.

Under a ancient rule known to every lawyer, no payments may be made to a plaintiff until the case is final (the finality rule), and as of the present there is no final judgment in the Fen Phen cases.  It is reported by sources close to the Fen
Phen case that Angela Ford has distributed at least some of the $42 million dollars she has seized in assets of a charity and from William Gallion et al.   Apparently the accounting reveals a number of persons who received payments from these funds.

The Bar Counsel’s office has known of the actions of Angela Ford in the handling of clients funds, and no public action has been revealed.   Sources close to William Gallion report that Angela Ford seized his personal laptop which contained numerous attorney client communications.  She had the laptop sold at a judicial auction.   Gallion’s family tried to purchase the laptop at the judicial sale, but she was outbid by Angela Ford.  These
sources report that Angela Ford had the hard drive copied and has retained his attorney client communications.

LawReader is seeking information regarding the handling of the news reports provided to the Bar Counsel’s office regarding conduct of Angela Ford regarding her handling of clients escrow funds.

Any investigation of the actions of the Bar Counsel by the KBA should ask if the Bar Counsel’s Office  has hidden behind “confidentiality ” rules and has not acted on published claims regarding Ford’s improper handling
of clients funds.  One thing is clear, the actions (and failure to act) by the Bar Counsel raise many troubling questions that the public should be entitled to know.  An independent investigation of the Bar
Counsel’s office is clearly warranted.
We further submit that the hiring of a Louisville law firm (Stites and Harbison) in numerous ethics cases, should be closely examined.  The Bar Counsel’s office employs nine full time lawyers and the question
of why outside counsel is needed by the KBA is a fair question.  Why the same Louisville law firm is being hired should be examined.  LawReader has received confirmation for three sources to the effect that Linda Gosnell’s
daughter is an associate in the Lexington office of Stites and Harbison.

The firms fee in the Deters case was $44,000.  That fee was regarding two court appearances in Federal Court wherein Judge Danny Reeves quickly granted summary judgment in favor of the Bar Counsel. On Nov. 18th. the Board of Governors disallowed this fee to be charged against Deters as a condition of his right to appeal to the Ky. Supreme Court.  One assumes that the dues paying bar members will be stuck with this fee bill authorized by Linda
Gosnell.    We note that the Board of Governors acted decisively in disallowing an attorneys fee under the guise of a “cost and expense” bill.   The Sup. Ct. last week repealed a rule that allowed the Bar Counsel to impose large
cost bills as a precondition for an attorney to have the right to appeal his conviction of ethics charges.

One of the Deters lawsuits against the KBA is on appeal to the 6th. Circuit.  In the John M. Berry / ACLU claim against the KBA, a reliable estimate suggests that the potential billing will be in excess of $100,000.
Berry was never convicted by the Bar of anything, but sued them for placing a warning letter in his KBA personnel file.  He wrote a letter critical of the Legislative Ethics Commission and after former Ct. of Appeals judge Paul Gudgel called
Gosnell, she began a two year investigation of Berry.  Berry admitted the letter but denied that it questioned the integrity of a judicial officer.   The Federal Judge ruled that the federal courts don’t have jurisdiction
of attorneys first amendment cases when brought by state bar associations.   That ruling is on appeal to the 6th. Circuit.

The current Supreme Court Rules (SCR 3.150 Access to disciplinary information) limit the distribution of information about ongoing ethics investigations.   This
rule allows the Bar Counsel to hide ethics complaints for years.

This rule apparently can be applied to hide from potential victims, the financial wrongdoing of their lawyer.  If Angela Ford has made a distribution of seized funds,  without a final judgment
to support the judgment , then Ford’s clients may be ordered to return any distributions.  It is still possible that the Fen Phen defendants may be retried and have a chance to win their civil case.  If that happens and the $42 million has been
distributed, it is unlikely that refund of the money by Ford’s clients would be likely.

The U.S. Attorneys office appears to be more interestged in protecting the original plaintiffs now represented by Angela Ford, than does the Bar Counsel’s office of the KBA.

It is reported by some sources that Angela Ford may have distributed up to $13 million dollars to herself and others as attorney fees.  The only basis for Ford to pay
herself is a judgment of the Boone Circuit Court which has been reversed and remanded for a new trial.

Until the accounting ordered by Federal Judge Danny Reeves is released, the public and the Fen Phen plaintiffs and defendants will not know what happened to the millions held by Angela Ford.

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