FEN PHEN DEFENDANT SEEKS WRIT OF MANDAMUS ORDERING KBA TO RELEASE FINANCIAL INFORMATION

The following Petition for a Writ of Mandamus seeks information about an attorney employed by the KBA who participated in William Gallion’s criminal trial. It is alleged that the attorney Jane Graham, had an ex parte meeting with Federal Judge Danny Reeves, and may have billed the KBA for this meeting. When Judge Reeves was asked to explain what happened at this ex parte meeting with the KBA’s counsel, he reportedly replied, “You can ask but I don’t have to tell.”

Sept. 20, 2013

COMMONWEALTH OF KENTUCKY
SUPREME COURT OF KENTUCKY CASE NO. 2013-SC-_________
WILLIAM GALLION PETITIONER

VS: PETITION FOR WRIT OF MANDAMUS

KENTUCKY BAR ASSOCIATION RESPONDENT

Comes now the Petitioner by counsel and for the Petition says as follows.

On February 8, 2013, Petitioner requested the Kentucky Bar Association to provide the unredacted billing records of Jane Graham, counsel for the KBA. (The letter to the KBA (Ex. 1) and (Redacted billing records of Ms. Graham are attached. (Ex.2) Ms. Graham presented a Motion to the US District Court in the trial of William Gallion and Shirley Cunningham precluding the Defense from cross examining prosecution witnesses on ethical misconduct charges made against them by the KBA. (A copy of the Motion is attached (Ex.3)
Ms. Graham’s redacted billing records came to light due to Mr. Chesley request to see an itemized list of costs the KBA incurred during his disbarment proceedings. Ms. Graham’s billing records show she billed the KBA for time spent on 2/24/09 the day she presented the Motion, and for time spent on 2/23/09, both in reference to the Phen-fen trial. 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.
On February 26, 2013, the KBA responded. The request was denied, citing attorney-client privilege, SCR 3.130(1.6), and work product. (A copy of the letter is attached Ex. 4) As a consequence of the Motion made by the KBA the Defendants were denied access to exculpatory evidence in the files of Judge Bamberger and Stan Chesley. The KBA knew that Chesley’s Response to Inquiry Commission Complaint contradicted testimony he was giving in the criminal trial of William Gallion and Shirley Cunningham.
The United States, in no small measure, premised the conviction of the Defendants on Chesley’s false testimony. (Attached are excerpts of closing argument, first trial (Ex.5); Chesley’s KBA file, pages, # KBA 5894, 5895, 5897, 5900-5902, 5908 (Ex. 6); and Chesley’s testimony in the second trial that convicted the Defendants.(Ex.7)
The entire line of testimony given by Chesley was pure fabrication, and the government knew it, as evidence by Grand Jury questioning of Judge Bamberger on March 8, 2007. (Copies of pp. 2, 26-28, & 51 are attached (Ex.8); (The KBA Inquiry Commission Complaint is attached (Ex.9.)
Gallion contends he has been wrongfully convicted. Excerpts from the criminal trials are set out in this Petition to justify the need to obtain the unredacted billing records of Ms.Graham. References to the trial are attached.
In Ms. Graham’s presentation to the Court she stated the following: “The concern of the Court — excuse me, of the Bar Association and of Ms. Gosnell, who is Chief Bar Counsel, is that while we don’t anticipate it would be relevant or – or people — and counsel would be inquiring into it, out of an abundance of concern, we would ask the Court to issue a protective order preventing any inquiry into the identity of or the existence of an investigation of a lawyer which has not reached the — a finding of an ethical violation.” (Volume 6A, p. 14 (Ex. 10)

Did Ms. Graham, on her own initiative, seek out a meeting with Judge Reeves the evening before she made this Motion or was she summoned by the Court?

The Defense questioned the District Judge on Ms. Graham’s ex parte contact with the Court:
“MR. ALMAND: … And Judge, I would also ask, has there been—I’m not aware of how the courts work in Kentucky in regards to communication with judges by the Bar Association, and I didn’t know whether there had been any communications with the Court or not directly concerning this matter that we’re not aware of, but if there were, I would just ask that question. And I’m assuming there’s not, but I just ask.
THE COURT: You’ve asked the question.
MR. ALMAND: Yes sir.
THE COURT: It doesn’t mean I have to answer it.
We’ll take a five-minute recess.” (Vol. 6A, p.23 (Ex.11)
The Court’s Jury instruction was tantamount to a Directed Verdict that compelled the jury to find the Defendants guilty. .

The Court’s Instructions:

Your second duty is to take the law that I give you,
apply it to the facts, and decide if the government has
proved each defendant guilty beyond a reasonable doubt. It
is my job to instruct you about the law. You are bound by
the oath that you took at the beginning of the trial to
follow the instructions that I give you, even if you
personally disagree with them. This includes the
instructions that I gave you before and during trial and
these instructions. All the instructions are important, and
you should consider them together as a whole.

You have heard testimony about the Settlement Agreement
between the defendants and American Home Products. I have
advised you that this settlement was an aggregate settlement
of 440 claims.

Aggregate settlements are governed by Supreme Court Rule1.8 (g), which I read to you earlier. Rule 1.8(g) requires that a lawyer obtain each individual client’s informed consent before negotiating an aggregate settlement for multiple individual clients. To obtain this informed consent, the lawyer must disclose to each client the overall terms of the settlement. This disclosure, at the very least, should include the total amount of the settlement, the number of claimants, and the method by which the allocations were determined.
(Vol. 28B, pp. 91, 92,120 (Ex.12)

Judge Reeves would not allow the Defendants to offer expert testimony on the interpretation of the language of the Settlement Letter.

Professor Erichson testified:

Q Professor Erichson, when we left, I had asked you based
15 upon your review of various documents and information, we’ll get
16 into that specifically, did you formulate an opinion on how this
17 case was settled? And when I say “this case,” I mean the case
18 involving 440 clients.
19 A You mean the Kentucky settlement in May of 2001?
20 Q Correct.
21 A Yes, I did.
22 Q And what is that opinion?
23 A It was a settlement of the claims of 440 named claimants
24 who are listed in the settlement agreement.
(Vol.18A, p.106 (Ex.13)

Q. Now, Professor Erichson, in your opinion upon review of all
of the information that you have done, in this aggregate
settlement that you have described of $220 million for 440
clients, would there be excess funds?

A. No. There is $200 million. That’s the amount that the
lawyers have to work with. If the plaintiffs’ lawyers have to
do the allocation themselves, then they take that money, they
divide it up, they allocate it among their clients.
(Vol. 18B, p. 16 (Ex.14)

Professor Erichson and the Government misinterpreted the Settlement Letters. Erichson couldn’t figure out any reason for it.The expressed language of the Settlement Letter says the Agreement was contingent on the execution of this Side Letter. (Vol. 18 B, pp. 4, 5 (Ex.15)

Gallion’s good faith reliance on the advice of counsel was crippled by Chesley perjured testimony and by the Disbarment Orders that were improperly admitted by Judge Reeves. Judge Reeves at sentencing stated: “ I did not find Mr. Chesley to offer false or misleading testimony. I found him to be a credible witness.. Mr. Gallion was the primary mediator.” The government went on to say at sentencing “the jury soundly rejected that defense” i.e., the advice of counsel defense. (Docket Entry 1179, pp. 7, 15 (Ex.16) The government knew and was contesting the defendants’ allegations that Chesley was intimately involved in the settlement process. Judge Reeves, more as an advocate than a judge, scrutinized the testimony of Mr. Robbins in preparation for the ruling denying its use. Did Gallion receive a fair trial? (Vol. 18A, pp. 3,4,20 (Ex.17)
The government, as shown by the excerpts of closing argument in the first trial, emphasized the failure of the Defendants to properly inform the clients of the settlement terms. Chesley was charged with ethical misconduct prior to the first Indictment of the Defendants for not following Class Action Law. The civil litigation was pending. Chesley was distancing himself from involvement in the Boone County settlement. (KBA 5908 (See Ex.6)
In the trial that convicted Gallion, the government, with the assistance of the Court, hid from the jury Chesley’s involvement in the Boone Co. settlement.
The KBA monitored the first trial and knew Judge Bamberger testified that William Gallion told him the clients were thrilled to put $20 million into the Charity. The Kentucky Bar Association knew that information in Judge Bamberger’s KBA file contradicted his testimony Gallion told him the clients were “thrilled put $20 million into a Charity.” The KBA knew that Judge Bamberger approved the Charity; knew the clients signed Releases; and knew Judge Bamberger believed the clients had been fairly compensated.
Since releases were in hand, Judge Bamberger approved attorneys’ fees. He knew he had several options concerning excess funds. Gallion recommended giving additional funds to the clients. In his discretion, Judge Bamberger distributed one-half of the remaining funds to the clients and held the other half pending potential claims in accordance with the Side Letter. Gallion, in good faith, believed the clients were fairly compensated. (From Judge Bamberger’s file, pages # KBA 2848, 2850 (Ex.18)
The KBA knew that Judge Bamberger’s file contained an interview given by David Schaefer that stated the plaintiffs’ attorneys, during the Mediation of the Settlement in April/May 2001, discussed putting left over monies [i.e. Excess funds] into a charity. This discussion took place in the presence of Mr. Schaefer and two other American Home Products attorneys. This, it should be noted, contradicts Judge Reeves’ aggregate settlement instruction and the government’s claim that the $200 million settlement was for only 440 clients. (From Judge Bamberger’s file, pages # KBA 2211, 2212 (Ex.19)
Mr. Schaefer’s memory is corroborated by David Helmers’ notation during Mediation concerning $50 million to Charity. The exhibit showing the reference was admitted in the first trial by Judge Bertlesman. Judge Reeves would not admit the exhibit, however he allowed Helmers to testify concerning the issue, but once Helmers could not identify who was present during the discussion, and Judge Reeves directed the jury to disregard the reference to $50 million. (Volume 13B, pages 48-61 (Ex.20)
According to Schaefer, the excess was discussed at mediation and this correlates with Judge Bamberger’s testimony that he was told at the May 9, 2001, Settlement meeting, in the presence of Schaefer, that indemnification was unlimited. Schaefer, at the criminal trial, testified that he did not recall a discussion concerning Unlimited Indemnification at the May 9, 2001, Settlement meeting among counsel and Judge Bamberger. (Volume 16A, pp. 32, 33 (Ex. 21))
Gallion proferred testimony at the trial concerning Mr. Vardaman’s credibility.

BY MR. ALMAND:
10 Q Mr. Gallion, I asked you were you aware of any information that would cause you to raise a question as to the credibility of Mr. Vardaman?
13 A Yes.
14 Q Do you remember that?
15 A Yes, I remember that question.
16 Q And the reason he would testify as he has in court?
A Yes. Q All right. And what was that? A Well, AH — the problem AHP had in this case, which is a problem that Mr. Vardaman’s office had, is that they gave a broad indemnification at the last minute for Dr. Duff. They gave a blanket indemnification, which they had not done for any other physicians. And it was an indemnification that was the subject of a dispute within their law office that whoever was asked to do the indemnification did it the night before the
PROFFER – MR. ALMAND 38
deposition of Dr. Duff. This was discussed with Mr. Chesley, this was something that he was well aware of, and he talked about this constantly, that this was a problem that they had, that the indemnification had no limits on it whatsoever. Then the reason — one of the reasons given for them not wanting to put in the settlement agreement the fact of the indemnification and all of the details, they wanted it done by side letter so it would not be disclosed that they had made this decision that they felt exposed the law firm. So consequently, they wanted us to assume the obligations outside of the settlement, and this was a problem for them.
(Vol. 28A, pp.37, 38 (Ex.22)

The Side Letter calling for Personal Indemnification was created by Stan Chesley and Jack Vardaman. Gallion was the unfortunate recipient of the ethical quagmire it created. Richard Robbins testified he had never seen a settlement agreement that made the attorneys representing the plaintiffs accept financial obligations. He faulted Vardaman in the first trial for putting the Appellees in that position. (Docket # 540, p. 108, 114 (Ex. 23)

Mr. Robbins testified: Case: 2:07-cr-00039 Docket # 519

p. 27 typically, this settlement process is a joint effort by the plaintiff and defense counsel …

Q. Contrary to what AHP did in this case by just walking away totally.
A. … AHP said were done here…. That was an unusual situation.

On cross examination Robbins testified, p. 73-76 :
Q. You said Vardaman knew better…. What did he know better?

A. It’s a certified class action at that point. It couldn’t be simply a discussion of 400 and something claimants. Mr. Varaman would have known that.

Q. Did you ever determine how many were in this class that was settled? ….

A. What I said was when you went into the mediation, it was a class action. Mr. Vardaman knew it was a class action. The outcome of the mediation was to pay 400 some odd people, have indemnification obligations, and decertify the class so there would no longer be a class…. All you would have to be dealing with were these individuals….
The way the settlement was structured was that the claims of the 440 were settled. The class, everybody else who may have a claim, was decertified….. And the lawyers agreed to indemnify AHP if other people brought claims… That’s the way the settlement was structured.
Q. OK. You said Mr. Vardaman misspoke or knew better?… Because he said that this case was settled for 440 people.
A. No…. what I said was his concept that he was only there on behalf of the 440 and he wasn’t dealing with a class action, that is wrong and he knows that is wrong. When he went into the settlement, there was a class action. You cannot ignore. … you can either deal with it by settling those class claims, or… by decertifying the class….
(Docket # 519, pp. 27, 73-76 (Ex. 24) & Docket # 540, pp. 96-98 (Ex.25)
The government’s claim that Ex. 3 was money allocated for the clients was a mistaken interpretation of the Settlement Letter per Kenneth Feinberg’s affidavit and the trial testimony of Tracey Curtis. Ms. Curtis saw a physician once in 1999. According to the government’s case and Judge Reeves opinion Ms. Curtis was entitled to $181,000 as shown on Ex. 3. (Vol. 2B, pp. 86-89 (Ex.26)
It was Chesley and the attorneys for American Home Products who fashioned the settlement requiring Decertification and Personal Indemnification obligations to the defendant (AHP) for future claims. Gallion and the other attorneys accepted the settlement. Judge Bamberger approved the settlement tendered by the parties which was negotiated by skilled attorneys and a nationally recognized expert in Class Action/ Mass Tort litigation. (Volume 4A, pages 54-57(Ex. 27)
Gallion does not contest the charges of ethical misconduct. He is contesting charges that the settlement was for 440 claimants. He did not steal monies negotiated for only 440 claimants. He was involved with the settlement of a complicated Mass Tort. He did not have criminal intent to defraud the clients. Judge Lisabeth Hughes Abramson was quoted in the news saying “There are a whole lot of more issues raised when attorneys are representing hundreds of clients. It’s just a different type of relationship than was envisioned 30 to 50 years ago.”
Civil litigation is pending to settle the dispute concerning the handling of settlement funds and retaining of legal fees. Medical evidence is necessary for a jury to decide whether the clients were or were not fairly compensated. Angela Ford in the criminal trial made a Motion to deny access to clients’ medical records. Judge Reeves granted the Motion citing the aggregate settlement as a matter of law ruling dictated that result. (Vol. 7A, pp. 2, 18, 19(Ex.28)
Judge Reeves, like Judge Wehr in the civil case, did not find the settlement to be complex. Judge Reeves determined that the Settlement Documents standing alone revealed that the settlement made in Boone County State Court was, as a matter of law, an Aggregate Settlement for 440 clients. The Settlement belonged to 440 clients, less a potential $7.5 million set aside. Judge Reeves would not allow testimony showing the $7.5 million limitation was related to attorney fees for defending potential claims filed by the Duff Class which had been dismissed as not settled. (Volume 13A, pages 66-69(Ex.29)
Judge Reeves invaded the province of the Jury. He instructed the Jury that the settlement was for 440 clients which was a fact disputed by the Defendants. Judge Reeves’ instruction followed Professor Erichson’s trial testimony disputed by the Defendants. (Volume 15A, pp. 46-48 (Ex. 30)
Prior to Mediation, AHP had made an offer of settlement of $20 million. As a result of Mediation, they settled 440 known claims and scattered to the wind some 60,000 potential claims of individuals in Kentucky for whom Dr. Duff had prescribed the diet drug medication. Vardaman testified he told the FBI that AHP wanted decertification to keep clients from coming out of the woodwork, suing AHP over the claims it had agreed on indemnify Dr. Duff. (Volume 3B, page 102 (Ex.31)
Professor Erichson gave no consideration to the fact that the Appellees agreed to indemnify some 60,000 potential claims against Dr. Duff for medical malpractice. (Vol. 18A, pp. 117-119 (Ex.32)
There was conflicting evidence concerning the Settlement mediated in May 2001. Conflicts in the testimony were not relevant to Judge Reeves’. In his opinion, Settlement Documents were dispositive on the law applicable to the Settlement.
Judge Reeves’ instruction to the Jury compelled a guilty verdict.
It was fundamental error to overlook and deny the significance of AHP’s requirement to decertify the Class Action in order to avoid giving Public Notice to the Duff Class of the existence of medical malpractice claims against Dr. Duff.
At the onset of the trial, prior to Opening Statement, Judge Reeves stated three times: “I disagree with that” in response to defense counsel commenting to the Court that Judge Bertlesman, in the first trial, had ruled it was a Class Action Settlement. (Vol. 2A, p. 46 & 69 (Ex.33) The trial judge has a duty to be impartial. Prejudging the nature of the settlement prior to hearing argument and evidence shows Judge Reeves was not impartial. Two trials by different Federal Judges disclosed factual disputes over the terms of the settlement that a jury was required to resolve.
Gallion was denied the right to offer expert testimony at trial. Richard Robbins testified in the first trial that the value of the 440 client’s claims did not exceed $50 million. (Docket # 540, p.100, 112,113 (Ex.34)
Mr. Robbins also testified that the Side Letter was poorly drafted and it made no sense for the agreement to call for Full Indemnity in the second paragraph, and by the way, in the last paragraph limit Indemnity to $7.5 million. He believed Gallion’s testimony was more credible that the $7.5 million was a limit on attorney fees. In any event it was a jury issue in the trial that 10 jurors voted to acquit the Defendants. (Docket # 540, pp. 105-107(Ex.35)

David Schaefer’s interview with the JCC concerning excess monies discussed during Mediation and David Helmer’s notation of “$50 million to Charity” call into question Judge Reeves matter of law instruction that the $200 million Aggregate Settlement was for 440 clients.
Mr.Chesley and Judge Bamberger were prosecution witnesses. Gallion did not tell Judge Bamberger the clients were thrilled with putting $20 million into a Charity. Documents corroborate Judge Bamberger relied on the advice of Mr. Chesley that funds remaining were Excess and could properly be given to Charity. It is of utmost importance to Gallion to show Judge Bamberger in his Judicial Discretion established the Charity. It was not an overt act by Gallion in furtherance of a Conspiracy. But for the extension of the Statute of Limitations by transactions in the Kentucky Fund for Healthy Living, Gallion has a viable argument that limitations would have bar the charges made in the Superceding Indictment against him.
All of the above raises a number of questions:
• Is it reasonable to believe Stan Chesley, Bill Gallion and American Home Products knew the $200 million settlement was only for 440 claimants? What did Mr. Chesley stand to gain by advising Judge Bamberger that Excess funds could be transferred to a Cy Pres trust?
• The Drug Co.’s lack of oversight and verification of the payment of settlement funds would subject them to civil liability had Ex. 3 in fact been settlement monies belonging to the 440 Clients.
• Are there insurance attorneys and claims agents in Kentucky who know of any settlement where the Insurance Co. wanted a Release but did not want to know the claimant was paid the settlement that had been made?
• Had Chesley known the settlement was only for 440 claimants why, then, was his participation in the settlement not criminally culpable?
• If there was a “conspiracy”, did he not participate in it?
• Why wasn’t Chesley indicted for wire fraud?
• Why was Judge Bertlesman, in the first trial, so inept that he did not see that the attorneys had stolen their clients’ money?
• Did Judge Bertlesman not understand the settlement was for only for 440 claimants?
The same fact witnesses testified in both trials concerning what was agreed to at the mediation meeting. Same fact witnesses disputed the meaning of Exhibit 3; however, in the second trial the Court interpreted the settlement document to mean the parties negotiated an Aggregate Settlement for only 440 clients.

The Petitioner is seeking relief from a 25-year prison sentence and $127 million Restitution Order. It is respectfully urged, thus, that the impropriety of the KBA’s interference in the trial of Gallion warrants an Order directing the KBA to provide the Petitioner with the unredacted billing records of Ms. Graham.

Respectfully submitted

_______________________
Michael R Dowling
PO Box 1689
Ashland, Kentucky 41105
dowlinglaw@msn.com
606 325 7682

The undersigned hereby certifies that a copy of this Petition was served by mail on John D. Meyers, Executive Director of the Kentucky Bar Association, 514 W. Main Street, Frankfort, Kentucky 40601-1812 on this the ___ day of September, 2013.

________________________
Michael R. Dowling
Attorney at Law
P.O. Box 1689
Ashland, Kentucky 41105
606 325 7682
Attorney for William Gallion

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